Social Security---The High Cost of Demagoguery

The Trustees of the Social Security program recently released its annual report on its financial status.

It is not a pretty picture.

The Social Security retirement fund is projected to become insolvent in the first quarter, 2033--- a mere seven years from now.

It can survive until 2034 if they raid the companion Social Security Disability fund to pay retiree benefits.

At that point all of the trust fund assets will be exhausted and benefit payments can only be paid to the extent of current Social Security tax revenues. Current Social Security tax revenues only cover about  75% of current outlays.

This means that every current Social Security beneficiary could be faced with a cut amounting to about 25% of their current benefit.

Social Security could be restored to firm financial solvency (75 year timeline) with the equivalent of a 29 % (3.65 percentage point) payroll tax increase, a 22% reduction in total benefits, or a 27% reduction in benefits for new beneficiaries if Congress acted to solve the problem this year.

If Congress waits to 2034 to solve the problem it just gets more expensive.

Delaying action until 2034 would increase the size of necessary adjustments by 15 percent. In that year, taxes would need to be raised by 34% (4.27 percentage points), benefits cut for all beneficiaries by 26%, or some combination thereof. Changes to benefits for new beneficiaries alone would be insufficient to restore solvency to the program, even if benefits were eliminated entirely.

Source: https://www.crfb.org/papers/analysis-2025-social-security-trustees-report?_sc=OTQzMjQwNSMxNzc3MDg%3D

Liberals would like people to believe that all of Social Security's problems could be solved by simply removing the earnings tax cap  (currently $184,500) and making all earnings subject to the FICA tax.

There are three problems with this.

First, it needs to be remembered that under current Social Security law high earners get proportionately less in benefits than low wage earners.

Uncapping the the cap would entitle high earners to higher benefits under the current formula.

As it is, hIgh earners only replace about 26% of the earnings they paid Social Security taxes on while low earners replace about 74%.

Uncapping the payroll tax without adjusting the benefits would make it far, far worse 

Social Security would look less like the social insurance program it was designed to be and more like a conventional welfare program. Such a change would alter the foundational elements of the program that have existed for almost 80 years.

Second, putting another 12.4% tax on high earners (6.2% on the employee and 6.2% on the employer) above the current cap could have massive negative effects on the economy.

It would be as if a massive flat tax was layered on to the current tax system.

One economic model suggested that such a tax burden could reduce long-term GDP by 1.5 percent.

It would represent the largest tax increase as a share of GDP in the last 40 years.

You begin to understand the impact when you consider what it would look like for a high earner in California.

Someone with over a $1 million of earnings would see a top marginal rate of 58.5%. A self-employed individual would be looking at a top marginal rate of 66.5% as Jared Dillian in an article at Reason.com explains.

Under current law, employees and employers each contribute 6.2 percent in Social Security payroll taxes on the first $184,500 in income. By eliminating the cap, that 6.2 percent tax would become a new top marginal tax rate. For example, a taxpayer in California would pay a 37 percent federal income tax rate, a 13.3 percent state income tax rate, a 1.45 percent Medicare tax, a 0.9 percent additional Medicare tax, and a 6.2 percent Social Security tax, for a top marginal rate of 58.85 percent. For self-employed people, who pay both sides of payroll taxes and Medicare taxes, the top marginal rate would rise to 66.5 percent—among the highest marginal rates in the world.

Third, most projections suggest that doing this by itself is not enough. Other measures such as raising the retirement age or raising the overall tax rate for everyone would still be required. 

The Committee for a Responsible Budget has developed a handy interactive tool that allows users to develop their own plan to restore solvency to Social Security.

For example, here is a plan that would involve all of the major issues that I believe will have to be considered to some degree in any Congressional compromise to insure Social Security's solvency.

1) Increase in the overall tax rate

2) Increase in the maximum tax cap

3) Increase in the future retirement age

4) Reduction in benefits for high earners

5) Reduction in COLA adjustments.

For example, the plan I proposed in the tool gets Social Security to 98% of what it needs for long-term solvency.

It is about as balanced as it can be between tax increases and benefit adjustments.

At the same time, it is unlikely to make anyone happy.

This is where we find ourselves due to not addressing this issue earlier.

What is sad about all of this is that President George W. Bush made an effort to reform Social Security in 2005---21 years ago. It made a lot of sense since the reserves in the trust fund had grown to substantial amounts and were still growing as the Baby Boom generation reached their peak earnings years.

Bush's plan would have allowed younger Americans to establish voluntary personal accounts in which workers could invest part of their payroll taxes.

The Bush plan would have also curbed the benefit formula for higher income workers but left in place the formula for average and lower incomes.

This would have taken a great deal of pressure off of Social Security's future funding issues as well as providing younger workers the opportunity to get a better return on their lifetime of Social Security contributions.

The proposed legislation went nowhere in the face of sustained demagoguery by Democrats and the AARP  that the Bush plan would involve "gambling" on the stock market.

