W e l c o m e !
Our Mission
Founded in 2002,
the Public Program Testing Organization (PPTO) is an all-volunteer, tax-exempt 
organization
dedicated to evaluating the effectiveness and efficiency of governmental
programs and not-for-profit entities. Our initial focus was directed
towards an evaluation of the United States Social Security system, and
proposals for reform of that system. Several items related to Social
Security can be found on this page and on the Social Security page. Other
issues explored on our Web site include Medicare, income taxes, and financial
regulation. The PPTO's findings are communicated via radio show
presentations, newspaper commentaries, direct communications with governmental
agencies and congressional leaders, and via this Web site.
Joe Fried, CPA, Director
Mayo Clinic, a role-model for health care, drops Medicare patients (January 1, 2010)
Although cited by President Obama as a model provider of good health care, the Mayo Clinic has decided to stop accepting Medicare patients at one of its primary-care clinics in Arizona. The decision, which will take effect immediately, is due to U.S. government reimbursement rates, which Mayo says are inadequate. The two-year pilot program will not affect patients in other states. Read More>>
Is Medicare really a model for health insurance reform? (December 5, 2009)
During the recent health insurance debate more than one politician or pundit has made note of the contentment most senior citizens have with regard to Medicare benefits. That may be true, but before we get too happy about it we should remember that Medicare is bankrupting the country. This is no exaggeration. It is estimated that a single woman who earns $20,000 dollars per year will get a net benefit of a quarter million dollars. That is, she will get medical benefits that cost Medicare $250,000 more than the total of payroll taxes she paid during her entire working career. If that same woman (or man) is married and has a stay-at-home spouse, her (his) net benefit will be one-half million dollars ($500,000). Since there are millions of such people who are in Medicare, or soon will be, common sense tells us that such an imbalance cannot be sustained (no matter how much we try to "tax the rich"). The truth is, Medicare is a mismanaged mess, and should not be expanded or replicated. Evidence of the waste in Medicare is found in the "60 Minutes" story found a little further down on this page.
The chart, below shows net Medicare benefits for various people at different income levels and with different familial status. It is reproduced (with permission) from Democrats and Republicans - Rhetoric and Reality, by Joseph Fried. Fried obtained the benefit estimates from tables created by Economists C. Eugene Steuerle and Adam Carasso. Notice that, no matter what the income level, everyone gets a net benefit (ranging from a low of $142,000 to a high of $525,000). If everyone is a Medicare "winner," so to speak, who is going to pay the tab?
The old "Miami Vice" TV show focused on the Florida cocaine trade:
It should have focused on Medicare.
Medicare is the government insurance program that
provides health care to 46 million elderly and disabled Americans but it also
provides criminals with a steady stream of illicit income. In fact,
Medicare fraud, estimated to be about
$60 billion per year, may now be one of
the most profitable crimes in America.
Recently, "60 Minutes" ran a story that will raise your blood pressure and raise
troubling questions about our government's ability to manage a medical
bureaucracy. It was a timely story, given the fact that, in the current debate
over health insurance reform, many cite Medicare as the model program to
emulate.
FBI Special Agent Brian Waterman told reporter Steve Croft that evidence of
Medicare fraud is found in the thousands of tiny clinics and pharmacies that dot
low-rent strip malls in south Florida. In these clinics and pharmacies you will
find no one - no doctors, nurses, or patients.
Standing outside one of those small, unstaffed businesses, Waterman stated:
"This office number should be manned and answered 24 hours a day. The tiny
medical supply company he referred to billed Medicare almost $2 million in July
and a half million dollars while 60 Minutes was there in August. However, 60
Minutes was unable to find anybody inside, and their telephone calls were never
returned.
To read the whole story, click here:
Medicare Fraud: A $60 Billion Crime - 60 Minutes - CBS News
Trustees report for 2009 shows deterioration in SS and Medicare (5/13/09)
In a recently-released report, the Social Security and Medicare Trustees note that the economic recession is exacerbating the financial difficulties for Social Security and Medicare. Social Security reserves will be exhausted in 2037 - four years earlier than previously forecasted. Medicare cash will be exhausted by 2017, which is two years earlier than previously expected. To bring Medicare into balance over the next 75 years would require an immediate cut in outlays of 53 percent, or a tax increase of 134 percent (increasing the rate from 2.9 to 6.78 percent of payroll). Social Security could be restored to balance over the next 75 years with an immediate benefits cut of 13 percent or by increasing the payroll tax rate from 12.4 to 14.4 percent. Read the Trustees summary report>>. Read story in the New York Times>>.
