FAQs – The Leviticus 25 Plan
1. How much would the Leviticus 25 Plan’s initial credit extension expand the balance sheet of a Fed-based Citizens Credit Facility?
The Plan assumes a participation rate of 80% of the 300 million U.S. citizens (approximately 240 million Americans). 300 million X 80% X $75,000 = $18.0 trillion
2. Why is a Plan like this so vital for reigniting economic growth?
Total U.S. public and private debt, also called “All sectors; Credit Market Instruments; Liability, Level” reached $38.770 trillion as of 2015:Q2 (St. Louis Fed).
David Rosenberg, Gluskin Sheff, has further outlined the private sector debt burden problem:
“Considering that total private sector credit market debt relative to national income
is still near a record-high of 137% versus a long-run norm of 80%, the mean-reversion
process suggests that before we can even consider embarking on a fresh credit cycle in
the household sector alone, mean reverting debt-to-asset or debt-to-income ratios would imply that anywhere from $4 to $6 trillion of leverage has to be extinguished before we can bring the outstanding level of liabilities to levels that would allow for a return to a sustainable pace of credit creation.”
3. How can the Leviticus 25 Plan effectively restore liquidity to American families, while at the same time reducing pressures from the U.S. sovereign debt problem? The Leviticus 25 Plan does not require additional borrowing by the U.S. Treasury. The Plan is capitalized by credit extensions, direct to American families, from the Federal Reserve. Treasury revenue gains, directly related to the “recapture provisions,” will be transferred back, periodically, to the Federal Reserve to shrink the Fed balance sheet back down to pre-expansion levels.
The primary benefit of The Leviticus 25 Plan flows from the massive debt reduction effect (mortgage and consumer loans) at the family level. As an example – A family of 4, with $200,000 in their Family Account, choosing to pay off a $100,000 mortgage balance (20-year maturity), would no longer have a $600-$700 principle/interest mortgage payment obligation each month. This would free up funds each month for saving, investing, additional debt elimination, and discretionary cash purchases.
It should also be noted that by paying off a $100,000 balance on a given mortgage, those families would actually save over $200,000 each in principle and interest costs, that they would have paid over the remaining life of their respective mortgages.
Perhaps most importantly, massive debt reduction at the family level would help insulate Americans against the economic fallout from future, potentially severe, economic contractions.
If 1,000 families (4 members per family) in an average-size community, all chose to pay off similar mortgage obligations, that community would benefit by $600,000 to $700,000 of ‘new money’ coming into that community each month for the next 20 years. This would provide healthy economic stimulation for the economy, and it would generate growing tax revenues, while reducing “income protection” costs in government.
The big picture benefit of The Leviticus 25 Plan: it would take a large proportion of the trillions of dollars paid out to banks and other lending institutions (debt service) each year, and redirect those dollars to American families, small businesses, and to federal, state, and local government entities. In addition, government entities would benefit from massive cost savings in social welfare spending.
4. Wouldn’t the initial $18.0 trillion disbursement direct to U.S. citizens lead to hyperinflation?
No. By far, the greater hyperinflation threat would be realized by NOT shifting away from the current big-government, central-planning approach to managing the nation’s financial affairs.
The U.S. government and the Federal Reserve have already set America on a hyperinflationary track with the snowballing federal deficits, stagnant economic growth, runaway social/entitlement spending, and the on-going Permanent Open Market Operation activities necessary to support orderly Treasury auctions and rate cap management.
The Leviticus 25 Plan, on the other hand, would improve economic and healthcare efficiencies in the marketplace and revitalize economic growth. It would generate a balanced budget for the federal government for each of the first five years and alleviate current, persistent pressures to ‘print’ fiat currency.
A. A large percentage of the $18.0 trillion credit extension will simply replace money that is already being spent by federal and state governments (welfare spending, healthcare benefits claims, unemployment benefits, etc.). This replacement spending would not be inflationary.
B. The disbursements ($6.0 trillion) into Medical Savings Accounts (MSAs) would generate new efficiencies in the healthcare marketplace, significantly reducing costs – over time.