20 years later we can assess how that would have worked out.

Those voluntary accounts would have performed spectacularly for the benefit of the Social Security system and its beneficiaries under almost any investment scenario.

The S&P 500 is up 767% since January 1, 2006.

The NASDAQ has provided a return of over 1,000%.

Franklin Delano Roosevelt signed the Social Security Act into law on August 14, 1935.

Lost in history is this quote from Franklin Delano Roosevelt in his message to Congress on January 17, 1935 asking Congress to enact the Social Security program.  

It is clear that Roosevelt understood that the program he was asking for was unsustainable in the long term and had to be replaced by a "self supporting system" in 30 years or so.  Unfortunately, that was 91 years ago.

In the important field of security for our old people, it seems necessary to adopt three principles: First, non-contributory old-age pensions for those who are now too old to build up their own insurance. It is, of course, clear that for perhaps thirty years to come funds will have to be provided by the States and the Federal Government to meet these pensions. Second, compulsory contributory annuities which in time will establish a self-supporting system for those now young and for future generations. Third, voluntary contributory annuities by which individual initiative can increase the annual amounts received in old age. It is proposed that the Federal Government assume one-half of the cost of the old-age pension plan, which ought ultimately to be supplanted by self-supporting annuity plans.

FDR openly admitted when the legislation was proposed that Social Security would need to be transitioned to a self-supporting annuity plan system in about 30 years in which the contributions of workers and employers would fund their future Social Security annuity payments. 

FDR also envisioned a system by which individuals could add voluntary contributions to increase the annual amounts received in old age recognizing individual initiative.

Apparently, everyone forgot about FDR's roadmap of how Social Security should work in the future in order to be sustainable.

I asked Google AI where we would be today on Social Security if the Bush plan had been adopted 20 years ago when it was proposed.

Source: Google AI

What is incredible is that the AARP put out an an article last year it which it bragged about stopping the Bush plan claiming that it "saved" Social Security in 2005.

Source: https://www.aarp.org/advocacy/times-aarp-fought-for-social-security/

In early 2005, fresh off reelection, President George W. Bush went all in on his proposal to “fix” Social Security by allowing workers to divert the payroll taxes that fund the program into “personal retirement accounts.”

In his State of the Union address that year, Bush said his plan would save Social Security for future generations by encouraging workers to invest that tax money in the stock market.

AARP disagreed. The nation’s largest advocacy group representing older Americans joined other critics who said the proposal would essentially dismantle the bedrock retirement security program and subject older Americans to the whims of Wall Street in their golden years. 

AARP was ready for the fight — armed with polling data, detailed counterarguments and a blizzard of TV and radio ads. Another potent weapon: its members, estimated to number about 36 million at the time, who flooded the phone lines of their members of Congress to express their opposition.

It just proves that there is a high cost to demagoguery.

A grave error was made in not reforming Social Security 20 years ago when there was a surplus to work with and there was time to implement the reforms.

No such luxury exists today.

Social Security will have to be reformed in the next few years and it will be very painful.

Current beneficiaries will likely not see their benefits cut but that is not assured depending on the nation's overall debt situation.

Retirement ages for younger Americans will undoubtedly increase.

The FICA tax will likely increase for everyone. but it will not mean higher benefits in the future, The returns on Social Security contributions will just get worse.

The payroll tax cap for high earners will be increased significantly if not completely eliminated.

Social Security will become more like a redistributive welfare program than the insurance program that it was originally designed to be. 

Undoubtedly, at that time we will also see the leadership at the AARP claim that they "saved" Social Security.

As we watch all of this unfold over the next few years remember that there is a high cost to demagoguery.

Most all of it was avoidable if demagoguery had been put aside and reason prevailed.

It is a lesson to remember for a number of other issues we are facing today as well.

Democrat Socialist Dope---July 17, 2026 Edition

As the 2026 mid-term elections are approaching and the Democrat Socialists are attempting to take over the Democrat party, I thought I should initiate a semi-regular blog post featuring the latest "dope" on what these Far Leftists are saying and doing.

It seemed to me that titling this feature "Democrat Socialist Dope" makes sense due to two definitions of the word "dope"  that seem to be particularly appropriate.

First, I want to provide you information about what is going on with the Democrat Socialists that you might find useful and that you might not have otherwise heard.

Definition 3 below.

Second, by sharing this information it should leave no doubt as to how stupid, idiotic and annoying the people are who are pushing this Far Left nonsense.

Definition 2 below.

Of course, it is very possible that a good number of people pushing the Democrat Socialist agenda have been imbibing too much in the stuff in Defintion 1 above.

Let's check out the latest dope with the Democrat Socialists.

Mayor Zohran Mamdani of New York City and other top elected officials in the city are poised to vote on an 18% pay raise for themselves next week.

Source: https://nypost.com/2026/07/14/opinion/an-18-city-council-pay-hike-is-a-middle-finger-to-nyc-voters/

The pay hike would boost the Mayor's pay to $305,800 from $258,750.

