This page has been archived and commenting is disabled.

Guest Post: When Soda Was A Nickel And Social Security Wasn’t Much More

Tyler Durden's picture


Submitted by Vedran Vuk of Casey Research

Every generation scolds the next one down the line and blames society’s ills on the guy up at bat. Considering past policy decisions, this common perspective doesn’t make much sense. Just look at the Great Depression generation, both known for its great character as well as the worst policies of the century. Clearly, older generations did not always make the best decisions.
One of those bad decisions, Social Security, still haunts America today like the grim reaper waiting to take his harvest. It’s strange to think the same men who courageously stormed the beaches of Normandy didn’t have the political courage to dismantle this ticking time bomb. If it wasn’t for WWII veterans, many believe that this article would be written in German. That might be true. But due to an exploding national debt and that generation’s failure with Social Security, we’ll be speaking Chinese sooner than German.
The lack of political will isn’t surprising since most past retirees were net gainers from Social Security while new retirees are net losers. Older folks love bemoaning runaway spending, welfare queens, and handouts. But often they don’t consider their own gains from the welfare state.

As Social Security taxes increased over time, so did the benefits. Essentially, previous generations paid into the system when taxes were low and retired when the benefits were high. A retiree’s maximum tax loss from Social Security in 1940 was $923 in today’s dollars. Compare this to the current maximum of $13,243.

To find the dividing line between net gainers and losers, we created a projection assuming an individual with a salary equaling the top taxable Social Security limit for 45 years (to get an idea of this amount, consider the limit was $3,000 dollars in 1940 and $106,800 in 2010 – both nice salaries). Our test dummy paid the maximum Social Security taxes every year.
On the other hand, upon retirement, he would receive maximum benefits. According to the Social Security Administration, maximum taxation is a prerequisite to maximum payouts. Next, we added Social Security benefits received over 13 years (derived from the average U.S. life expectancy of about 78). Finally, we calculated the difference between taxes paid over 45 years and the payouts received for 13. The results were shocking.

Before 2007, our projected retirees were net gainers from Social Security. 2007 retirees were the first net losers at -$411. By 2011, retirees will be -$40,403 in the red.

In the ‘80s, a Greatest Generation survivor retiring at 66 in 1985 received a net gain over his expected lifespan of $113,350 in 2010 dollars. Just a decade down the road, a 1995 retiree still profited by $67,982.

While welfare is often equated with public housing residents, perhaps nursing home residents should be considered too. These Social Security payments outweigh many welfare handouts. For example, California’s maximum TANF (welfare) payments for a family of three were $9,373 a year in 2005, inflation-adjusted for today. It takes over 12 years of welfare to equal the 1985 retirement net gain. (To be fair, if housing subsidies, food stamps, and other benefits were included, the number of years would be lower.)

So, are pre-2007 retired generations complete bums? Well, not exactly. It depends on how the money would have been spent otherwise. Suppose that instead of paying Social Security, the same amounts had been placed into an account earning five percent a year.

After 45 years starting in 1940 and ending in 1984, this account would have been worth over $297,000 in 2010 dollars. This is $44,000 more than 13 years of Social Security benefits starting in 1985.

Hence, older retirees are bums on a case-by-case basis. An investment-savvy penny-pincher would have lost from Social Security. Without the program, he could have invested privately. But spendthrift retirees benefitted enormously. The responsible saver is punished and the careless spender rewarded – the same old story of welfare retold for an older generation.

[And this note as an afterthought:

How Much Do You Really Pay for Social Security?

The government has pulled a fast one on most people. You pay half the Social Security tax and your employer pays the second half, right? No, wrong. You actually pay both.

Let’s go through this example to understand the point. Let’s say that a person earns $100,000 a year and pays $6,000 in Social Security taxes and the employer pays $6,000. In the eyes of the employer, the person’s services are worth $106,000 ($100,000 salary + $6,000 in Social Security taxes), that’s how much he costs the employer.

Now, imagine what would happen if Social Security taxes disappeared overnight. For a little while, the employer would profit by paying $100,000 for an employee worth $106,000. However, in a free market, prices move toward levels equaling the underlining value. Just like good underpriced stocks will eventually move up, so does the price for good undervalued employees – although, both may not be immediately appreciated.

Eventually, the person’s wages would be bid up in the market from $100,000 to $106,000. Because of this, the employer’s half is actually your half too. Without Social Security, your wages would be close to your value to the employer, in this case, $106,000. So, in reality, the person pays $6,000 in taxes and makes $6,000 less than he would in a completely free market, meaning that the real loss is $12,000 per year.


