Saturday, October 27, 2007

Social Security and Medicare Legislated Benefit Cuts

I have tried not to say too much if anything about Social Security during the campaign, but I must make a comment. In the past couple of weeks, the first baby boomer has applied for Social Security benefits (early retirement at age 62. The media has picked up and reported the age old problem about funding benefits. They have even stated that if nothing is done Social Security and Medicare will consume all federal revenues.

Well this is not going to happen. Besides the well known 1983 changes to Social Security most of us know about such as increasing the tax, base, retirement age and taxing Social Security benefits, there was another change made that few people know of and from what I have learned, no US Senator or US Representative seem to know.

Social Security by law cannot borrow money. It has statutory authority to spend only those funds received from the dedicated social security tax on wages, tax on benefits and funds in the trust fund. Federal Law prohibits transferring general revenues to any trust fund.[4]

By law the trust fund cannot be drawn down to zero. The trustees must submit a report promptly to congress detailing benefit cuts or tax increases when in any given year the trust fund is projected to fall below 20% of that given years expenses. Social Security's ability to pay future promised benefits is dependent solely on the ability to raise social security taxes.[5]

What does this mean for Social Security? It simply means that the trust fund may not be exhausted, but must maintain at a minimum, a balance equal to 20% of any given years expenses. This is because Social Security gets funded on a quarterly basis. Without this provison, benefits may be paid for the first two months of each quarter, but not the third. It also insinuates that if nothing is done, a cross the board cuts take place. I envision cost of living allowances to be the first things cut around 2035 with benefit reductions of about 3% a year there after until they total 30% if not more.

Medicare is a bit different. It if funded 50% by payroll taxes workers pay, 25% by premiums paid by beneficiaries and 25% funded using General Revenues. This formula creates a break on spending. The medicare tax of 2.9% on wages means that General Revenues can never contribute more than 25% x 2.9% of wages. Therefore, for Medicare to spend more than 5.8% of total wages, it must have congress increase the Medicare tax. If it does not do this, then across the board cuts take place.

For over twenty years the Social Security Trustees have projected and reported the trust fund to be exhausted anywhere between 2019 and 2042 which is decades before its original projection of 2064. Where is their report detailing benefit cuts and/or tax increases to rectify the inadequacy? When I asked Senator Lugar's staff this question five years ago, they were not aware of this statute. I have not heard back from anyone yet.

[4] United States Code Title 42, Chapter7, Subchapter VII, Sec. 911 (a),

[5] United States Code Title 42, Chapter7, Subchapter VII, Sec. 910 (a),

Thursday, October 25, 2007

You Have Nine Choices

During the Vietnam War young men were being drafted and were too young to vote. After much protesting, Nixon signed into law lowering the voting age to 18. I thought young people would now vote in numbers they represent. It may have been higher in the early 70’s, but now it is very low. They either do not care or feel disenfranchised. We complain about young people not voting, but the truth is we are lucky if we get 25% turn out, one in four registered voters voting.

I have been voting since 1974. Every year that passes, it becomes more difficult to choose whom I want to support. Just because a candidate is republican, no longer means they are a fiscal conservative nor is a democratic candidate a spender. In fact the Republican Party has moved so are from what my beliefs and moral values are, I find it difficult to support very many. There are democrats I like. Just because they are a democrat does not mean I will not support them with my vote. I vote for an individual.

This November 6 you have a choice between nine candidates for City Council at Large. I hope you will do a little research before casting your vote and simply not vote just because the candidate is representing a particular party. The two major parties have become nearly indistinguishable. Maybe it is time not vote for a party, but an individual.

You are in essence hiring an individual to do a job for you. Have they been responsive in the past? Do they support your views? If not then maybe it is time you fired them and hired a new person to work for you.


News Sentinel

Bill Larsen's Web Sight

Tuesday, October 23, 2007

The Mayoral Debate

I watched the debate this evening and heard some disturbing responses. Tom Henry stated it was the job of the Mayor to protect all citizens/residents and that he was to uphold the law. When it came to illegal immigration he said he would help those breaking our laws by helping them gain legal status. This does not sit well with me. We are a country of laws and you simply cannot look the other way. My grandparents were immigrants and entered the country legally. Both candidates identified the large cost to our community in terms of public education and the difficulty teachers have in educating them.