City council members would go from $148,500 to $175,500.

For context, here is what some other top elected and othes government officials are paid around the country.

President Donald Trump                                 $400.000 (donating all to charity)

Vice President J.D. Vance                                   $235,100

U.S. Senators and House Representatives          $174,000

Governor Greg Abbott of Texas                              $153,750 

Governor Ron DeSantis of Florida                            $141,400

The Mayor of New York City is already making more than the Vice President of the United States and this will increase the pay by another 18%?

The Mayor of New York City will make more than the pay of the Governors of Florida and Texas, COMBINED!

City Council members in New York City will make more than U.S. Senators and Representatives?

Mamdani has stated he will not take the pay increase if it is passed but isn't it curious that one of the first tangible "accomplishments" of the Democrat Socialists in New York City is to take a bigger piece of the pie.

 Let it not be forgotten that Mandami ran on a platform of providing free bus fares among other things he said were going to make things more affordable in New York City.

Nothing has happened on that score principally because 1) it would cost as much as $1 billion to do it, and 2) the Metropolitan Transit Authority is a state agency not under mayoral control.

Meanwhile, rents for one bedroom apartments in New York City just hit a new record high.

How does Mamdani propose to fix this?

He wants to ban landlords from getting proof of income or allowing credit checks of potential tenants and he also wants to make it harder to evict someone when they don't pay.

I am sure that will work out great.

All the while, more and more high income earners in New York are taking their money and leaving.

Source: https://nypost.com/2026/07/13/us-news/ny-sees-dramatic-exodus-of-us-millionaires-causing-nearly-11b-loss-study/

If the trend continues that was already taking place before Mamdani took office they might find a way to solve the housing storage without building another unit.

Another reminder that you should take any promise from a politician with a grain of salt.

If it is a Democrat Socialist politician, it is more like a ton of salt.

Speaking of Mamdani, he was recently asked to explain why the number of rapes has been increasing in New York City.

Here are the statistics of reported rapes as compiled by the New York City Police Department since 2021.

Rapes + 51% since 2021

Rapes + 30% since 2024

Source: https://www.nyc.gov/site/nypd/news/PR011/nypd-fewest-shooting-incidents-shooting-victims-murders-recorded-history-for

Mamdani claims that most of the increase is due to "an expanded definition of rape" and rapes from prior years that are being reported in the current year.

There may be SOME truth to the latter explanation in looking at the data but I would like to know what has changed in the definition of rape over the last five years?

Mamdani also conveniently does not mention the thousands and thousands of men from third world and Islamic countries who have come to New York City (many illegally) who often treat women as little more than property.

Of course, Mamdani and other Democrat Socialists believe no one here illegally should be deported and the country should have open borders.

Finally, various Democrat Socialist leaders over the last month have been busy further articulating their vision for the future of the country.

The DSA has released an updated platform that goes beyond what I wrote about in these pages in June.

Source: https://www.washingtontimes.com/news/2026/jul/15/updated-dsa-platform-calls-abolishing-ice-scrapping-senate/

In summary, they want to effectively dismantle the framework of the U.S. Constitution.

Forget about the separation of powers between co-equal branches of government.

Their plan is to rip and tear it all up.

Abolish the Senate.

Abolish ICE.

Allow anyone who is in the country to vote even if they are not a citizen.

Expand the House and have the President and Supreme Court selected by and subordinate to that sole legislative body.

The DSA is also telling people that under their plans they can work if they want to but it will not really be necessary as all their bills would be paid for.

Source: https://program.dsausa.org/

How?

It will all be paid for by wealth taxes and public ownership of the largest corporations and essential industries.

They call it economic democracy.

History has called this communism.

Source: https://program.dsausa.org/

They conveniently don't explain who the rich and wealthy are going to be if the government has taken control and ownership of all the businesses that were responsible for that wealth.

You can read the entire revised DSA phttps://program.dsausa.org/latform here.

Do you now understand why I used the word DOPE in this new feature?

Is there a better description of those trying to sell this agenda?

We can only hope that we have enough people left in this country who are not dopey enough to believe what they are selling.

The Best and Brightest?

We are told that the best and brightest among us can be found on the campuses of elite colleges and universities like those in the Ivy League, Stanford and Amherst.

Is that true anymore?

Consider the percentage of students claiming disabilities and the startling increase in the numbers at some of these elite colleges and universities over the last decade.

Stanford.       38%

Amherst.       34%

Brown.          22%

Cornell.         22%

Chicago.        21%

Yale.              20%

Credit: https://americaninequality.substack.com/p/accommodating-the-elite-ignoring

At UC Berkeley the number of students who report having a disability has quintupled in the last 15 years.

Claims for disability accommodations are not limited to the most elite colleges and universities.

Pace University in New York reports that 37% of its students have a disability, up from 5% in 2015.

Hampshire College in Massachusetts has 38%, up from 10% a decade ago.