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 04/06/2010 - 18:12 | 289124 Comrade de Chaos
Comrade de Chaos's picture

check this out:


Tuesday, April 6th, 2010, 12:53 pm

Source: Financial Times

BlackRock, a leading US bond investor, says banks will have to take their share of losses on distressed mortgages before it resumes large-scale purchases of new “private label” mortgage bonds, which are sold without government backing."


now repeat after me, we do not have the socialized RE markets & our Gov does not create future moral hazards by its actions!!!

Tue, 04/06/2010 - 18:48 | 289145 erik
erik's picture

why this is not gigantic news is beyond me.  if Blackrock says they won't buy until banks take some losses, then mortgage rates will have to climb, or banks will have to take some losses.  either way, that is bearish.

Tue, 04/06/2010 - 19:07 | 289159 Comrade de Chaos
Comrade de Chaos's picture

PIMCO has been reducing it's MBB exposure for a while now. The rest will (must) follow as usual, and one of those summer nights the chair of .. will be getting number of calls. (so much for political independence.... )

Tue, 04/06/2010 - 19:29 | 289173 erik
erik's picture

Yes, Pimco was selling because the government would soon be out of the MBS buying game.  Well now the government is out.  Why won't Pimco do the same thing Blackrock is doing from here forward and refuse to buy private-label mortgages without govt backing?

Either way, mortgage rates are going up, and housing is going down.  That will make the problems even worse.

I'm placing the over/under on the Fed jumping back into the MBS market at Aug 1st.  Any takers?

Wed, 04/07/2010 - 00:48 | 289338 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Nice!  I have cut and pasted this convo to send to friends and family; this is very important because everyone is about to lose their shirts thanks to the housing market.

Tue, 04/06/2010 - 18:56 | 289150 erik
erik's picture

This is related to 2nd mortgages (home equity loans mostly).  Investors (Blackrock) want banks to take their losses on 2nd mortgages.

Blackrock is concerned that they will get screwed in the modification process because the banks are usually 2nd mortgage holders and SERVICERS, which means they will be in charge of the modification.  Blackrock is worried that it will be stuck with unfair losses on 1st mortgages if the banks modify loans in such a way to benefit themselves and hurt 1st mortgage holders.

This is the next big thing.  Barney Frank has already griped about it, but with a pivotal player like Blackrock involved, the stakes become much, much higher. 

Bottom line:  Mortgage rates will continue upward until the government steps back in with more taxpayer screwing bailouts.

Tue, 04/06/2010 - 19:14 | 289162 erik
erik's picture

Is it purely coincidence that Blackrock was downgraded to sell by Citi last week?  Deutsche downgraded them as well.

I think the flap between 1st and 2nd mortgage holders is growing, and Blackrock is throwing down the gauntlet by saying they will not buy private-label MBS until banks take their losses.

Guess who loses in the end?  The taxpayer, because our beloved government will step in with our money, like it or not.

Tue, 04/06/2010 - 18:17 | 289127 Anonymouse
Anonymouse's picture

Nice analysis.  Clean and straightforward.

Not to complicate it too much, but in fairness, you probably should use different life expectancies for each year.  Since life expectancy is increasing, payout would look a little better for later retirees.

Probably not much though.

Tue, 04/06/2010 - 18:26 | 289130 dark pools of soros
dark pools of soros's picture

you are missing the point of that whole 'society safety net' idea


granted it will get ran into the ground, but that is a different point than what you are making

Tue, 04/06/2010 - 18:49 | 289146 three chord sloth
three chord sloth's picture

Why do folks continue to pretend there is a sustainable social safety net, some sort of standard-of-living floor that government can guarantee?

I see no evidence such an animal exists. I see plenty of two, three, four generation Ponzi schemes where the latecomers get stuck with stale beer and pizza crusts and the bill... but I see no systems that are equitable down through the generations. Aw heck... forget equitable... I'd settle for "non-bankrupt", and I still wouldn't find what I'm looking for.

We should face the truth. The overarching theme of the twentieth century was "the search for the stable welfare state". That is what all those "isms" were about. None of them worked. Stick a fork in 'em.

Tue, 04/06/2010 - 18:58 | 289151 SayTabserb
SayTabserb's picture

I think it's possible for a society such as the United States to provide an old age pension and universal healthcare as the basic entitlements, but the priorities of the country have to be rational and well planned. Since 1983 about $2.55 trillion in payments were surplus. With conservative management and real investment (not "investment" in the government itself as further debt), the system would obviously be solvent now. What turned it into a complete Ponzi was that the fund was raided for other priorities, chief among them the growth of the defense/security state. That left only dwindling numbers of workers to support an aging population, which is unfair and which is why it will not last much longer. Had the surplus been invested in the real economy, it would have been good for GDP and far more self sustaining. Still an "ism," but not quite so Old World.

Tue, 04/06/2010 - 19:08 | 289160 Shameful
Shameful's picture

rotflol the government, invest wisely and manage properly :)

Might as well ask a monkey to race a car or fly an airplane...sure it's theoretically possible but it's not likely and the crashes and costs would be monstrous.  What's wrong with people making decisions for themselves?