C. A large percentage of the $12.0 trillion going into Family Accounts would be allocated to reduce mortgage and installment debt. “Debt service” is not inflationary.
The Leviticus 25 Plan would support prices and counter persistent deflationary pressures in the global economy. Over the longer term, by supporting free market allocation of capital rather than a big government allocation of capital, it would promote new efficiencies in nearly all markets across the economic spectrum, thereby stabilizing prices and minimizing inflationary risks.
If America does not change its current track, there will be a dramatic inflationary reset ahead.
5. Is there any type of ‘fail safe’ mechanism that would minimize the danger of some participants in the Plan simply “blowing” their money?
Answer: Yes, there is a ‘fail safe’ mechanism. When prospective participants apply for the plan, the banks / financial institutions must verify that they have properly screened the applicants for credit risk and job history. If an applicant family has a poor credit history / poor job history they would not be eligible to receive a lump sum deposit into their Family Account (FA), but would receive only 3-month incremental deposits – to manage their family’s affairs.
At the same time under current big-government programs, many are “blowing it” now: food stamp-for-drugs fraud, SSI fraud, SSDI fraud, EITC fraud, Medicaid and Medicaid fraud, Workman’s Compensation fraud.
Furthermore, the government has already “blown” billions of dollars with worthless and
ineffective stimulus programs, massive financial infusions for foreign banks, IMF transfers to foreign nations, emergency loans and discount window transfers to scores of major financial institutions, including JP Morgan, and Goldman Sachs (providing over $100 million in bonuses to Lloyd Blankfein and upper level GS management).
Participants in The Plan would be “off” all or most of the federal/state “means-tested welfare programs” for a period of five years. Government social welfare programs would not be available during the defined participation period or between incremental deposits, if they did not properly manage their Family Accounts and Medical Savings Accounts. Their recourse would then be to turn for help to: family members, community groups / churches / other religious and charitable organizations.
An improving job market would also support newly motivated workers moving into the market.
6. Won’t banks and other lending institutions get hurt by the Plan?
On the contrary, the Government’s central-planning approach to the handling of the financial crisis banks has led to sluggish economic growth – which is not beneficial to the banking industry. Banks continue to need, and receive, liquidity support from the Federal Reserve. Major financial institutions have taken on significant exposure to various derivatives – which are entirely dependent upon the strength of the counter-parties. Fragile elements remain embedded within the system. The banking industry needs market-based economic growth.
The Leviticus 25 Plan will benefit banks with increased cash reserves and stronger loan portfolios. Loan loss reserve requirements should contract as loan loss provision decreases.
Non-performing loans (non-accrual and restructured loans) would improve, with non-performing assets declining substantially over time. An improving economy, with significantly reduced debt burdens, would generate new loan demand, over time, from credit-worthy borrowers.
7. Does the Plan affect small business taxes – or corporate taxes?
No. The Leviticus 25 Plan does not affect current tax law regarding small business or corporate taxes. Tax reform in those sectors, to improve the business climate for American businesses, would need to be addressed independently of the Plan.
Reducing “corporate welfare” ($90-100 billion per year) would also be a key factor in support of deficit reduction – and should be addressed on its own merits. It would also help to level the playing field between large corporations and small business in America.
The Leviticus 25 Plan’s liquidity restoration benefits for families would generate healthy, market-driven economic growth, benefiting both small businesses and large corporations.
8. How will The Leviticus 25 Plan affect government tax revenues?
The economic scoring assumes that at least 80% of U.S. citizens will participate in The Plan.
The Plan’s recapture provision regarding income tax refunds (where participating families agree to give up their tax refunds for a period of five years) will provide for a massive revenue recapture. The IRS reported issuing 109,171,000 refunds, totaling $304.001 billion for 2015 (through November 2015).
Income tax refund recapture: $304 billion X 80% participation = $243.2 billion / year for five years for a total of $1.216 trillion.
A proportional amount of this revenue would be transferred back to the Federal Reserve each year to reduce the $18.0 trillion balance sheet expansion of the Fed-based Citizen’s Credit Facility.
Aside from the ‘recapture revenues,’ the debt reduction benefits would lead to the elimination of major sums of mortgage / HELOC interest-expense deductions and with significant health care deductions, which would generate considerable new federal and state tax revenue.