Scripps College in California has seen it numbers go from 11% to 36%.

For context, the number of students at community colleges that typically report having a disability has remained flat over the last decade at 3%-4%.

What is the explanation for the surge in disability claims? 

Mental health experts claim that the increase is due to better diagnosis and less stigma for conditions such as ADHD, autism, anxiety disorders and depression.

This may be true but a big reason seems to be the fact that in 2008 the Americans with Disabilities Act (ADA) was broadened to include conditions that limited life activities such as thinking, concentrating, reading and communicating to be covered disabilities.

This led the Association on Higher Education and Disability (AHEAD), an organization of disability-services staff, to release guidance urging universities to give greater weight to students’ own accounts of how their disability affected them, rather than relying solely on a medical diagnosis.

This was all it took for college administrators, who generally have a liberal mindset, to grant almost any disability requests that are made by students.

The remedy for someone with a disability is some type of accommodation.

At these colleges if it is ADHD, autism of anxiety it typically might mean more time to take a test or turn in an assignment or being allowed to take the exam home or in a quiet room without distractions.

This then results in a cascade effect.

In a competitive environment, if others are doing it and you are not, you end up being the loser.

You end being stupid if you don't game the system.

This young woman at Stanford tells her story of how the system works at Stanford.

Source: https://www.thetimes.com/us/news-today/article/40-percent-stanford-undergraduates-claim-disabled-sw99r3k8c

Are these the values we want from our best and brightest?

We used to live in a world where having a disability was so stigmatized that many with a disability did everything in their power to try to overcome it so as to blend in.

Those with a disability worked harder as they wanted to prove they could do almost anything any other person could.

We have now reached a point where the opposite is true. 

Those with the most ability are claiming disability to further their natural advantages.

Of course, all of these disability accommodations then further diminishes those that have real significant physical or mental disabilities.

All of this also reinforces a statement I have made often in these pages.

Incentives drive behavior.

There is one absolute when considering human behavior.

Human beings respond to incentives. We quickly understand what is in our interest and what is not, and we respond accordingly. We will act in accordance with what is in our best interest. Period.

If the incentives for people are properly aligned, you will get the behavior and result you want.  If the incentives are not properly aligned, you will get poor results.  Whenever you get a poor result it is likely that you will find that the underlying incentives were not aligned properly.

None of this would be possible but for the college administrators that are allowing it to occur.

This leads to another story that caught my eye recently about the best and brightest at Brown University.

Economics Professor Roberto Serrano has taught a undergraduate course on "Welfare Economics and Social Choice" for much of the 34 years he has been at Brown University.

This is the background for the story in Serrano's words.

In part due to the tragic shooting that took place at Brown on December 13 during a review session for a final exam, I decided to move my course’s two exams—the midterm and the final—from an in-class exam to a take-home, closed-book format. I thought that would help students deal with exam anxiety. The exams would be made available to students through an online portal, and they would have 11 hours (for a two-hour test) to complete and submit each. Unsurprisingly, the course enrollment jumped to 86, far above 30, the highest maximum in previous semesters.

On the midterm exam, the average grade was 96 with 40 students obtaining perfect test scores.

This compared to class averages of between 65 and 80 on midterm exam scores in previous years.

Serrano suspected cheating.

He noted that there were a lot of answers on the exam that included passages that closely matched what he found when he provided the questions to ChatGPT.

Serrano told the class of his suspicions but stated that he would not void the midterm exam scores.

However, he stated that the final exam would be in person.

If the grade distribution of the final was similar to the midterm he would average both scores.

However, if there was a large difference he would void the midterm grade completely for the entire class and the final exam alone would constitute the course grade.

What happened next with the best and brightest?

18 students immediately dropped the course learning the final exam would not be taken at home..

Another 9 students did not even show up for the final.

3 students took the exam but merely signed their name and turned it in blank.

The average fell from 96 to 48---the lowest in the course's history.

More than half did not score above 50%.

Source: https://www.insidehighered.com/news/faculty/learning-assessment/2026/07/08/brown-professor-suspects-most-his-class-used-ai-cheat

 

In reviewing the graph above, I can see only two students who appear to be scrupulously honest.

Student 1---scored 95.5 on the midterm and 95 on the final.

Student 22---scored 55 on the midterm and 59.5 on the final--the only student to score higher on the final than on the midterm. That is one honest and hardworking kid that deserves some type of award.

However, they probably ended up with a D because Professor Serrano set the failing grade at 50.

What's the worst part of this?

Serrano reported the obvious cheating to the Brown administration and characterized its response as "meek".

In May, Serrano submitted the data shown above to Brown’s Standing Committee on the Academic Code and received no response. After he went public with his story in late June, the committee, through his department chair, asked Serrano to submit individual complaints against each student suspected of cheating, including copies of their exams, he said.