The system was never solvent it was Ponzi from day 1, and ponzi by design.  Lets face it no government could be that responsible.  Find me 1 in history.  And even if "invested" so who would invest it?  GS, JPM? I'm sure they would treat us right.  Or if do it direct I'm sure it could be done with all the skill of a Soviet era planner.  You can believe all you want the system you dream of cannot exist as long as humans are involved. The corruption factor is to high.  Hell they are looking at seizing 401ks now because of the money there.  Governments don't think out that far, it's all about the quick fix and quick loot.  You can wait for a responsible well managed gov that will not loot for genrations and I'll wait for El Chimpo to win the the points standing in F1...think I'll have less time to wait.

Tue, 04/06/2010 - 19:16 | 289165 SayTabserb
SayTabserb's picture

Well, you could be right. CalPers invested in the private sector and that's had some problems.

Tue, 04/06/2010 - 19:21 | 289170 Shameful
Shameful's picture

CapPers will go bankrupt, it just came out recently that they are way underfunded.  It's simply not possible to trust the gov with the money.  Would you trust your hard earned money with any gov to invest it better then you?  Or would you prefer to invest it yourself or seek out your own investment advisor?

I'm not in the investment biz, but correct me if I'm wrong isn't the pension money usually referred to as dumb money?

I'm all for people preparing for themselves. Now if you think that the state should be able to loot people to pay for others that's another argument entirely.

Tue, 04/06/2010 - 19:39 | 289183 SayTabserb
SayTabserb's picture

No, I'd rather keep it and do my own planning. I've been self employed for a long time and the amount of money I've poured into that FICA rate kind of makes me sick when I think about it. The return analysis shown in the post confirms me in my thinking. The problem that I guess FDR was looking at is that if you allow an opt-out, the scheme (Ponzi?) falls apart pretty fast. So in order to provide for the elderly who can't put it together, the whole (non-govt) working population has to buy in. But the point is, as I wrote down below, is that the system has in fact fallen below break even, and that means Congress can't use the only part they were interested in, the surplus. So we'll start to hear more arguments about "opt out" etc. whether it will work or not. Because they don't care if it works, only if it creates pork while the SSA sends out checks.

Tue, 04/06/2010 - 19:48 | 289186 Shameful
Shameful's picture

Well yeah ponzis fall apart when people wise up.  At that point the only way to keep it going is with a gun to the head.

I don't think you will see an apt out.  My whole gen would giggle hysterically and opt out and the system would collapse.  The only would not allow that, they vote.  What will happen is they will game it with the CPI and print the money out of thin air till we hit the default point at which point the old will be left out in the cold.

Now if they don't do that they will simply kill the old.  They will not drag them into the street, but they will deny any and all healthcare or service.  After all why should the gov like the old?  They are not producing and being taxed, and really the gov sees as nothing more then serfs and wage slaves to afford them their way of life. 

Wed, 04/07/2010 - 10:27 | 289619 FEDbuster
FEDbuster's picture

They like the old, because they vote. 

Means testing for benefits should have started 30 years ago.  Call a spade a spade, social security was a social welfare program not a retirement program.  If FDR had just labeled it properly "Elder Welfare", people would have looked at it as just another entitlement program.  The taxes would have stayed low and no one would have this "I paid into it attitude" when they retired.  The moral hazard was established when workers thought this was a legitimate retirement plan and employers played along, rather than a ponzi scheme government entitlement program.

I have some sympathy for the people whom were duped into thinking they could rely on the government for their retirement income.  Unfortunately there aren't enough Walmart greeter jobs to hire all the boomers that will find out they aren't making it on government subsistence.  Maybe the government should hire them to be greeters at every government office, post office, etc...?

Wed, 04/07/2010 - 13:12 | 290018 RockyRacoon
RockyRacoon's picture

I hear you saying that we have a Willie Sutton  style government financial planning here.  It takes from whatever pool of ready cash is available to pay for its profligacy "because that's where the money is."

Tue, 04/06/2010 - 19:39 | 289185 three chord sloth
three chord sloth's picture

Well, one could create a sustainable old age pension program... an individual program mind you, not a whole maintain "x" lifestyle system... if one were to set it up based on percentages and not birthdates. But the healthcare option is right out... it would likely fail the sustainability test, costing 5% GDP first generation, 10% GDP second gen, 15% GDP third, etc. That is just repeating the same mistakes we made over the past half century... a great system for those first in, and a collapsing pile of bills for those who follow.

Wed, 04/07/2010 - 09:04 | 289539 mikla
mikla's picture

Well, one could create a sustainable old age pension program... an individual program mind you, not a whole maintain "x" lifestyle system... if one were to set it up based on percentages and not birthdates.