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Visitor comments
Social Security issues
Plurality of Americans want private option for Social Security (3/12/09)
By 46 to 38 percent, Americans believe workers should be allowed to opt out of Social Security to provide for their own retirement planning, according to a recent Rasmussen Reports national telephone survey.
A majority of voters also agree with President Obama's proposal for workers to pay Social Security taxes on more of the income they earn each year. Sixty percent (60%) say people should pay Social Security taxes on all or most of their annual income. Twenty-nine percent (29%) disagree, and 11% are undecided. Sixty-two percent (62%) of voters also say people who pay more in Social Security taxes should receive more in retirement benefits when they retire. Twenty-two percent (22%) are against that idea, with 16% undecided.
Currently, a worker pays Social Security withholding tax equal to 6.2% of his or her gross wages, up to but not exceeding $102,000 per year. The same 6.2% tax is imposed on employers. As part of his plan for shoring up Social Security, Obama has proposed levying the 6.2% tax on wages of $250,000 and above but not on earnings between $102,000 and $250,000. [Note: Under current law, the benefit payment rate on wages over $54,000 per year is only a small fraction of the benefit rate for lower wages. In other words, there is already a large transfer of wealth from higher-earning workers to lower-earning workers.]
The survey results are from a national telephone survey of 1,000 Likely Voters conducted by Rasmussen Reports on December 21, 2008. The margin of sampling error for the survey is +/- 3 percentage points with a 95% level of confidence.
SS Disability claims soar due to recession (4/19/09)
Job layoffs are leading to increased applications for disability benefits, and the Social Security system is straining under the paperwork. Read on MercuryNews.com.
Democrats resist President Obama on Social Security (2/22/09)
The New York Times reports that Democrats are resisting President Obama's call for a bipartisan panel to study Social Security reform. Some liberal Democrats say they will resist plans to cut benefits, and that Obama's "political capital" would be better spent on health care and other issues.
Who earns what? Who pays the taxes? (11/11/08)
According to recently-released IRS data, the highest earning 1% of of Americans made about 22% of all 2006 income (reported on tax returns) and paid about 40% of all 2006 federal income tax. Americans with earnings in the lower 50% made about 12.5% of all reportable income and paid about 3% of federal income taxes. Keep in mind that welfare distributions (including food stamps and the Earned Income Tax Credit) were not counted in this analysis, and would substantially increase the percentage of income for people with earnings in the "lower 50%." Read in Kiplinger's>>
INTERESTING NOTE: During the recent U.S. Presidential election it was claimed that taxpayers with relatively high earnings "got a break" during the 8 years of the Bush Administration. However, it should be noted that the percentage of 2006 taxes paid by the upper 1% of earners (40%) was greater than the percentage paid by the upper 1% during 2000 - the last year of the Clinton administration. (They paid about 37.5%.) In fact, in 2006 the upper 1% of earners paid more than the entire lower 95% of earners. A great analysis of these tax data, and the trends since 1980, are found on "Carpe Diem," the blog of Dr. Mark J. Perry, Professor of economics and finance at the University of Michigan.
Who is responsible for the crisis on Wall Street? (10/2/08)
We all know that Wall Street "greed" is responsible for the recent credit crisis. But, the federal government is also culpable. Specifically:
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The Federal Reserve Bank Chairman, Alan Greenspan, kept interest rates too low after the 911 attack. This overheated the housing market, and encouraged institutional investors to park their assets in the now infamous "mortgage-backed securities" (MSBs). MSBs offered higher interest rates, and seemed safe, but were not because they were laced with subprime mortgages (risky loans to marginally-qualified home buyers). When housing prices declined and these subprime mortgages went into foreclosure, the market for MSBs collapsed.
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Virtually all Congressional Democrats (and some Republicans) fought against regulatory reform of Fannie Mae and Freddie Mac. These quasi-private entities had a large role in the rapid growth of the subprime mortgage market. Fannie and Freddie encouraged the expansion of lending in poor and middle-class neighborhoods, at the expense of prudent lending practices. Irresponsible private lenders eagerly followed suit, and further expanded subprime lending.
