Thursday, July 16, 2009

Tax dollars spent at high end resorts

ABC TV Phoenix, AZ, uncovered yet another bankrupt company living off tax dollars holding a conference at a high dollar resort area. "PHOENIX ... motivational management conference held at a high-end Valley resort last week cost $700,000... Costs for the conference at the Arizona Biltmore Resort & Spa included airfare, hotel entertainment, dancers, motivational speakers, and food... A spokesperson said the conference was essential, that teleconferencing was not an option, and that all 675 managers needed to meet in person... provided ABC15 with a list of courses provided at the conference, which included "Techniques to Empower You," "Mentoring the Generations," and "Emotional Intelligence."... But the information did not mention an after-hours casino trip, family members staying at the hotel, or the 20-minute dance party ABC15 observed."

So what company is being so extravagant during these hard times- some foreign owned multi-national bank, some crooked brokerage house? It's
The Social Security Administration This from a organization that said in May the program will start paying out more in benefits than it collects in taxes in 2016, and the program's trust fund will be depleted by 2037... of course, the 2016 date assumes that the stimulus has already worked, the recovery begun, and businesses will resume hiring next year so that tax collections will go up; otherwise, it will go into the red sooner- and the 2037 date assumes that people will continue to die off at the current rate, that there will be no increase in the average lifespan in the next quarter century, and that the economy will continue to grow at the rate of the Reagan/Bush/Clinton years for the entire time, else it goes bust much sooner; I have seen estimates, fairly conservative estimates, not worst case scenarios, that put the bankruptcy date closer to 2027. Just something to remember when the proponents of single-payer government healthcare tell you that half the costs will be paid for by the government's greater efficiencies.

Here's something else to remember- proponents of both government healthcare and a second bailout say that any untoward costs are temporary; that in the long run, it will save money. That may well be. But that was also the plan to deal with the SSI bankruptcy; the upside-down financial condition SSI will be in shortly is temporary, caused by the baby boomers retiring... as they die off and Gen X and Y become pillars of industry, earning the big bucks, it will be back in the black. The plan was to just borrow the money to pay SSI benefits until that happened. But the two rounds of bailouts- Bush's and Obama's- have consumed nearly all our credit margin; we came within an inch of having our bond rating devalued. It is just barely possible, if all goes well the next quarter century, if the economy booms, if there's not another Katrina or 911, if there's not another war, we can pay down enough debt to have the margin needed to cover the SSI shortages and avoid national bankruptcy. Every additional dollar we borrow for the next twenty years brings closer the certainty of the US imploding the way the Soviet Union did.


UUpdater said...

Well, speaking of greater efficiencies I just took a look at my last travel expense for my company. My airfare alone was higher than the total dollar amount spent per employee on this trip. My total was about triple what the SSA paid on a per employee basis.

Oh, and if you compare this to what AIG spent ($440K on 70 people, as opposed to $750K on 670) they were spending about 1/6 the amount per employee when AIG pampered their executives. The SSA must have negotiated some darn good rates, and been willing to put up with July temps in Arizona - ouch, so lavish.

Their administrative costs are already reasonable. The funding issues that you point out would hardly be fixed by trying to lower their 0.6% operating costs. And other fixes that have been proposed, like privatization, would increase complexity and raise administrative costs. A restructuring of the SS benefits are probably in order, but that is besides the point to this story which seems to be not much of a story when held under scrutiny.

Joel Monka said...

True, a good deal must have been negotiated- though I know from experience, having produced conventions myself, that when you're talking 675 tickets, good deals can be had. The greater question is not how good a deal they got, but whether it was necessary at all.

Yes, the SSA has reasonable percentage overhead, but no better than many non-profits; there's no way a healthcare system can be financed by greater efficiencies.

kim said...

Other countries manage to make healthcare much more efficient than us. Is it just impossible in the USA? Why? We're just that incompetent? Or just that stuck on the inefficient and wasteful system we have that we couldn't possibly go with a system more efficient and humane and less wasteful?

Joel Monka said...

Kim, I think part of the reason we're stuck with this system is that there are so many non-medical interests vested in it. Lawyers, insurance companies, unions, manufacturers- a lot of people would have to voluntarily give up their special corner of influence and income to change.