Revitalized economic growth would result in more Americans working, paying taxes and social security and Medicare and Medicaid payroll taxes.
9. How certain and how significant would the Plan’s cost-saving features be?
The significance of The Plan’s cost-saving benefits cannot be overstated, and the credit extension would be well-collateralized.
The ‘recapture provisions would generate massive cost savings for state and federal government agencies, as they accrue over time, from the reduction in specified means-tested welfare spending, income security programs, unemployment insurance payments, modest adjustments in deductibles for Medicare, Medicaid, VA, TRICARE, and Federal Employee Health Benefits (FEHB) eligible health care expenses. The majority of these savings at the federal level would be transferred back to the Federal Reserve each year in the recapture process.
Aside from the recapture provisions, additional savings would accrue from the reduced cost of government (reduced participation in government social / welfare programs) and from the potential cancellation of various other projects such as economic stimulus programs.
A. Means-tested welfare programs – assumes 80% participation by participants
Total “means-tested welfare spending” (federal, state) reached the $927 billion level in 2011. This is projected to reach the $1.6 trillion level in the year 2022.
Source: Heritage Foundation, “Examining the Means-tested Welfare State: 79 Programs and $927 Billion in Annual Spending” – Robert Rechter, May 3, 2012
Appendix Table One (Spending in millions of dollars)
Categories Federal Spending State Spending Total Spending
CASH TOTAL 162,717.75 19,412.14 182,129.88
MEDICAL TOTAL 289,816.86 168,854.66 458,671.52
FOOD TOTAL 102,288.00 7,126.73 109,414.73
HOUSING TOTAL 54,058.00 2,085.00 56,143.00
ENERGY AND UTILITIES TOTAL 6,403.00 6,403.00
EDUCATION TOTAL 60,175.00 60,175.00
TRAINING TOTAL 7,324.90 1,085.88 8,410.78
SERVICES TOTAL 10,411.40 4,866.13 15,277.53
CHILD CARE AND CHILD DEVELOPMENT TOTAL
15 ,961.56 6,709.53 22,671.10
COMMUNITY DEVELOPMENT TOTAL 7,937.00 7,937.00
2011 TOTAL 717,093.48 210,140.07 $927,233.55
Cost savings over the course of a 5-year ‘recapture period (federal and state spending): Average Means-Tested Welfare spending of $1.1 trillion/year X 80% X 5 years = $4.4 trillion
Note: Medicaid cost savings is a factor of $5,000 deductible and a significant reduction in Medicaid-eligible families as more Americans become fully employed and covered under other more beneficial plans. Medicaid hit a record of 72,600,000 people enrolled for at least one month in 2012. CBO analysis projects that Medicaid “average monthly enrollment is expected to increase from 58 million in 2013 to 73 million in 2024.”
The cost savings under The Leviticus 25 Plan would be substantial.
B. Medicare savings – assumes 80% participation from Medicare recipients
In 2011 49.4 million Medicare beneficiaries collected approximately $564 billion in benefits “Americans paid $274 billion in Medicare taxes and premiums,” resulting in a deficit of approximately $290 billion. “Looking into the future, even the most optimistic estimate by the program’s trustees puts Medicare’s future unfunded liabilities at more than $38.6 trillion. More realistic projections suggest the shortfall could easily top $90 trillion” (CATO – Aug 24, 2012).
A 2011 GAO report estimated “$60 billion to $90 billion in fraudulent claims paid out each year.”
There are approximately 54 million enrolled Medicare beneficiaries in 2015, and that number is projected to grow to 64.9 million by 2020. Those numbers are expected to expand to 70 million by 2025 and to 77 million by 2030.The Plan’s recapture provision incorporates a $5,000 deductible per participant per year for Medicare eligible expenses.
Cost savings over the course of the 5-year ‘recapture’ period: 59.5 million Medicare recipients (projected average/year for the next 5 years) X 80% X 5 years X $5,000 deductible = $1.19 trillion.