“What they are asking is ridiculous … I believe they plan to run them through some AI-detection tool, which is well-known to give many false positives and false negatives,” he said. “Their response, I must tell you, is seen as appalling and insufficient by hundreds of people who have emailed me in support, many of them Brown alumni.”

As colleges and universities grapple with AI, cheating must be taken seriously, Serrano said. “We cannot afford to have a society in which a significant fraction of our best young minds think that cheating is OK,” he said. “That leads to a declining society, to a failed society … We cannot choose to become idiots.”

Keep in mind that the "best and brightest" are supposed to be our next generation of lawyers, doctors and government leaders.

Is a client supposed to agree to a lawyer billing double the hours because he needs more time to complete the task due to ADHD?

A pre-Med student claims they need to take their exams in a quiet room because they are too easily distracted in a crowded classroom. How does that work out if they end up being a doctor in a chaotic emergency room?

Will we ever have a political leader again who can speak on their feet without AI writing their speech?

Are we grooming our young  people in our colleges and universities today to be the best and brightest?

Or just a bunch of idiots devoid of values?

California Nighmare

The Mama's and Papa's song California Dreamin' was the #1 song on the Billboard end of year survey for 1966.

The song was written by John and Michelle Phillips when they were living in New York City during a cold winter and missing sunny California.

The lyrics of the song begin this way.

All the leaves are brown (all the leaves are brown)

And the sky is gray (and the sky is gray)

I've been for a walk (I've been for a walk)

On a winter's day (on a winter's day)

I'd be safe and warm (I'd be safe and warm)

If I was in LA (if I was in LA)

The weather is still generally warm in California.

It is debatable on how safe it is in parts of LA.

However, the dreamin' is definitely dying under the weight of compounding financial and other challenges in the state that have been almost entirely self inflicted due to liberal policies.

California is looking more like a nightmare than a dream in 2026.

Governor Gavin Newsom recently approved a $352 billion budget for the fiscal year beginning July 1.

That level of spending is an increase of 10% from last year and is 72% higher than when Newsom took office eight years ago while the population is essentially unchanged over the last decade.

That compares to an overall national inflation rate of 29% over the same period.

California is facing a future structural budget deficit of $35 billion per year according to the state legislature's financial advisor..

However, this assumes that state revenues will continue at the same pace as they have in recent years which have been fueled by outsized personal income tax receipts due to AI stock market gains.

The state's top 1% earners pay about 50% of state income taxes but a proposed wealth tax has caused a number of high earners to flee the state.

At the same time, California owes the federal government over $20 billion it borrowed for unemployment claims during Covid that has not been repaid.

It is the only state that borrowed money from the feds that has not repaid the loan.

Source: https://www.abc10.com/article/news/politics/california-employers-face-higher-taxes-as-ui-debt-tops-20-billion/103-4d90ab3a-5ec9-4e6f-a336-e5ebc9cc43c8

California also faces mounting unfunded pension obligations,

20 years ago these obligations were fully funded.

It is now estimated that these pension obligations are underfunded by over $250 billion,

Source: https://equable.org/resource/california-pensions-calpers-calstrs-2025/

A financial nightmare is a certainty in California if the economy or stock market has a slight wobble.

In Los Angeles, county officials are warning that the Los Angeles Unified School District (LAUSD) is facing insolvency by next year due to a projected $230 million deficit.

Source: https://abc7.com/post/los-angeles-unified-school-district-faces-potential-insolvency-county-officials-warn-could-run-money-year/19478950/

The Los Angeles Unified School District could run out of money within about a year and is showing severe signs of financial distress, according to county education authorities.

The nation's second-largest school district, which serves more than half a million students, faces possible insolvency, prompting the Los Angeles County Office of Education to take action.

"I think it's something everyone was hoping would be avoided, but I don't think it's really a surprise to anyone," educational consultant Jamie Bacall said.

County officials said LAUSD is projected to be more than $230 million in the hole by November of next year. In response, the county superintendent has appointed a fiscal expert and given the school board 45 days to fix its budget.

What has caused the problem?

Student enrollment is only about half of what it was in the early 2000's.

At the same time, total staff has increased by 10%  over the same period.

Source: Google AI

Compounding the problems, the school board just approved new union contracts covering multiple employee unions.

Those contracts are projected to raise costs by $1.13 billion in the upcoming school year and by $1.44 billion in 2027-28.

Employee unions downplay the warnings stating that they expect the state to provide more funding.

I guess they have not been paying much attention to what the numbers look like in Sacramento.

They are also not paying much attention to demographic trends which suggest there is going to be a need to cut school spending a lot over the next decade due to further enrollment declines.

California will lead the nation in enrollment losses according to this data.

The financial problems in California even extend to the beautiful and tony coastal enclave of Santa Monica that abuts Los Angeles.

20 years ago it would have been unthinkable that Santa Monica would have financial problems.

This was the headline in a recent Wall Street Journal story on the city.

At first glance, this picturesque coastal enclave bordering Los Angeles appears to have it all: palm trees along a famed shopping promenade, wide beaches and a wealthy tax base.