No.  All pensions are frauds, and should be made illegal.

Pensions are based on actuarial math that attempt to quantify future risk.  They are guaranteeing based on an unknown -- an unquantified future risk.  They are frauds, because this unknown cannot be quantified, and cannot be protected against.

If I promise you a pension annuity, I'm a liar (we both merely pretend the risk doesn't exist).

Thus, like all ponzis, the "ignored risk" becomes real and everyone is screwed.


Tue, 04/06/2010 - 21:31 | 289254 Sam Clemons
Sam Clemons's picture

Agree that prioritization would help, but all we've done is created a massive population bubble all over the world by guaranteeing the survival of bums, sick people and the elderly.  Everyone dies anyways.

Additionally, and I will admit it sounds harsh, but the gene pool gets punished by these sorts of programs.  Like all bubbles, the population bubble will crash too, and in much more dramatic and deadly fashion than if we weren't so kind and actually let nature solve its own problems - natural death due to stupidity or laziness.  I guarantee we would have much more productive societies in this case.

Tue, 04/06/2010 - 22:34 | 289291 Sam Clemons
Sam Clemons's picture

Junk?  Hah.  Of course in America, people hate the people who try to tell them the truth and love the people who lie to tell them everything is ok.


All I'm saying is that our civilization has become "survival of the weakest," not survival of the fittest.  This applies to companies and people.  I know many people hate the idea of a rugged man surviving on his own in the old West.  I admire that man.

Tue, 04/06/2010 - 22:43 | 289318 Shameful
Shameful's picture

Your right of course.  The safety net aside for being immoral because it institutionalizes theft and destruction of property rights is the survival of the least fit.  Look at Michigan and welfare, where there was an incentive to breed without any ability to care for hte children (not sure if it's the same now as it was but I have deadbeat distant family milking the system there).  Watch Idiocracy if you want to see the path we are on.  What will save us is the infeasibility of the safety net system.  There is a lot of death in our future.  With oil and water problems I expect the world population to drop a fair bit of the next 20 years. 

Hear you about the old west.  One of my favorite genres, where a man was a man and was expected to take care of himself and his family.

Tue, 04/06/2010 - 23:13 | 289342 Sam Clemons
Sam Clemons's picture

I agree with you on it being immoral and on your historical precedents.  I suppose most people here recognize that their precious "job" or "skillset" would not enable survival in a hand-to-mouth, productive world so they dislike what we are saying. 

Additionally, they are right that it is junk because my post generally does not apply to social security, which this article was about, because that does not aid procreation.

It is not as though I advise any kind of cleansing like Obama's science Czar because that requires mankind to discriminate which generally causes more harm than good.  Nor do I love the planet so much to hate my fellow man.  I just propose removing most "warning labels," and letting nature run its course.

Tue, 04/06/2010 - 23:42 | 289366 Shameful
Shameful's picture

The world is a hard place.  Look at it, we have temporarily softened it and in doing so have done a disservice to the young.  They will face a world that is harsh completely unprepared for what is waiting for them.

I'm not for pop reduction.  I think the earth can support more people then now, with the market dictating living standards.  I simply see that those are dependent on social welfare for support are not equipped to do well went that net snaps.  And I expect the net to snap and society to descend into chaos.  In that many will die simply because the supply lines are so short.  If they are cut the cities will be out of food and fuel within days and will turn into violent hungry places.  This is not something I want, indeed it horrifies me, but this is what the signs point to.

Tue, 04/06/2010 - 21:57 | 289275 dark pools of soros
dark pools of soros's picture

why do people continue to forget to read what is written instead of what they already believe?

the article ranted about how bad the program was except that for a bunch of years it worked..  sure it was destined to fail but for a lot of reasons.. mismanagement more than just math..and the whole point of the program is/was to keep idiots from becoming old starving idiots..


but most people here just want simple yes/no answers to everything



Tue, 04/06/2010 - 22:32 | 289311 dumpster
dumpster's picture

a safety net

jim sinclair

To balance the US balance sheet, gold would have to go to insane numbers. The mechanism is in place to drive gold to incredible numbers.


Wed, 04/07/2010 - 09:04 | 289538 hedgeless_horseman
Tue, 04/06/2010 - 18:36 | 289139 SayTabserb
SayTabserb's picture

Right now (in Feb 2010) the Soc Sec. fund took in about 49 billion and paid out 61 billion. An "on budget" addition to the fund of $12 billion put the cash flow in balance. I assume that the on budget add of $12 bil simply represents a subtraction from the empty "Trust Fund" of $2.5 trillion, roughly. Thus, the system is now underwater since the $12 billion in reality is simply funded through Treasury borrowing. This can only get worse, since the deficit 1) arrived 7 years early and 2) the leading edge of the Boomers is just now starting to draw benefits.  Since the Kongress Klowns now realize the "surplus" is not a piggy bank for bailouts and F-22 building, Soc. Security is not fun anymore. It's a drag, in fact.  Thus, it's extinction will not be far off, leading to the private fund idea discussed here and as proposed by Clinton first, and then followed by George W.

