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Skin In The Game



skin
Dear Leader Barack Hussein Obama, in January 2009, told George Stephanopoulos on ABC’s This Week, “Everybody’s going to have to have some skin in the game.”

What does that phrase mean? Well, my first stop was Investopedia.com , which says “… the best vote of confidence is putting one’s own money on the line just like outside investors!” I then went to UsingEnglish.com, which says “A person who has skin in the game has invested in the company they are running.” I then went to wikipedia.org, which says “To have ‘skin in the game’ is to have incurred monetary risk by being invested in achieving a goal.” And I consulted William Safire’s The New York Times 2006 article, which quotes Senator Tom Coburn, M.D. (R-OK) as saying “This bill will move us closer to a true consumer-oriented health-care system. H.S.A.’s (Health Savings Account) give consumers some ‘skin in the game‘ by putting them in charge of health-care dollars.”

So, combining those definitions with what Obama told Stephanopoulos, EVERYBODY, all US citizens, are going to have to sacrifice financially in order to accomplish an economic recovery. Obama preceded his “skin” remark with “Everybody’s going to have to give.”

There are only three little problems with what Obama said. First, all US citizens don’t “have skin in the game” because only 53 percent pay federal income taxes. Second, benefits paid by the federal government have actually increased under Obama. Third, to finance the benefits increase, the deficit has exploded.

According to Dr. Walter E. Williams, “Roughly 47 percent of Americans pay no federal income tax.” That means that about 47 percent of US citizens don’t “have some skin in the game.” Mitt Romney said, in September 2012, “There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it.” I’m sure some commenter will explain how those people have (from the Obama perspective) skin in the game.

In order to overcome the “skin in the game” faux paux, Obama introduced the concept of “fairness,” that the rich should pay their fair share. But (and there’s always a “but” when Obama is involved) the “rich” pay much more than their fair share when it comes to income tax. Those “non-rich” (let’s say the bottom 50 percent of tax payers) paid, in 2009 (the most recent year for which data is available) 2.25 percent of all income taxes paid. As this chart shows, half of those who do pay income tax have very little skin in the game.

Income Percent Taxes Paid
Top 1% 36.73%
Top 5% 58.66%
Top 10% 70.47%
Top 25% 87.30%
Top 50% 97.75%
Bottom 50% 2.25%

Source: National Taxpayers Union

Remember, the above chart applies ONLY to income tax payers, those that “have some skin in the game.” The chart does not include the 47 percent with no “skin in the game” but still vote.

As Phil Izzo says in his Wall Street Journal article, “The increase [in benefits spending] in recent years is likely due in large part to the lingering effects of the recession. But even without the effects of the recession, there would be a larger reliance on government.” So, let’s examine benefits spending for “The Big Three”: Welfare, Social Security, and Medicare, and increases in benefits spending:

  Welfare Social Security Medicare
2009 $530 billion $650 billion $410 billion
2013 $580billion $800 billion $500 billion
Spending Increase 9.4% 23.08% 21.96%

Source: usGovernmentSpending.com

It’s interesting to note that welfare spending in 2010 was $690 billion, a 30.2 percent increase over 2009. By the way, the inflation rate for 2009-2013 is 1.7 percent. As the above table illustrates, government spending on benefits has increased. Some will say that the spending increases were due to increased recipients. That may be true, but WHY the number of recipients increased is a subject for a subsequent article. Plus, the above table is in terms of percentages, not numbers of recipients. Don’ compare apples to oranges.

Now let’s turn our attention to the deficit. Obama said on February 23, 2009, “I’m pledging to cut the deficit we inherited in half by the end of my first term in office.” So, with that post-inauguration promise, let’s see what has actually happened:

Year Deficit Amount
2009 $1.413 trillion*
2010 $1.294 trillion
2011 $1.3 trillion
2012 $1.087 trillion
2013 $0.973 trillion*

Source: usGovernmentSpending.com

* – 2009 and 2013 deficits provided as reference

Half of $1.413 trillion is $0.7065 trillion, so if we say the 2012 deficit was amassed during the last year of his first term, Obama did not even come close. And he missed his target again in 2013. Some will say that deficit reduction progress is being made. But at what cost? The amount of deficit reduction will be of little consequence if we cannot defend ourselves. And, as Evan Soltas says, the Congressional Budget Office’s deficit forecasts are, at best, suspect.

Regarding the deficit, so what? Well, there is a major consideration here: the economy. As John Mauldin said in 2012, the five biggest problems facing the US economy are the deficit. The US will lose, if it doesn’t get its deficit under control, access to the global bond market at reasonable rates. An 2010, Communist China of (all countries!) lectured Obama about debt:

“Sovereign debt troubles in Europe underscore how important it is for the United States to control its own borrowing as its indebtedness reaches concerning levels, a senior Chinese official said on Thursday.”

And, we have already seen that access degradation happen, unprecedentally, in August 2011, when Standard & Poors downgraded the US credit rating to AA+ from AAA.

Debt can be viewed as accumulated deficits. Deficits themselves are not a problem most of the time. It is the total debt rather than the deficit that is the real problem. Deficits become a problem, however, when servicing the accompanying debt becomes a problem. As Dr. J.D. Foster said about debt (and therefore about deficits):

“Federal government debt has nearly doubled since President Barack Obama took office.”
“Recent and projected growth in U.S. government debt poses a serious hazard to the nation. At a minimum, high levels of government debt mean substantial government resources must go toward servicing debt – to pay interest. Further, theory indicates and a growing body of research suggests a consistent relationship between high levels of government debt relative to the size of the economy and abnormally high interest rates consistent with lower levels of domestic investment.”
“Current and projected increases in government debt, cutting into future economic growth rates, also mean slower future growth of government revenues.”
“Slower economic growth, higher interest expense, fewer resources for other priorities – these are the legacies of President Obama’s debt-based fiscal policies and of his and Congress’s refusal to deal with long-standing fiscal and programmatic flaws in Social Security, Medicare, and Medicaid.”

“The U.S. economy is recovering from the Great Global Recession, but President Obama’s massive deficits, soaring debt, and tepid support for reforms to render America’s entitlement programs affordable pose a grave economic threat.”

Regarding the deficit as a percentage of GDP, I’ll be the first to say that George Walker Bush was no bargain. But, even including 2009, Bush’s average deficit from 2001 through 2009 was 2.88 percent of the US GDP. Obama’s deficit average has been 7.62 percent of GDP for 2010-2013. So, it turns out that Obama is an even worse bargain. Even using Obama’s (wildly optimistic) forecasts for 2014-2018, the average is 3.01 percent of GDP, still above Bush!

Have the above tables illustrated Obama’s 2009 “skin in the game” and “Everybody’s going to have to give” statements to be, at best, fraudulent? Die-hard Obama supporters will not admit it, saying that the economy is just fine and that unemployment continues to drop (artificially), but that’s not what’s being addressed here.

Sour grapes? Yes! That’s because those who have no “skin in the game” are taking those of us who DO have “skin in the game” down as well.

Sure, everyone pays taxes: sales tax, car tag tax, property tax (if they’re not renters), phone tax, and on and on and on. But the last time I looked, Obama was president of the United States. So, can his “skin in the game” remark be construed as talking about federal taxes, more specifically income tax? Perhaps it’s time that we took Obama literally, that it’s time for a 28th amendment to our US Constitution, one that specifically states that in order to vote one must be a tax payer, a contributor, must have “skin in the game.” But that will never happen because Democrats would lose their voter base. And one takes Obama literally at one’s hazard, as his recent Syria remarks illustrate.

But that’s just my opinion

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