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An Old Man’s Gripes

Richard Quinn

THOMAS JEFFERSON said, “Honesty is the first chapter in the book of wisdom.”

It’s well known that we tend to believe what we want or what fits our preconceived notions. But this is getting out of control. Here’s what drives me nuts on the misinformation superhighway:

1. “Health care is unaffordable.” There’s no denying health care is expensive and insurance premiums can be a heavy financial burden. And, yes, surveys find that Americans think health care is unaffordable. But what about a day at the ballpark? Is that cheap? Have you ever seen a survey about that?

Nobody, it seems, wants to spend their hard-earned money on health care. They don’t even want to fork over a modest co-pay. We each need to come to grips with health care spending as a regular part of our family budget.

2. “Health insurance is the problem.” Health insurance premiums reflect the cost and use of health care. If the cost and use of health care rises, so too will premiums. Health care costs drive premiums, not the other way around.

The real problem with health insurance is that it isn’t insurance at all. We expect our health insurance to reimburse us for everything we spend, rather than just for extraordinary expenses. That’s not how real insurance works.

3. “Health insurance company profits are the problem.” That’s ridiculous. Those profits have nothing to do with health care costs—and they represent just a small portion of health insurance premiums.

Moreover, most Americans have health care coverage that doesn’t involve insurance, because their employer is self-insuring or they’re covered by a government program. The profit margins for health insurance companies are nearly the same as regulated utilities—in the 3½% to 10% range. When you read that an insurance company has billions in profits, divide it among all the policies in effect and you’ll see the individual impact is modest.

4. “Teachers are underpaid.” It isn’t possible to pay good teachers commensurate with the value they bring to a community or a child. But generally, they aren’t underpaid. Yes, you need to consider their salary. But you also need to consider vacation time, benefits while working and benefits received once retired, notably pension benefits.

5. “Social Security has a surplus.” A surplus implies you have more than is needed to meet obligations. The reality: Social Security has unfunded liabilities in the tens of trillions of dollars. What Social Security has is a reserve—a trust fund that’s gradually being depleted. The reserve, by itself, is sufficient to pay current benefits for about 53 months.

6. “Social Security is going bankrupt.” Wrong again. As long as there are taxes coming in, Social Security can’t go bankrupt. But when the Social Security trust fund is depleted, the incoming taxes won’t be sufficient to pay 100% of promised benefits.

7. “Congress stole the trust fund.” This is a rumor that just won’t die. Nobody stole the Social Security trust fund. It’s invested in special interest-generating Treasury bonds. Last year, those bonds paid $80 billion in interest, which was then used to pay Social Security benefits.

8. “Congress should give retirees more.” There’s a misconception that the annual Social Security cost-of-living increase is determined by Congress or the president, both of whom get the blame when there’s little or no “pay raise” for retirees.

But in truth, the increase is based on the annual change in a key inflation measure, CPI-W. There’s no annual decision by Congress or the president. Many people want to move to CPI-E, which is designed to better reflect the inflation rate experienced by seniors. But CPI-E is no guarantee of a higher Social Security cost-of-living increase—and often the difference isn’t significant.

9. “Congressmen are paid their salary for life.” This is another persistent rumor. To receive a pension, a member of Congress must have five years of service, which means a member of the House of Representatives would need to be reelected twice. A pension is nothing close to full pay. And, yes, members of Congress pay Social Security taxes and contribute toward their pensions.

10. “Members of Congress are overpaid.” At $174,000 a year, which is nearly three times the median household income, it’s easy to feel members of Congress are paid too much. But I’d argue Congress is underpaid.

Think of it this way: You have a good job or run a small business. You have a family. You then win a job in Congress—which you may lose two years later. Could you afford to move your family to Washington, DC? Could you afford to maintain two homes, one in your home state and one in the District of Columbia? The cost of living in the Washington area is nearly 60% higher than the national average. Members of Congress had their pay last increased more than a decade ago. Some estimate that tight family finances compel 50 to 100 members to live in their offices.

11. “Times are different.” Change doesn’t mean loss of opportunity. Rather, it means different opportunities—requiring different strategies to cope. Yes, baby boomers had the advantage of the post-Second World War economic boom. But today’s millennials have the advantage of vastly improved technology and a more open world. Why all the complaining?

12. Assumptions and consequences. It drives me nuts that so few people ask about the assumptions used or the possible—and sometimes unintended—consequences of… just about anything. The cost, or the projected savings from, a new government program can be swayed by tweaking assumptions. Take state pension funds. Assume a higher rate of investment return and the funding can suddenly look a whole lot better.

13. “I can’t afford to save.” As Henry Ford may have said, “Whether you believe you can do a thing or not, you are right.”

Except for the chronically poor, everyone can save. The first step is taking an honest look at where your money goes, especially differentiating between necessities and other spending. The secret is to pay yourself first, preferably through an automatic savings program.

14. “How much money will I need for retirement?” How am I supposed to know? There’s no quick and easy answer, because there are so many factors—and those factors vary with every individual. What standard of living do you want to maintain? How much savings will you need to maintain that standard of living through a long retirement that’ll likely see at least modest inflation? What will your Social Security benefit provide each month? Gather all that information and you can get a reasonable answer to your question.

15. Shopping carts. I’ve saved my favorite gripe for last—and, I’ll freely admit, it has nothing to do with misinformation. What is it that prevents so many people from returning their shopping carts to where they belong? I’ll go out on a limb here and say it’s a reflection of how these folks behave in other areas of their lives. And, yes, they probably don’t believe in facts, either.