Tue, 04/06/2010 - 18:52 | 289148 G.Kesarios
G.Kesarios's picture

What does all of this matter? All these obligations will at one point be written off beacuse no western country can make good on them

Tue, 04/06/2010 - 18:58 | 289152 Shameful
Shameful's picture

Ah one of America's oldest and most respected Ponzi schemes!  You will not be able to pry this one out of people's hands, they have grown to dependant.  This is be quite explosive when it and Medicare go up in smoke.  Remember the old vote.

Tue, 04/06/2010 - 20:44 | 289217 MarketTruth
MarketTruth's picture

True, though remember the Medicare PONZI scheme was just robber to the tune of MANY trillions due to the new health care plan. Imagine all the suckers who were forced to give money in to Medicare yet have received zero benefits. Now with the new plan you can kiss all that money you were forced to pay out goodby.

Tue, 04/06/2010 - 20:54 | 289226 Shameful
Shameful's picture

Well at my age there is 0 chance I get any of these bennies.  But then I would be jaw on the ground stunned if the dollar survived a decade without giving up at least 50% value from here.  The whole system is going to come down.  I get next to noting out of my tax dollars and that's what I expect.  I pay for crooked cops, lazy and worthless bureaucrats, an insane military, and banker bailouts, so it doesn't surprise me that I won't actually get any "bennies" from uncle sugar.

Hell maybe the system comming down is the most just thing that can happen.

Tue, 04/06/2010 - 22:09 | 289287 dark pools of soros
dark pools of soros's picture

for all the supposed deep thinkers here, hardly anyone seems to examine without an already established agenda.  "I'll take care of my money, stay outta my pocket" is the knee jerk reaction to just about everything going on


What about runaway costs of the healthcare and pharma that this captive program (medicare) is forced to dole out??  


So you say there is this huge pile of money that we can't touch unless it is through benefits... so we just find ways to jack up the prices and no one complains that much since it is all rolling outta the medicare payouts...  nice 


medicare dries up... pensions costs skyrocket with the bene's..

the capitalism snake is well past half way eating its tail..

Tue, 04/06/2010 - 22:17 | 289292 Shameful
Shameful's picture

The healthcare system in this country has NOTHING to do with capitalism.  Why do we pay 4x as much or more for drugs?  Well that would be the Gov interfering.  Look at the gov with IIRC Medicare C, open corruption.  Look a the FDA and tell me if that is a good system.

We have massive government interference in health care, so the answer is less government now more.  If capitalism is not the way is socialism the way?  Point to me a nation in Europe that has a socialist system that is doing well that is not relying on selling natural resources (won't last forever).  Norway looks great but they are selling their oil and remember only native Norwegians get the good bennies.

Why are healthcare costs so low in th developing world?  Why is there medical tourism is socialism is the way?  I remember just recently a Canadian offcial came to the US for a procude, but I thought the Canda's had a great solcial healthcare net, so why did he come down here?

As to capitalism have you looked at the pricing of LASIK or plastic surgery.  Quality of care has radically increased in the past decade, and prices has come down (without even looking at inflation).  Now this system exists out of the crooked and controlled insurance system so tell me how can they pull of the miracle of lowing costs and improving quality.  The system you hate is crony capitalism, we have not had capitalism in the USA for decades.

Tue, 04/06/2010 - 22:51 | 289325 velobabe
velobabe's picture

shame, guess i got to jump in here and ask, why does everybody hate old people? it's like my bf accuses me of hating poor people. of course i don't.

i guess i just don't see this side of america that is rampant in these comments? your young in college, but i guarantee you older people I KNOW are nothing like what is written down here. i don't even know what a pension IRA is. i don't have health insurance cause the whole industry is a scam. nobody really knows what health is, I DO. i have never been to a quack doctor except when i had to, to have a kid and i vowed never to go back. stay healthy, wealthy and wise. yeah an apple a day definitely keeps the doctor away and saves you money. i am an athlete and broken about 12 bones so i give to the ortho's pockets, but that is better than paying into health insurance. pay as you go, skip the middle man. that is probably the way it is in burma, straight cash for everything, no debt, even when your sick or broken. just my 2¢s

Tue, 04/06/2010 - 23:51 | 289374 Shameful
Shameful's picture

I don't hate old people.  I hate that old people want to enslave me for their benefit.  I have an amazing relationship with my parents.  I used to spend time going to nursing homes talking to old folks as a kid in junior high.  My dad made sure that I knew every old person still alive from the Old Country and heard their story.  I do not hate the old, but is it fair that they look at me as a meal ticket?  "Shameful I did not prepare for my future.  Infact I left a world of shit for you.  So Now I'm going to rob you, pay up!"  Also I'm a bit jaded having worked around the casino industry and watched these people spend their SS check gambling.  Clearly they need it if they can feed the one armed bandit.