Note: The Plan also assumes that with individual Americans managing the first $5,000 of their Medicare eligible expenses, fraud, overcharges/billing errors would be reduced.
C. Federal Employees Health Benefits Program (FEHB) – assumes 80% participation.
This health care program for civilian government employees (including Congress) and their dependents covers approximately 8.2 million insured at any given time. $5,000 deductible for FEHB eligible expenses that would be a direct cost to the government.
Cost savings over 5-year recapture period: 8.2 million X 80% X $5,000 X 5 years = $164.0 billion
D. VA Healthcare savings – assumes 80% participation from VA Priority Group members.
$5,000 deductible for VA eligible expenses that would be a direct cost to the VA.
Veteran’s participation noted in Priority Groups (2014):
1, 2, 3, 4, 5, 6, 7A, 7C, 8A, 8B, 8C, 8D, 8E, 8G = 5,586 million enrollees plus 305,000 non-veteran recipients
Cost savings over 5-year ‘recapture’ period: 6.16 million X 80% X $5,000 X 5 years = $123.0 billion
E. TRICARE – healthcare program for service members, retirees and dependents
Cost savings over 5 years: 9.5 million recipients X 80% X $5,000 X 5 years = $190.0 billion
F. Supplemental Security Disability Income (SSDI) – participants are ‘off’ SSDI.
The Plan assumes 80% participation of the approximate 12.2 million disabled beneficiaries and non-disabled dependents who received total payments of $132.64 billion during 2014.
Cost savings over 5-year recapture period: $132.64 billion X 80% X 5 years = $530.56 billion
G. Supplemental Security Income (SSI) – participants are ‘off’ SSI. The Plan assumes 80% participation of the current 8,335,457 recipients receiving $54.693 billion (2014).
Cost savings over 5 years: $54.693 billion X 80% X 5 years = $218.8 billion
H. Unemployment benefits – assumes 80% participation / $111.6 billion in payouts per year.
Unemployment benefits ($319 billion 2008-10) – $106 billion / year
Federal government has paid $109 billion of that bill.
Liabilities: 31 states have $41 billion in loans outstanding to cover unemployment
insurance payouts – a figure that is expected to rise further through 2015.
Extended federal unemployment benefits (~$56 billion over 10 years) – $5.6 billion/year
Cost savings over the 5-year ‘recapture’ period: $111.6 billion X 80% X 5 years = $446.4 billion
I. Stimulus bill – Additional stimulus bills would not be needed.
J. Corporate welfare – current $250-$300 billion / year.
Cutting 125 programs (Cato) would save taxpayers $85 billion per year.
Cost savings over 5 years: $85 billion/year X 5 years = $425 billion
Total from Recapture Provisions:
The Leviticus 25 Plan total recapture benefits over the first five years of the program (Income tax refund recapture plus A thru J above): $8.904 trillion, for an average of $1.78 trillion per year.
The Leviticus 25 Plan – primary scoring assumptions
The Plan assumes an 80% participation rate by U.S. citizens. Wealthier Americans would likely not participate, due to the size of their refunds. Certain individuals in the lower socio-economic sector would not participate, due to high benefits profiles that they would not want to give up.
The Plan assumes that participating families would use significant funds to pay down / eliminate debt and that the ongoing benefits of this debt reduction would flow to families and to federal, state, and local government entities (as tax revenue) for several decades beyond the event.
The Plan assumes that dynamic new efficiencies would emerge in the healthcare system – with more families managing/directing healthcare expenditures through their MSAs.
The Plan assumes that apart from the recapture provisions, there would be significant new general tax revenues growth for federal, state and local government entities. This would develop from free-market economic revitalization, more people working and paying taxes, and from the elimination of various income tax deductions (e.g. mortgage / HELOC interest expense).
The Plan assumes that there would not be a massive full-scale move back into the means-tested welfare programs, income security programs, SSDI, unemployment insurance at the end of the initial 5-year recapture period.
The benefits of a free market economy and newfound economic liberty for American families would provide positive economic inertia throughout years 5-10, and for many years beyond.
Recapture provisions would provide an estimated $8.904 trillion return over the initial 5-year period. Economic growth over the following 10 years would generate significant additional tax revenues for both federal and state governments.