Instead, Santa Monica is in recovery mode. It is trying to bounce back from a string of problems—mounting liability settlements, falling international tourism and years of fading retail businesses—that led the city of roughly 90,700 to declare “fiscal distress” in September. 

There are just not many people dreamin' to be in California anymore.

Liberal policies are destroying a state with tremendous natural advantages and turning it into a nightmare.

Illegal immigration openly encouraged and protected.

Doing little to curb open drug use.

Homeless encampments that are tolerated.

Failure to police and curb crime.

Overregulation.

In addition, consider the tax environment in the state,

The top marginal tax rate in the state is now 14.4%--the highest in the country.

However, even a single filer making $71,000 must pay a tax rate of 9.3%.

Source: Grok

The average state and local sales tax rate is 8.99% but the rate in the city of Los Angeles will be 10.25% effective October 1, 2026.

The state gas tax is the highest in the nation---63.4 cents per gallon.

Despite it all, California is still heading towards financial disaster.

A day of reckoning is on the horizon.  The cliff draws closer.  

The big question is what happens when they go over the cliff?  

Bankruptcy is not an option as states are prohibited by federal law of going that route. 

You can be sure that there will be calls for a federal California bailout if it gets bad enough,  

This may be the biggest unspoken issue that will be before us in the next decade.

Who is sitting in The White House and in Congress will make an enormous difference when the time comes.  

20% of all House Democrats alone are currently from California.

That number will probably be even higher after the 2026 mid-term election.

If the Democrats are in power they will be highly motivated to write any checks necessary to keep California afloat.

You may believe California is not your problem.

The reality is that California's nightmare might become all of ours at some point.

 

A More Perfect Union

We just finished celebrating the 250th anniversary of the signing of the Declaration of Independence.

This led to the Revolutionary War, victory over the United Kingdom and the eventual adoption of the United States Constitution in 1787.

A lot of people today like to denigrate the United States and the men who wrote that foundational document for the country.

It seems to me that most of them take for granted the freedoms that are guaranteed therein.

"Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances."

In many other countries in the world we would never hear complaints like these because there is no freedom of speech.

Consider this data on the number of reported arrests in various countries in 2023 for online/social media posts that violated government laws.

Leading the list is the country from which we just celebrated gaining independence from.

The UK arrested more people for social media posts than China, Russia, and Turkey combined under the provisions of its Communications Act and Malicious Communications Act.

Source: https://x.com/XFreeze/status/2066778611227709885

This data should not suggest that speech in the UK is more restricted than in China or Russia.

Keep in mind that citizens in those countries understand that speaking out or saying something offensive is guaranteed to get them arrested so they self censor to begin with.

What is ironic to me is the number of people who speak out and protest about the supposed flaws in the country that don't appreciate what they have because they live in the United States.

There is no bette example of that than New York City Mayor Zohran Mamdani who took the occasion of July 4th to sit behind the former desk of George Washington and complain about how bad this country is.

Source: https://amgreatness.com/2026/07/07/mamdanis-embittered-fourth-of-july-rant-to-america/

All of this coming from a Muslim born in Uganda to parents of Indian ancestry who has only been a U.S. citizen for eight years.

Mamdani suggests that people with the color of his skin and religion are not welcome in the United States.

If that is the case how did this occur?

Credit: https://x.com/RealJamesWoods/status/2070242976668991732

Perhaps it has something to do with that United States Constitution that he and others believe is flawed.

Mamdani and others also believe we should have open borders and let everyone in that wants to come here.

However, it is difficult to understand that if the United States is as flawed as they say it is, why would anyone want to come here?

Why did Mamdani and his family come here in the first place if it was so awful?

Why did they not immigrate to their ancestral home in India?

We all know that the reality is that billions want to come to the United States. and over 1 million are given permanent residence legally each year.

The United States also naturalizes more immigrants each year to become citizens than Japan, South Korea, India and China have IN ALL OF THEIR HISTORIES AS NATIONS...COMBINED!

Source: Grok

Underlying all of this we also hear that the United States is ruled by White Supremacy.

It has increasingly been cited as the root of every problem.

However, it seems to be more a function of a media narrative than based in reality.

That term just happened to become a thing in the last ten years.

White Supremacy?

Consider this recent Census Bureau population data on Georgia.

Whites in Georgia are no longer a majority of the population in that state.

People of color are now the majority of Georgia's population.

This is Georgia that used to be considered the heart of the Confederacy.

Non-Hispanic Whites now make up only 48% of the population of the state of Georgia.

Mamdani goes even further than that and called the United States an "arena of supremacy".

The powerful have always known their answer. America, in their view, is an arena of supremacy, where only a select few are allowed freedom, where not all are created equal. America, if you ask them, becomes less the more people it welcomes. America, they will tell you, belongs only to those with the right accent or the right shade of skin. The rest of us, they insist, should be grateful for merely being allowed to visit. 