I've talked to plenty of old guys and they KNEW that SS was a scam when they were young.  Admit it to me, hell they even tell me that they know that I won't get it but I have to pay for them.

You mistake my hate for being robbed and enslaved for hate of the old.  If a white man robbed you would you at gunpoint would you resent him because he is white or the fact he is robbing you?  SS can be dressed up any way you want but it's pure theft.  If the system makes in another 40+ years it would turn to plunder a generation.  Institutionalized theft, and noting more.

Wed, 04/07/2010 - 09:30 | 289552 Master Bates
Master Bates's picture

I completely agree with you.  I'm really tired of the older people that have been living high on the hog with money that they borrowed from us over the years.

All they do is blame "kids today" for everything, when they themselves are the people that created the systemic problems that we were born into.

It makes me mad that so many of them are mean to us, when they're going to be living off of us for the next thirty or forty years after they did everything to sell us out.
Economy going to dip?  Hell, that's okay, borrow from our kids!  30 years down the line, when it causes a depression... we'll all be retired.

I personally believe that it's more the baby boomers fault than anything else.  They've been offshoring our jobs for thirty years, exporting our country's success to China, and in a few more years, they'll be right there with their hands out expecting us to continue to be debt slaves to them even after they've done their best to sell out our generation's opportunity so that they could get some granite countertops and an extra bathroom in the McMansion that they can't afford.

Baby boomers should be eaten by bears.  Or at least stop blaming us for what THEY have done...

Wed, 04/07/2010 - 15:08 | 290312 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

"[T]he older people that have been living high on the hog."

Then you may like this theory I have; baby boomers will continue to try and achieve the 'Mercan dream' (not to mention the emerging middle class in other countries)-they will trade in their hummers for Harley Davidsons.  HOG to double YoY from here on out, I think.

Tue, 04/06/2010 - 22:39 | 289316 dumpster
dumpster's picture

the capitalism snake .. yammer

this is not free capital ism  .. it is Keynesian amphomorphic mush.

this form of economics is the cause of war, poverty, unemployment , and what you see as far as the eye can see,

drowning in debt,

so to fix the problem stop digging .

Tue, 04/06/2010 - 19:14 | 289163 Alienated Serf
Alienated Serf's picture

 In the late 1930's avg. life expectancy was 62 or so, benefits did not pay out until 65; obviously that led to a low participation rate and short duration of participation.  What needs to be done is to enforce a Life Expectancy Adjustment Index that automatically raises the retirement age, just as COLA is indexed to inflation.  Of course this is not very politically palatable, seeing that senior citizens vote en masse, and I don't think we have the time to phase this in 20 years from now when they could care less, especially not with the boomers still around.

Lets face it, we are going down the road of Greece.  Politics trump math.  We will get to the point of default before any change is made. 

For all I care raise the retirement age to 80, god knows I'll be working off my law school debt until then.  In any event, the spendthrift boomers who are now housepoor, 401k poor, pensionless and unemployed are going to be thankful for a Walmart greeter job.  Senior Citizen poverty epidemic, coming to you 2025.

Also, someone please explain to me the disconnect of older Americans who thought that Obama was going to turn them into Soylent Green, scoff at the Canadian system but think Medicare is the greatest thing ever.  All while ordering cheaper drugs from Canada. 

Raise SS retirment to 75 tomorrow or start building large government funded housing project style nursing homes asap.  At least we would get some construction jobs going....




Tue, 04/06/2010 - 19:14 | 289164 jmc8888
jmc8888's picture

This guy is so wrong on so many levels it approaches asinine level.


He omits many pertinent facts, thus his test bubble is bursted.

We all know the inflation data he used to surmise this is faulty.  One can guess how wildly off from reality his inflation data is when the errors aren't using a few years, or a decade, but multi-generational. 


Let's see.  When he talks about if a savvy investor had put the same money in the stock market in 1940 he'd of made an extra few tens of thousands, that's a load of sophistry.  Who is a market savvy investor?  Not everyone.   Lots of people who have called themselves 'market savvy' are anything but.  Plenty of dipschmidts made a lot of money thinking they were smart, but somehow picked the du jeuere bubble to place their bets in at the right time, without knowing it. So this guy says, since A savvy investor, let me repeat that, "A" savvy investor could have made more money than in social security, then it would be good for all of us to have that option, or something to that effect.  NOPE. 