Henry is for more taxes. He says we need a broader based tax such as sales, hotel, dining and other types of sales taxes. This will help reduce property taxes. After speaking with several people about sales taxes, they have the impression that these new taxes would not apply to essentials. How much of your budget goes to essentials, groceries, electricity, gas, etc and how much to non-essentials? Henry says a ¼% increases in local income taxes would reduce property taxes by 7%. I for one would like to see this analysis. For every dollar we bring home, we pay mortgage, utilities, groceries, etc. What do we have left that we spend on non-essentials? What I am trying to say is if there is only 10 cents on the dollar we spend on non essentials (fun) what type of sales tax rate is needed to replace the cut in property taxes?

I thought Mat Kealty did a good job. He certainly had enthusiasm. Tom Henry seemed to be tired and sluggish. They are totally different in their ideas.

Monday, October 22, 2007


Last week the Journal Gazette called my home. My wife gave me the name and phone number and told me they were doing an article on the at large candidates. Against my better judgement, I returned their call. The JG asked some questions and I replied. We spoke for about ten minutes. I read the article this morning on line because I just can not bring myself to spend good money on such a rag of a paper that censors the publics information on candidates.

Here is what they printed.

Also on the ballot are three Libertarians: Doug Horner, in his first race for public office; William Larsen, who has unsuccessfully sought the GOP nomination for U.S. representative; and Michael Brightbill, who has been absent from campaign events.

Wow, a total of 38 words, or 213 characters. How many words did they use for other candidates at large?

44 words - Denise Porter-Ross
123 words – Marty Bender
123 words - John Shoaff
151 words - Thomas Essex
210 words – Liz Brown
1113 words – John Crawford

In 2006, I received 35% of the vote in Allen County. You might think that this means something, but it does not. The Journal Gazette appears to be of the same caliber as the Republican party, we pick and choose what candidate you hear about and if others want to run and challenge the good O’boy network, we will make it as difficult as possible.

America is supposed to be about free speech, freedom of the press and political expression is one if not the most sacred right we have. However, the Journal Gazette has proved to me once more that they are not there to report the news or present information that voters need to make an informed decision, but like the Republican Party censor the candidates.

Based on what I told the Journal Gazette, they do not find the following topics news worthy:

  • Harrison Square
  • Tax Incremental Financing Districts
  • $214 Million unfunded Police and Fire Pensions
  • $500 Million yet to be planed separation of the storm and sewage sewers
  • They cut $3.1 Million from the budget in order to give a token indication they care about high property taxes, yet when will they bite the bullet to pay for pensions and sewers?

If you feel these issues are newsworthy, maybe you need to let the Journal Gazette know this. If you do not like your news censored, then let them know this as well. If you think the choice for city council at large is up to you and not then, then let them know this as well.
While they say they feel our pain over ever-higher property taxes, they speak with fork-tongue and support greenways, North River Development, Harrison Square and more, all of which costs money.

I only hope the Internet puts newspapers like the Journal Gazette out of business.

Tuesday, October 16, 2007

Many candidates for City Council are saying they want and we need lower property taxes to attract businesses and retain workers. At the same time they say they are in favor of buying the Omni Source Property, support developing our rivers, greenways, Harrison Square and more. In simple terms they want to spend millions more that do not pay for police, fire, water sewage or street maintenance. They say these new developments will increase property values.

As an engineer, I deal with a lot of what-ifs daily. What I do not understand is how these candidates, supporting new projects in the expectation of increasing property values, expect our property taxes not to increase, but profess to support lower property taxes. Increased spending increases property taxes. The reassessment (increase in property values) and trending (increase in property values) is what has caused the large increase in our property taxes now! So how do they propose to decrease or at a minimum hold property taxes where they are?

By their own logic, the more we spend the less we will pay in property taxes.

P.S. How much is the cost of yearly maintenance?

Sunday, October 14, 2007

Sewage and Storm Sewers

How would you like to have sewage in your down stairs when it rains?

Last Thursday I had the opportunity to speak to many people about issues that were important to them. One person had problems with flooding in her house when it rained. The storm sewers would back up and flow into the sewage sewers and come into their home. They have been battling this for years. This goes back to what I have been saying for a long time. Instead of adding additional infrastructure to maintain, fix what we have first.