Significant inertia from The Plan would also provide on-going, market-based growth benefits over succeeding years that far exceed any prospect for healthy economic growth that may be expected under America’s current big-government, central-planning approach.
These additional benefits would be generated from:
Massive liquidity gains and debt reduction at the family level.
Immediate, sweeping reversal of government “central planning” approach.
Major reversal in work disincentives embedded in social welfare program structures.
Economic growth, improved productivity and job creation.
Stabilization of housing market.
Strengthening bank capitalization.
Minimizing the role of government in managing, directing, and controlling the affairs of
The Leviticus 25 Plan would restore Biblically-inspired economic liberty and freedom from oppression – as intended by The Year of Jubile.
Total Monthly Medicaid and CHIP Enrollment, Sep 2015, Henry J. Kaiser Foundation
Five Years After Passage: ACA by the Numbers, April 2015, AmericanActionForum.com
2015 and Prior Year – Tax Filing Statistics, IRS
OPM Announces Federal Government Health Benefits Program 2015, Office of Personnel Management
Patients by Beneficiary Category (TRICARE), Military Health System, Defense Health Agency
SSI Monthly Statistics, June 2015, Social Security Administration
Social Security Disability Trust Fund, August 2014, The Heritage Foundation
Number of Veteran Patients by Health Care Priority Group FY2000 to FY2014, Veterans Administration: http://www.va.gov/vetdata/Utilization.asp
“All Sectors; Credit Market Instruments; Liability, Level,” Federal Reserve Board of Governors, Apr 2014: http://rt.com/usa/166352-us-total-debt-sixty-trillion/
“The American Welfare State: How We Spend Nearly $1 Trillion a Year Fighting Poverty–And Fail,”
The CATO Institute, April 22, 2012: http://www.cato.org/publications/policy-analysis/american-welfare-state-how-we-spend-nearly-$1-trillion-year-fighting-poverty-fail
“Total Number of Medicare Beneficiaries, 2012,” The Kaiser Foundation – Statehealthfacts.org:
Medicare projections – Chart Book, Henry J. Kaiser Family Foundation: http://www.intellectualtakeout.org/library/chart-graph/projected-number-medicare-beneficiaries-2001-2030
Able-bodied People Defrauding Social Security Program, ” Heritage – The Foundry, Oct 12, 2012: http://blog.heritage.org/2012/10/12/able-bodied-people-defrauding-social-security-disability-program/
“Examining the Means-tested Welfare State: 79 Programs and $927 Billion in Annual Spending,” The Heritage Foundation, May 3, 2012: http://www.heritage.org/research/testimony/2012/05/examining-the-means-tested-welfare-state
“US Taxpayers Just Paid $780 Million to Fund the Latest Greece Bailout Tranche” 07/08/2011: http://www.zerohedge.com/article/us-taxpayers-just-paid-780-million-fund-latest-greece-bailout-tranche
“Fed Releases Details on Secret $855 Billion Single-Tranche OMO Bailout Program: Just Another Foreign Bank Rescue Operation” 07/06/2011: http://www.zerohedge.com/article/fed-releases-details-secret-855-billion-single-tranche-omo-bailout-program-just-another-fore
Goldman Sachs Group Inc. Chief Executive Officer Lloyd C. Blankfein and his top deputies will collect about $111.3 million in stock next month in a delayed payoff from last year and their record-setting 2007 bonuses. Bloomberg 2010-12-15
Blankfein, 56, is poised to receive about $24.3 million in January, based on yesterday’s share price, while President Gary D. Cohn, 50, will get about $24 million, company filings show. The payouts, just a portion of the $67.9 million bonus awarded to Blankfein for 2007 and the $66.9 million paid to Cohn, reflect a 24 percent decline in the stock’s value since it was granted at $218.86.
Within a year after the bonuses were approved, Goldman Sachs took $10 billion from the U.S. Treasury, converted to a bank and was borrowing as much as $35.4 billion a day from Federal Reserve emergency programs. This year the firm paid $550 million to settle U.S. regulators’ fraud charges related to a mortgage-security the company sold in 2007.