This guy also doesn't know FDR.  Because if he DID, he'd know SOCIAL SECURITY IS NOT WELFARE.  The whole fact that he deems social security part of the 'welfare state', shows how clueless he is about social SECURITY.  It was never meant for welfare.  If his side of the aisle considers it such, they're idiots, and no wonder it's crashing.


He also cleverly forgets that since the 1980's, all the surplus....meant to compound so that higher benefits could be paid out in the future....was pulled away.


So as the bubble was blowing and trillions of faux money created, guess what missed out? That's right social security.  But the people that depended on it, didn't miss out on the inflation.  This guy forgets that pertinent point.  Just imagine, if you put your money in the stock market, and took out the gains every year and gave them to charity, my guesses are, from 1940 to 1984, even if you were a savvy investor, you would have ended up with a loss.  NO SCHMIDT!!!  Kind of easy to blame social security shortfalls when we've stolen the surplus for 25 or so years.  Kind of is expected.  So here we are with the piper calling to be paid.


He also forgets another thing about social security that completely skews things.  Amount of Payers IN, Amount of Receivers OUT as a ratio.  Now memory serves correct it was somewhere in the neighborhood of 11:1 people paying IN, as compared to paying OUT.  Demographics have a lot to do with this.  Demographics is now reaching a point of saturation, where the constant burden will explode and then level off, and reach a relative constant additional payers in and out.  So the baby boomers will cause a strain, but then as they die off, as a percentage the next generation won't add as much and the ratio should go back up from I believe it's at 3:1 now, after making a pitstop around 2:1 or so.  


People forgetting such a bubble in population making its way through the system are projecting that bubble to keep going up as if their is an exponential increase in retirees AFTER the baby boom, that simply is not the case. 


Then he talks about 'in a free market' like one ACTUALLY exists.  HA HA HA HA HA

Then he actually believes that employers would raise the wages.  Are you effing serious? This guy is an idiot.  No, what would happen is this.  Your employer noticing that he doesn't have to pay the 6k, and you don't have to pay the 6k, will lower your wages commensurate to what you aren't paying.  You see, to you, you never saw the money in the first place, and the greedy corporation will surely like to cut costs by 12,000 on you, not 6,000.   Your wages would go DOWN, not UP, like this idiot suggests.  The furthest he'll go is say, you won't notice the effects immediately.  Yeah, and we're still waiting for reagomics to trickle down some of that 1980's money we never saw.


This guy is peddling pond scum.  His idea of getting rid of social security is asinine.  It's full of bs, omissions of pertinent facts, and full of wishy washy hope that the free market that we don't have will do the right thing....this time.  I call BS.






Tue, 04/06/2010 - 19:27 | 289171 Shameful
Shameful's picture

Wow.  Just wow.  So you must be really counting on those SS checks.  Well your brilliant system is insolvent for all intents and purposes.  Good luck getting your payout.  And if your getting it, well stockpile what you need old man the times they are a changing.

Wed, 04/07/2010 - 00:27 | 289399 Trial of the Pyx
Trial of the Pyx's picture

I thought he did have a point about the surplusses getting siphoned away and therefore not inflating with everything else...not that it would have made the thing work if they hadn't...but it is a good point.

Tue, 04/06/2010 - 20:49 | 289221 dumpster
dumpster's picture

you may now come up for air ,,, that rant made me tired ,

off to spend  .s.s. check,, on tacos and beer,

and while at it scout out another for  new dumpster site. 

a supplement to living large  


Tue, 04/06/2010 - 23:54 | 289377 DoChenRollingBearing
DoChenRollingBearing's picture

+ 60,000,000

Finally I get to give a tip o' the hat to the dumpster!

I'm 54, and I don't even qualify for S.S!  So, I am just a spectator, rock on!  Crash and burn.  That's what our .gov has given us.


O/T, Shameful, today I went and broke in my new friends Mr. Beretta and Mr. Kalashnikov.  Very liberating.  I may just stay here and NOT go anywhere else to participate in all the fun coming our way.

Tue, 04/06/2010 - 21:44 | 289262 Older Than Dirt
Older Than Dirt's picture


A reading of the complete Act clearly shows that it was intended to be PARTIALLY a "redistribution of wealth.: "

The Social Security Act (Act of August 14, 1935)  [H. R. 7260]

An act to provide for the general welfare by establishing a system of Federal old-age benefits, and by enabling the several States to make more adequate provision for aged persons, blind persons, dependent and crippled children, maternal and child welfare, public health, and the administration of their unemployment compensation laws "

However regarding "Federal old-age benefits", the Act states in Title II Federal Old-Age Benefits - Old-Age Reserve Account:

"It shall be the duty of the Secretary of the Treasury to invest such portion of the amounts credited to the Account as is not, in his judgment, required to meet current withdrawals.  Such investment may be made only in interest-bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States."