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The Bush Administration's Securities and Exchange Commission (SEC) was lax in regulating Wall Street lending and investment practices. SEC should have warned that many of the MSBs were laced with risky subprime loans, and were not suitable for the investors who bought them. And, SEC should have been more rigorous in enforcing the capital requirements of the investment banks.
An excellent overview of the crisis and its causes has been published on reasononline. See "The Roots of the Crisis," by Michael Flynn, Director of Government Affairs for the Reason Foundation.
Where does Barack Obama stand on Social Security? (7/3/08)
Barack Obama has stated that he opposes a change to benefits, opposes a change in retirement age, and opposes allowing workers to opt for Private Retirement Accounts. His solution to the financial problems of the system is to tax individuals with income above the current cap of $102,000. Apparently, these people will pay additional tax without getting additional benefits, or without getting full additional benefits. (This detail is not clear.) To read Senator Obama's plan click here>>.
Fake janitors skim $2.2 billion from SS trust fund?!
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Investigations by Joe Fried and the PPTO lead to Inspector General finding of $2.2 billion in unauthorized Social Security payments! For full story click here>> (Updated 1/6/09) |
Other Important Issues
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A Conversation on Strengthening Social Security with - President George W. Bush - - Cedar Rapids, Iowa, March 30, 2005 -
PPTO Director Joe Fried participated in an informative "Conversation on Strengthening Social Security," held on March 30, 2005 in Cedar Rapids, Iowa. The program, which was hosted by Des Moines' Newsradio1040 radio host, Jan Mickelson, included many topics related to Social Security, and involved the following participants: President Bush, Senator Charles Grassley, former Congressman J.C. Watts, and American Spectator contributor David Hogberg. Audio clips of each speaker are available at this link>>. |
----- For many more Social Security issues ---> click here>> -----
Interviews
To arrange an interview with Joe Fried, to discuss any subject on this Web site, call 216 524 2143, or e-mail joefried1@gmail.com. Joe is the director of PPTO, and is a CPA and public auditor. He has published two books: How Social Security Picks Your Pocket (Algora Publishing, 2003) and Democrats and Republicans - Rhetoric and Reality (Algora Publishing, 2008)
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(Where visitors to our Web site express their opinions)
The federal government confuses debt and revenue
February 16, 2009
A frequent contributor, Jon Hall, has written a thought-provoking piece for the American Thinker. Jon notes that off-budget surpluses are reported inconsistently, and in a misleading manner::
Jon also questions the usefulness of long-term budget projections:
We share
Jon's concern. The accounting methods used by the federal
government are not sound. For example, the Government uses
"cash-basis" accounting rather than "accrual-basis" accounting,
which is required for Generally Accepted Accounting Principles (GAAP).
Essentially, cash basis accounting means you report income when
received and expense when paid. On the other hand, accrual
basis accounting means you report income when receivable and
expense when owed. To see the dramatic difference
between the two methods, consider the transition period between the
Clinton and Bush administrations. The stock market started to
collapsed in March, 2000 - ten months before President Clinton left
office. By the time President Bush took over (1/20/01), the
government already had an enormous accrued liability for capital
losses that would be claimed 3 months later, on April 15th, 2001.
However, none of the accrued liability was reported by the
government, and it did not reduce the so-called surplus of Clinton's
final year. Had GAAP been used, there may have been no surplus
at all. Indeed, most of the Clinton surpluses of the mid-1990s were
simply the revenue the government collected on NASDAQ stock paper
profits: profits that eventually disappeared, causing
taxpayers to file for refunds during the Bush term. Why Social Security needs a private investment option
January 20, 2009
Paul McWilliams contacted us to express his views on Social Security. He gives a great analogy pertaining to the lack of a real "trust fund."
"Let’s say you hired an investment advisor to plan your retirement and every year you handed him thousands of dollars feeling secure it would be there when you needed it. However, rather than investing your money he uses it to finance his wild lifestyle and stuffs your retirement account with IOU’s he forges your name on that are actually debts from you to you. Would you be mad? Would he go to jail (if you didn’t catch him first)? Well, that is exactly what the U.S. Government does with your Social Security money; in the private sector we call this theft, but for our government it’s business as usual."