The Harrison Square project will cost over $46 million. This amount of money would have gone along way towards implementing the EPA edict about separating the sewage and storm sewers. Fort Wayne City Council has had their priorities wrong for too long.

The Brain Drain

There is a term floating around called “The Brain Drain.” It refers to young educated people leaving Fort Wayne. I hear some city council members are presenting funds to young people to pay for college if they agree to stay in the area. Is the brain drain real or do we have brain dead politicians?

Carroll High School has over 80% of graduates going on to higher education. Homestead High School is slightly higher. New Haven as well as the other area high schools have high rates of continuing education. Indiana - Purdue University has over 14,000 students. Ivy Tech has thousands as well. St Francis, ITT and Taylor Universities have thousands more. Together these local higher educational schools educate and train our children as well as thousands from outside Fort Wayne.

I know that the number of positions that require a college degree is about 20% of all positions available. This means that when our area schools have a higher than 20% continuing higher education and graduation success rate, that we exceed the ability of our local employers to create positions for all of them. Harrison Square is supposed to entice visitors from outside our local area and bring them here to Fort Wayne to spend money. What happens if they instead decide to move here? Do they take a job away from our young graduating adults?

Our higher educational institutions attract students from a wide area. The students that come here bring money to spend and pay for the educators and administrators. Our higher educational institutions are no different than GM where their product are trucks to ship outside the area, but where the educational institutions are to ship out educated individuals. If we were to have enough employment growth to absorb all graduates from these higher educated institutions, we would need job creation in the tens of thousands each year.

I was educated in Fort Wayne as well as my wife, brother and sister. We all left Fort Wayne and have since returned not with just ourselves, but our families. We bring a diverse work experience back to Fort Wayne. If Fort Wayne truly had a brain drain, then the city of Fort Wayne would be shrinking in population, not growing, graduation rates would be lower and our higher educational facilities would have decreasing enrollment.

Saturday, October 06, 2007

What are the issues?

This campaign season for city council has a new twist that I have not seen before. There definitely are more candidates to choose from, but more importantly, what the message that candidates are stating. The Meet and Greet hosted by the YLNI clearly showed that both Democrats and Republicans have moved towards a more fiscal message. All but one candidate embraced the view of civil rights, small government and minimizing red tape. however, their words and views are not backed up by decades of actual leadership or the lack there of.

One even mentioned the $3.1 million reduction in expenses or reduction in total property taxes collected passed by the city council recently. The problem I have with this is, why give this tax back to the taxpayers when the city OWES $214 million to fund the police and fire pensions. That is right, the city council has not addressed the 40 year old known problem of funding police and fire pensions prior to 1977. The state will cease its 50% contribution in 2009. Many of the council have served multiple terms. Why have then not addressed this? Why are they addressing such things a smoking ban, signs, Harrison Square, Headwaters Park and more when the CITY OWES $214 million? However, this is small potatoes compared the storm water sewer EPA mandate. Over ten years ago the city was notified by the EPA that it had to separate its storm sewers from its sewage sewers. Has the city done this yet? Have they planned how to do this? Have they any idea how they will fund this more than $300 million to $500 million mandate?

At the same time the Fort Wayne City Schools have failed to adequately maintain the schools. They recently tried to borrow $500 million, but the property owners voted no.

The Allen County Library several years ago expanded the library at a cost of $85 million. Northwest Allen County schools is expanding Carroll High School and is planning a new elementary.

The individual taxing authorities need to work together instead of in a vacuum. The Library said the average property tax increase would be $50 to $75. NWAS said the increase in property tax would be about $235 now add another $50 for the elementary. I do not know about you, but I think all these taxing authorities need new blood. We need people who understand that money does not grow on trees. We need people who understand that the source of all revenues is us.

YLNI Meet and Greet

This past Wednesday the YLNI “Young Leaders of Northern Indiana” hosted a meet the candidate night. They allowed one-minute introduction and two minutes to answer one of two questions. With two mayoral candidates and nearly 27 city council candidates, this meant a lot of time for people to sit. Having participated in several “meet & greets” this particular event was very well done. The ratio of listeners to candidates was I would estimate at least 7 to 1. This is far higher participation rate than any meet and greet I have ever attended. I hope this group continues to grow and perform a great civic duty. Great Job and good luck!

NBC-33 Debate poll results from 2002