The irony is that Mamdani's life story belies everything he says to be true.

Where else but in the United States of America could an immigrant of color from another country, who just gained citizenship eight years ago, and is a member of small religious group in his new country (barely 1% of the total population), become the Mayor of the largest city in the nation?

Has the United States always been perfect?

No.

However, it has done more things right for its people and others in the world than any other country in the history of the world.

Can it be better?

Absolutely.

The Founders stated in the preamble to the Constitution that their goal was to form "a more perfect union".

We the People of the United States, in Order to form a more perfect Union... do ordain and establish this Constitution for the United States of America." 

They did not declare it was perfect at the outset and undoubtedly knew it would never be perfect but that they had set a foundation for something that would evolve and continue to improve over time. 

However, Mamdani and others refuse to honor and celebrate the union that has been achieved and seek to tear it down and replace it with a collectivist society that will do nothing but increase their power and privilege at the expense of the masses they claim they want to help.

I am all for a more perfect union.

I just don't see the logic in trashing the  union we have already created.

Any objective analysis shows that it has provided the masses with more freedom and prosperity than any other nation in history.

It should be celebrated on every day and in every way even if we want a more perfect union.

Recency vs. History

When you hear many people talk about their disapproval of President Trump today they will often cite either gasoline prices or food prices.

I thought I would go back in time and look at prices for these commodities today compared to what they were four years ago.

We often hear people claim that prices have never been higher.

These people have fallen victim to recency bias.

Source: Google AI

We tend to overvalue recent events or data compared to older, more comprehensive historical data.

For example. let's look at oil prices that have gotten a lot of attention since the Iran War began.

Crude oil (West Texas Intermediate) has recently been trading at around $69/barrel after briefly breaking $100.

Four years ago crude oil was over $100/barrel for an extended period of time in 2022.

Notice that the price of oil is also lower right now that it was at almost anytime in the three years from 2022 to 2024.

It also goes without saying that we would not be in this position were it not for the shale oil revolution that President Trump and the Republicans supported but which was opposed by almost every Democrat politician over the last decade.

We would be in very bad shape if we had not followed Trump's advice to "Drill, Baby, Drill".

(You can read about what The Shale Revolution has meant to the United States in a blog post I wrote in May.)

That would be true even if there were no problems in the Strait of Hormuz today.

Do you also remember this statement by Joe Biden in 2019 when he was running for the Democrat nomination for President?

Source: https://www.dailymail.com/news/article-7837265/We-jail-Biden-wants-prosecute-fossil-fuel-executives-environment-damage.html

Of course, there is typically a lag effect between commodity prices and when they reach the consumer.

Refining, transportation and distribution costs get added to the commodity cost of oil as the product moves to the retail market.

The regular price of gasoline has come down from the highs of a couple months ago but would appear to have more room to fall based on current commodity prices that will eventually work their way into the refining system.

However, the national retail price of gasoline is still 29% below what it was at its height in 2022.

Source: https://www.gasbuddy.com/charts

Food prices are a mixed bag.

Commodity prices for dairy products are down from where they were four years ago.

Milk -19.5% compared to four years ago.

Source: https://tradingeconomics.com/commodity/milk

Cheese -25.6%

Source: https://tradingeconomics.com/commodity/cheese

The same is even truer for poultry and eggs, especially compared to the price spike that occurred in late 2024 and early 2025 due to the bird flu panic when millions and millions of chickens were euthanized.

Commodity prices for eggs are down 90% from a year ago.

Source: https://tradingeconomics.com/commodity/eggs-us

However, commodity prices for beef are way up as anyone who likes ground beef and steaks can attest.

Live cattle prices are up over 80% compared to four years ago.

Source: https://tradingeconomics.com/commodity/live-cattle

This has driven the national city average price for ground beef per pound from $4.89 four years ago to $6.75 in May, 2026 per BLS. data. 

Keep in mind that is a 38% increase compared to a 80% increase in the underlying commodity price.

That tells me to expect even higher beef prices in the near future.

On the other hand, the lower commodity prices we are seeing now in other food items should result in lower grocery prices in the near future than we are seeing right now.

For example, despite the huge drop in commodity egg prices the retail price of eggs in grocery stores have not fallen at the same rate.

The national city average in May was $2.19 per dozen.

That is 25% lower than July, 2022 and 39% cheaper than a year ago.

Nevertheless, eggs at the grocery are not down 80-90% over these periods as are the underlying commodity prices.

Part of the reason is that labor and other overhead costs in the grocery system have risen substantially as a result of the high inflation during the 2022-2023 period.

Labor costs, in particular, are not going to reverse. Those additional costs are now baked into the system. Pay and benefits increases that were given the last few years are not going to be taken away.

You can also bet that grocers are not as willing to lower prices as quickly as they were to raise them as their costs first went up.