The solution, according to Mr. McWilliams, is a gradual move towards safe, private investment options. Read more of his views here.
Social Security is worse than a Ponzi scheme
January 20, 2009
Jon Hall points out that, in some respects, Social Security is worse than a Ponzi scheme:
"Whereas a Ponzi, like Mr. Madoff’s hedge fund, must at least make some investments – if for no other reason than to escape notice from the Securities and Exchange Commission – the Social Security Administration invests none of its surplus. Yes, Social Security does have a so-called trust fund, said to contain more than $2 Trillion. But the treasuries in the “trust fund” differ from “regular” treasuries in that they are not marketable; they’re IOUs. In reality, there is no Social Security trust fund – the government spent the surplus."
Mr. Hall notes that we should not assume that the U.S. will be able to meet these obligations, given the many other needs requiring attention. And, he worries about the impact of the unfunded SS opbligation on the value of the dollar: "[E]ven if Social Security obligations are met, the question isn’t just whether Social Security will be there for you, but whether the good ole U.S. dollar will still be worth anything."
Read the Jon
Hall's entire article on his blog at
http://ultracon-opinion.blogspot.com/2009/01/social-security.html. Bernard Madoff to work for SSA?
January 6, 2009
Dear Mr. Fried, Rather than wasting taxpayer money to incarcerate Bernard Madoff (the man who stole $50 billion) I think we should consider appointing him to be commissioner of the SSA. After all, he is an expert on using the Ponzi scheme to rip off people.
Jack, Detroit
SS Disability fraud irks visitor*
January 6, 2009 To the PPTO:
Dear Sir, I read the article concerning Social Security Disability Fraud online at (http://www. Regards, XXX
*This letter is typical of the kind of letters PPTO has received from concerned taxpayers about SS fraud. This letter has been edited to preserve anonymity and minimize space requirements.
When will SSA respond to your Freedom of Info. request?
December 16, 2008 Dear PPTO: On your "Texas Teacher Scam" page you said that PPTO had requested info. to determine what (if anything) SSA was going to do about the $2 billion Social Security rip-off, but I don't see anything. Is that information still going to be posted?
[Yes, we are still pursuing the request, but SSA seems to be dragging its heels. This is probably due to the fact that SSA has done very little to rectify the problem, and does not want to tell that to the public. Rest assured that we will continue to pursue this and will use all available administrative and legal means. - Joe Fried, Dir., PPTO]
Ticket to work is a failure
October 29, 2008 The "Ticket to Work" program was created by an act of Congress in 1999, and was supposed to encourage disabled workers to seek rehabilitation services that could get them back into productive jobs. However, the results seem to be dismal. A visitor to the Web site put it this way:
This harsh assessment prompted us to seek information on the status of the program. The last published evaluation (in 2007) reviewed the program's progress as of December 2004 - and it was dismal. At that point only 1.4% of eligible disabled beneficiaries were participating.
Now, the SSA is implementing new regulations designed to improve the system. We remain dubious.
A windfall for geezer kids! September 18, 2008
Some people seem to feel that "entitlements," such as Social Security, should be unchangeable, as if cast in stone. Any reduction in benefits would, in their opinion, violate a sacred commitment made to beneficiaries. However, we must constantly review entitlement programs to ensure that they are effective, efficient, fair, and free of loopholes and give-aways. Recently, a visitor to this Web site, Lesley Throup, pointed out such a wasteful loophole.
The minor children of Social Security beneficiaries can qualify for substantial monthly benefits until they reach the age of 18. Consider this example, provided in the October 2008 issue of Kipplinger Personal Finance: Donald McCarren is 68 years old and has a daughter who is 5 years old. He recently learned that, because he is a retiree and Alexa is a minor, she is entitled to SS benefits of $1068 per month until she reaches the age of 18. McCarren received a retroactive payment (on behalf of his daughter) for $40,000, and will receive more than $250,000 by the time Alexa is 18.
Frankly, we believe that men in their '60s should not have children if they have to rely on Social Security to support them. This is a total waste of money, and an outrage. Congress needs to modernize the Social Security benefit formula to eliminate such wasteful benefits.
A Quick Fix for America’s Elections June 17, 2008 By visitor Jon N. Hall
Read More on Jon Hall's Blog>>
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