Public Program Testing Organization

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  

Bloomberg: It's Time to Fix Fannie and Freddie

"More than 90 percent of new mortgages are owned or guaranteed by Fannie, Freddie or the FHA. Private capital is almost nonexistant. As long as Fannie and Freddie have an outsized presence, plus an endless stream of taxpayer subsidies, the private sector will stay on the sidelines." Read more.

New Program: Senior Medicare Patrol (May 16, 2012)

A new program called Senior Medicare Patrol uses senior-citizen volunteers to help other seniors learn about Medicare fraud and how to detect it. Read more.

107 Charged in Medicare Fraud Busts in 7 Cities (May 2012)

Per the Associated Press, 107 doctors, nurses and social workers have been charged with defrauding Medicare of $452 million. "Patient charts were doctored to show services that were billed to Medicare but often never given, according to an indictment." Medicare fraud is estimated to cost $60 to $90 billion each year. Read more.

News is more bleak for Social Security and Disability funds (April 2012)

The Social Security Board of Trustees has stated that the combined assets of the Social Security and Disability Insurance Trust Funds will be exhausted in 2033, three years sooner than projected last year. The DI Trust Fund will be exhausted in 2016, two years earlier than last year’s estimate. Read more.

Romney has said little regarding Social Security and Medicare plans (February 2012)

So far, we don't know much about Governor Mitt Romney's plans with respect to Social Security and Medicare. However, in February 2012 the presidential candidate proposed that we raise the Social Security retirement age for younger workers, and that we index the benefits of higher earners to cost of living  inflation, rather than wage inflation. He also advocated the creation of a voucher system that could provide future senior citizens with the funds needed to buy private insurance, in lieu of normal Medicare benefits. These are sensible proposals, but lacking in detail. Read more in the Detroit Free Press.

Bi-partisan Medicare reform proposal wins praise (December 2011)

The Wyden-Ryan plan is, simply put, a much better version of Ryan's previous proposal. Starting in 2022, it would give seniors subsidies that they could use to buy insurance through new regional marketplaces called exchanges, similar to the ones created by the 2010 healthcare reform law. But rather than eliminating Medicare for anyone not yet 55 years old, as Ryan proposed, Wyden-Ryan would continue to make the current Medicare program available as an option through the new exchanges. Read more.

Choosing a Medicare prescription drug plan can be confusing. (November 2011)

The more you know, the easier it will be to find one that makes the most sense for you. This article in the Milwaukee-Wisconsin Journal Sentinel has some valuable tips.

The long-term health care problem (October 24, 2011)

AP: The Obama Administration has pulled the plug on its Community Living Assistance Services and Supports program (CLASS), leaving the long-term health needs of Americans in doubt. Read more.

Kansas City Star: Hey, Occupiers! What about protesting Fannie and Freddie? (October 2011)
E. Thomas McClanahan notes that the Chief Investment Officer of JP Morgan Private Bank recently revised his 2009 account of what caused the financial crisis. He wrote: “US Agencies played a larger role in the housing crisis than we first reported. In January 2009, I wrote that the housing crisis was mostly a consequence of the private sector … However, over the last 2 years, analysts have dissected the housing crisis in greater detail. What emerges … is something quite different: government agencies now look to have guaranteed, originated or underwritten 60% of all ‘non-traditional’ mortgages, which total $4.6 trillion in June 2008. What’s more, this research asserts that housing policies instituted in the early 1990s were explicitly designed to require US Agencies to make much riskier loans, with the ultimate goal of pushing private sector banks to adopt the same standards.” Read more.

Christian Science Monitor: Not true that no one went to jail for lending illegalities (October 11, 2011)

Actually, there were a couple. But, in most cases illegality was not shown. "While the distinction between hubris/stupidity and illegality may not satisfy many, it’s a key component to the financial crisis." Read More

Associated Press: Obama's Deficit Plan Tightens Squeeze on Medicare (September 2011)

AP reports that the President's plan would do some heavy cost cutting or shifting.  "Drug companies, hospitals, nursing homes and state health care programs assessed the damage Tuesday from the president's latest deficit-reduction proposal to Congress. While Medicare and Medicaid would be spared radical reengineering, the plan spreads plenty of pain. Future retirees would be on the hook for a greater share of their Medicare costs." It is estimated that payments to the pharmaceutical industry would be cut by $135 billion over 10 years, leading some to wonder if drug research would be affected. Read more.

Heritage Organization: Obama’s Medicare Plan is an Open Secret (July 2011)

Robert Moffitt claims that President Obama's health care proposals will "end Medicare as we know it" by slashing payments to providers. This will result in fewer health care providers. Says Moffit: "If the president’s Medicare payment cuts continue, the number of Medicare providers who find themselves in the red will jump to 25 percent by 2030, when the Medicare rolls reach an esti�mated 80 million beneficiaries." Read more.

Trustees: "The financial conditions of the Social Security and Medicare programs remain challenging." (May 2011)

In their annual report the Trustees report: "Social Security expenditures exceeded the program’s non-interest income in 2010 for the first time since 1983." Regarding Medicare they report: "The projected 75-year actuarial deficit in the HI Trust Fund is 0.79 percent of taxable payroll, up from 0.66 percent projected in last year’s report." Their overal conclusion: "Projected long-run program costs for both Medicare and Social Security are not sustainable..." Read more.

Washington Post: Republican Rep. Ryan's Social Security plan would cut benefits for high earners (October 2010)Lori Montgomery writes: Republican Rep. Paul Ryan's plan "would reduce benefits by gradually raising the retirement age and gradually trimming benefits for the top 70 percent of earners." Read more.

Finally: Feds approve Louisiana sand berms to fight oil slick (June 2, 2010)

After weeks of apparent procrastination, "U.S. Coast Guard Admiral Thad Allen told BP to pay for the five berms approved by the White House, in addition to one he and the Army Corps of Engineers approved last week." These berms will be artifical sand reefs designed to keep the oil slick away from fragile Louisiana wetlands and wildlife. Read more in Reuters.

National Debt over $13 trillion for first time (June 2, 2010)

The Treasury Department reports that the National Debt exceeded $13 trillion as of June 1st, 2010. This amount equals nearly 90 percent of the nation's Gross Domestic Product, which is the total market value of all goods and services produced by the U.S. in a year. President Obama blamed his predecessor for the huge deficits. Read more.

USAToday: "Is oil spill becoming Obama's Katrina?" (May 27, 2010)Louisiana residents "want to know why the federal government didn't act faster to stop the oil from reaching shore, why BP hasn't been forced to skim more oil from the surface and why their request hasn't been approved to build new barrier islands to help keep the oil at bay." Read more.

NYT: Obama administration slow to act on BP oil spill (April 30, 2010)

"We now face a huge disaster whose consequences might have been minimized with swifter action." Read editorial.

CBO: U.S. debt to soar under Obama Administration's budget (March 5, 2010)

The Congressional Budget Office (CBO) announced that the Obama Administration's proposed budget would add more than $9.7 trillion to the national debt over the next decade, and this is without adding any possible impact from the Administration's health care initiatives. In addition,  "Interest payments on the debt would also skyrocket by $800 billion over the same period."  Read report in Washington Post.

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

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.

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:

1. 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.

2. 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.

3. 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.

Fake janitors skim $2.2 billion from SS trust fund?!

Other Important Issues

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Public Program Testing Organization

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Date last modified May 2012