As shoppers got more accustomed to paying $3.00-$4.00/ dozen for eggs it is easier to price those eggs in the $2.00-$2.50 range rather than return to the $1.50 range they were before the spike in prices.

It is also important to remember in all of this that the cost of food as a percent of personal disposable income is about as low as it has ever been.

Food (both at home and away from home) takes a smaller percent of disposable income than it did in 2022-2024.

The only time it was lower in history was in the period right before and during Covid.

Source: https://www-tx.ers.usda.gov/data-products/chart-gallery/76967

The share of disposable personal income spent for gasoline is also near historic lows.

Source: https://institute.bankofamerica.com/content/dam/economic-insights/consumer-gas-affordability.pdf

I understand that people remember when gas was $2.00 gallon, you could buy a dozen eggs for $1.50 and might find a clearance price on bread at Kroger for 99 cents.

However, the reality is that all of those prices were during Trump's first term.

We are not likely returning to those prices unless we find ourselves in a worldwide recession and no one should be rooting for that.

Covid, the money printing that ensued and the inflation that inevitably followed brought us to where we are today.

However, the fact is that most everyone in history, and anyone living anywhere else in the world today, would gladly take the food and gas prices (and incomes) that many Americans are complaining about.

It is easy (especially for those who dislike him to begin with) to disapprove of President Trump for current gas and food prices.

It is much more difficult to put all of this in historical perspective and context.

However, if you allow recency bias to control you, it is distorting your decision making ability and views about the reality around you..

It is just one more example of why I often say "context is everything when assessing anything".

American Pride In Decline

Tomorrow we celebrate 250 years of American Independence.

However, each year there seems to be fewer and fewer people who want to celebrate the United States of America.

There have never been fewer people who say they are "proud to be an American."

Gallup just released its annual survey on American Pride.

Only 33% of adults state that they are "extremely proud" to be an American.

In 2003, that number was 70%.

Source: https://news.gallup.com/poll/711938/american-pride-falls-year-record-low.aspx

Among self-identified Democrats, only 14% state they are extremely proud to be an American.

That has declined from 62% in 2003.

The comparable number for Republicans is 70% today.

Source: https://news.gallup.com/poll/711938/american-pride-falls-year-record-low.aspx

There is clearly some element of partisan bias in the numbers.

There was a dip in American pride among Republicans when Biden was President before it rebounded in 2025 with Trump in office.

American pride with Democrats came up a bit with Obama and Biden in office but the downward slide in their patriotism over the last 25 years is difficult to ignore.

Why do we see the scorn we do about the United States of America from Democrats specifically?

A big reason for this seems to be that younger people in particular have negative views about America due to our liberal education system that spends more time maligning the United States and its Founders than extolling its virtues.

An astounding 45% of those between the ages of 18-34 state they have only a little pride in being an American (24%) or none at all (21%).

For those ages 55 and older the comparable percent is just 13%.

48% of those age 55 and over are extremely proud to be an American.

Only 14% of those 18-34 feel the same.

Source: https://news.gallup.com/poll/711938/american-pride-falls-year-record-low.aspx

The education establishment loves to push the narrative to their students that everything about the United States is illegitimate in that it was founded by a bunch of rich, white men who created a system based on slavery and were primarily concerned with protecting their own self interests.

All of American history is portrayed as a system of oppression of minorities-native Americans, Blacks etc.

Of course, this narrative fails to mention that our Founders were generally the elite class in the American colonies. The British system had worked out well for their self interests. They were "the 1%" in that day and age. They had it "made in the shade" as the younger generation might say.

They had little to gain personally from rebelling against the British.

By declaring independence from the British, they put all that they had at risk--their lives, their livelihoods, and their riches---for independence and freedom FOR ALL.

Why did they do it?

They valued freedom and independence for themselves and their fellow Americans more than their own self-interests.

How many Americans would do anything like that today?

However, many of these men of influence and privilege in the British system, who had little to gain personally in seeking independence, paid a heavy price for what the masses gained.

What happened to the 56 Founders who signed the Declaration of Independence?

About half of them died from wartime hardships, were financially ruined or were captured and brutally tortured

Source: Google AI

You can read the details of what happened to the 56 signers here.

I can assure you that this history is not being taught in our education system today.

No one should also forget that the signing of that Declaration of Independence and the ensuing Revolutionary War also set in motion a global movement that led to the rise of democracies and individual rights being recognized around the world.

Monarchies, empires and autocracies fell and were replaced by governments that gave people more political and economic autonomy and freedom.

All of this is also playing out in vastly different ways in which America's 250th birthday will be celebrated tomorrow.

In San Diego County, California this is the schedule of events for the official July 4th celebration.

This seems to have more similarity to a DEI event or the convention of the Democrat Socialists of America rather than a July 4th celebration.

The days of the 4th of July parade, all members of the community gathering to celebrate and a concluding fireworks display are disappearing at the same rate that those with American Pride are.

How long will it be before July 4th is not even recognized in blue states?

It might be sooner than you think.