DICK BAYNTON: The Entitlement Society

Dick Baynton

For many years, we have heard appeals over TV and radio from attorney firms and other advisors revealing statistics that show if you owe Uncle Sam $12,000, you must contact us and let us help reduce your tax burden. Next frame shows likenesses of Frank & Susan and then the comment that ‘we helped them settle for just $1,800!’ Think about the consequences of that transaction. This means that although this couple owed the IRS at least $12,000, they crawled out from under that debt and saved $10,200.

Attorneys don’t work for scraps; in fact the family may have settled for $1,800 with the IRS, but how much did they pay the law firm? Attorneys often reap about to 1/3rd of the savings which would be about $3,400. Let’s presume that the tax debt was accurate according to government rules. One of the outcomes is that other taxpayers must make good on the $10,200 amount forgiven. Suppose the taxpayers went to the IRS and appealed with reasonable logic why the amount can’t be paid in a timely manner. A settlement could probably be reached including paying the tax with future periodic payments and reductions in the total tax bill.

Radio announcements trumpet something like this on radios daily: Are you buried in credit card debt? Did you know that you don’t have to pay that debt? Call this number and stop the harassment and call us right now at this #. Let’s say the CC holder has four cards with debt of $35,000 and are told that bankruptcy can be avoided and ‘escape’ this debt. In some cases the liability can be added to mortgages and in other cases a budget planning specialist helps set up a periodic payment plan. The rate may exceed 10% APR (annual percentage rate). The facts are that the card holders made the purchases and accepted the obligation to pay it back either in one payment or periodically with terms that may exceed 25% APR. The fee charged by the interested law firm or advisor will be an uncertain amount.

The student loan bill signed into law on March 31st, 2010 was a high risk venture. First, let’s establish some frame-of-reference. Currently total credit card debt amounts to $977 billion, auto loan debt in the USA stands at $1.1 trillion and student loan debt recently reached crisis stage at $1.5 trillion. This debt burden is spread over 44.1 million student borrowers or almost 14% of our 330 million population. Of this debt 22% of borrowers are in default with about 1 million new ‘delinquents’ annually. About 30% of borrowers don’t repay within six years and only half of borrowers pay their debt within 20 years. About 2/3 of student debt is owed by women borrowers.

About two million citizens have exited the need for food stamps (SNAP) in the first year since the 2017 election, a saving of $3.2 billion of the more than $70 billion (SNAP) budget. Let’s take a look at the big picture of federal government debt: Unfunded liabilities amount to $115 trillion, made up of Social Security benefits, Medicare (A, B & D), Federal Public Debt and Employee & Veteran’s benefits.

How did we get into such deep debt? The answer is not that complicated; we have allowed generous benefits to multitudes of recipients who receive something without exchanging something in return and with little or no verification. We have created many of our benefits such as Social Security to unwittingly become a ‘Ponzi Scheme.’ We have set up our government workers at all agencies to receive current compensation, retirement and medical benefits beyond the dreams of comparable workers in the private sector. Our legislators have failed to act in common sense terms regarding economic changes (inflation, etc.), age of recipients, years worked and performance-related compensation. Finally, those government agencies that are unionized have gained control without attention to productivity and timely results. We have trained our citizens to become government-dependant

Total federal entitlements were over $2.6 trillion of almost $4 trillion of federal spending in fiscal 2017. We have adopted the philosophy of spending our way out of debt. Apparently our legislators skipped math classes in favor of courses of politics and social justice. It’s called Socialism by default.’

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