Richard Quinn blogs at QuinnsCommentary.com. Before retiring in 2010, Dick was a compensation and benefits executive. His previous articles include Money PitCrying PovertyShortsighted and Farewell Money. Follow Dick on Twitter @QuinnsComments.

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Mik Barbasol
Mik Barbasol
2 years ago

Facts don’t have feelings which is probably why it offends so many…the end result of an entitlement society.

CraftsmanCT
CraftsmanCT
2 years ago

I especially like No. 15 about shopping carts. In the long run, it is in the best interest of everyone to return their carts to the store or the return-cart areas in the parking lot. A store employee has to run all over the parking lot to retrieve the ones that are just left sitting about. They often use expensive mechanized equipment to handle the loose cart pick-up. This all contributes to higher costs for the merchant, who has no choice but to pass it on to customers. We often don’t think about consequences enough; we are in too much of a hurry; we are lazy. These unfortunate attributes ultimately contribute to a less enjoyable and more costly society.

ALDI grocers has the right idea with carts that have a returnable deposit, which incentivizes customers to return the carts, and the carrot is the return of only a quarter. Also, their “bring your own bag” concept saves them money, which can and does get passed back to the customer (witness their prices), and contributes to the betterment of the environment.

medhat
medhat
2 years ago

While I don’t agree fully with everything on your list, I do think objectivity is important in analyzing what is served up in easily-digestible sound bites in the press (both right and left). The sad thing is that critical analysis, objectivity, and open-mindedness aren’t taught in schools. Nor it is frequently, it seems, taught in the home. So the millennial generation, more or less the children of the baby boomers, have as “teachers” adults who came of age in the post-WW2 economic expansion. Sure, not all those boomers did well, but on a whole very many settled into a comfortable living where jobs were plentiful and the cost of living declined steadily. In the aggregate, it was a formula for complacency, one we’re seeing with the onset of an information/technology society transplanting a manufacturing/industrial one, and the consequences are evident in our societal changes as well as our politics. It shouldn’t come as a surprise, then, that there’s a younger generation that has an expectation of entitlement and comfort. On this 75th anniversary of D-Day, with precious few remaining that witnessed that sacrifice first-hand, it perhaps bears noting that extreme changes are brought about by extreme conditions. I would hope as a world we could make more modest, positive, changes without the need for worldwide turmoil. We’ll see.

The Old Hippie
The Old Hippie
2 years ago

Wondering about your statement #7. Does that include the money taken by LBJ for his “War on Drugs” and Mr. Obama’s taking of money to help Obamacare get started?

Bob Warmbrodt
Bob Warmbrodt
2 years ago

Everyone! Get off my lawn!!

David J. Kupstas
David J. Kupstas
2 years ago

This article is amazing, especially the part about health insurance not being health insurance. Also, everyone wants the best healthcare possible – and they want someone else to pay for it!

cpinva
cpinva
2 years ago

Mr. Jefferson very honestly admitted, in writing, that slavery was wrong, and it might end up being the death of the newly birthed country. yet, he could never bring himself to free “his people”, because that would have cost him money. being a terrible businessman, this would be money he could ill afford to lose. so much for Mr. Jefferson as an ethicist. thrown in his multiple rapes of Sally Hemmings, and it’s time he came down off that pedestal.

Peter Blanchette
Peter Blanchette
2 years ago

You are the best! Is that better? I love #15!. I would really love to get your data for this one. Maybe after paying $28 for a haircut we are all so fed up that we are taking it out on those poor shopping carts. Fortunately, where I shop people are more responsible! Forgive me. I forgot that you have the pulse of America. It explains your very erudite conclusions.

Find me 11,780 votes
Find me 11,780 votes
2 years ago

C’mon Quinn… your articles often provide genuine supportable information, but then you ruin it with information that is factually incorrect, or at least non-supportable. Often, it is merely your assumption that others have poor spending habits. What in the world possessed you discuss the “affordability” of healthcare by discuss “a day at the ballpark”. No relation whatsoever… one is a need, the other a frivolous expenditure.

As for your shopping cart issue, shop at Aldi. Its about 30% cheaper than Walmart, the food is as good or better, and you never need to worry about people putting their shopping carts away….

SchmidtyFi
SchmidtyFi
2 years ago

You’re spreading lies about Social Security.

1) Social Security can’t go bankrupt, but that’s only because it’s not a business that’s allowed to file for chapter 9. It is inevitable, however, that Social Security will not be able to pay the benefits it has promised in full. That is, effectively, bankrupt.

2) The “trust fund” can’t pay for anything. Taxpayers pay taxes, which pay the interest/principal, of those “bonds”, which pay SS benefits. Those are the same taxpayers that would pay the benefits in the absence of those bonds. So, in one case taxpayers pay interest/principal to pay for the benefits, and in the other taxpayers pay for the benefits directly. Please explain to me how the “trust fund” makes any difference, at all, as to the financial health of the system. With, or without it, taxpayers would have to pay. This is elementary stuff about Social Security that I don’t think you understand.

ishabaka
ishabaka
9 months ago

It’s a popular misconception that the purpose of health insurance companies is to pay for health care. It is not. The real purpose of health insurance companies is to collect premiums and deny claims. That’s why every American health insurance company employs an army of nurses, pharmacists, and doctors to “review” (deny) claims.

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