So, even if we allowed that the "excise tax" on employers was to be devoted to the "social welfare" aspect of the Act, the payroll tax on employees was to be:

(1) Funded in "the Account," and

(2) Invested in "interest-bearing obligations of the United States," i.e. Treasuries. 

Neither of these requirements in the Act were carried out. Various Congresses - both "R" & "D" - spent the tax revenues deducted from employees over years. They're still doing it today. So, if you really think that you're paying for grandpa & grandma, it's true only in the sense that this has been the biggest Ponzi scheme EVER! It makes Charles Ponzi & Bernie Madoff look like pikers!

Just for "grins," I downloaded the rates on Treasuries from Federal Reserve's site. Data was only available since 1962. Then, I had to manually input data on income caps, & FICA tax rates from the Social Security site (they're a BIT behind the times technologicaly - no download to a .csv file, e.g.). Averaging the 5, 10 & 30 year Treasury rates & applying it to the taxes withheld (based on 25%, 50%, 75% & 100% of the income cap), the compounded amounts over the period from 1962 to the year I "retired" were significant (big bucks!). Then, I deducted "benefits" from that point & "re-compunded" the balance. I'll be "in the 'black" for a long time. I used only the empoyee tax not the employer excise tax. I figured that was for "social welfare."

I don't want welfare - just what's due to me. That's probably what most "regular" folks that played by the rules want as well!

If the U.S. government can get us going at each other's throats, e.g. young vs old, the game is over! Hell, it probably is anyway. 


Wed, 04/07/2010 - 00:43 | 289412 fxrxexexdxoxmx
fxrxexexdxoxmx's picture


Wed, 04/07/2010 - 01:06 | 289427 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

With Lawyers advertising on televison for clients to "win" their disability claims with SSI does anyone actually believe this system is about taking care of the helpless?

It has become a corrupt system that millions currently use to game it for personal profit.

People who have never contributed a single penny get checks today.

I met a man from the former soviet union in 1996. He was getting a check from the feds and was angry that it was so small.

Getting rid of the fraud would make SS & SSI solvent overnight

Wed, 04/07/2010 - 15:52 | 290460 JR
JR's picture

Thanks for the reminder of this provision which only underscores how the politicians market their legislation without promoting the details, hence clean air act,  climate change (cap and tax), and Obama health reform (more wealth transfer). The first generations after Social Security was enacted all believed it was nothing more than a partial retirement fund for wage earners; most never dreamed that it included this wealth transfer statement nor were they intended to know.

“Then, ‘twixt a vice and folly, turned aside

To do good deeds and straight to cloak them, lied.” From Kipling’s A Bank Fraud

It would be a stretch to say, however, that the bastardization of SS existed in the 1930s to the extent it does today.  For instance, “Aid to Dependent Children (ADC), which the U.S. Congress enacted on August 14, 1935, as part of the Social Security Act of 1935, began as a program limited to dependent children under sixteen who had lost one or both parents, an outgrowth of the underfunded widows' pensions numerous states enacted after 1911.”

My research shows that, according to Encyclopedia of Children and Childhood in History and Society: “Vastly increased federal spending in the 1940s and 1950s generated enough prosperity to make poverty (apparently) disappear, and to encourage massive movements of peoples of all classes and races around the country, and from farm to city or suburb. By the 1960s ADC and other programs ballooned, and ADC became AFDC, Aid to Families with Dependent Children, with caregivers' stipends added. In 1960 AFDC was the largest federal welfare program, with 3,000,000 enrollees. Today it is nothing less than a broad welfare program…

“Well into the early 1970s, the rolls grew at a dizzying pace, due to the growing impoverishment of the lower classes. The age's egalitarianism and individualism encouraged the poor to demand welfare as a right, not merely a privilege, and this, combined with racial tensions, and the growing new conservative movement, led to increasingly fractious criticisms of AFDC. By the early 1990s, AFDC, and the compassionate welfare vision of an earlier era, was increasingly politically out of step with the times. The WELFARE REFORM ACT OF 1996 ended AFDC.”  It was replaced by the Temporary Assistance for Needy Families (TANF) program as described in section 601 of the Social Security Act.

According to Public Benefit Law, Professor Levy, Spring 2001: “Today, the largest welfare program is TANF “which provides federal block grants for state benefit programs for needy families.  TANF replaced AFDC and is the principal component of welfare.  The second major component of welfare is Food Stamps… SSI is a third important federal benefit program that provides federal benefits for the aged and disabled individuals on the basis of need… SSI, TANF, and Food Stamps are supplemented by a variety of other need-based benefit programs.  For example, individuals who qualify for SSI, TANF or Food Stamps are generally eligible for federally funded Medicaid benefits as well.  Additional programs include state general assistance benefits, school lunch and other supplemental food programs, housing and energy assistance, and programs targeted at specific populations.”

And some people still argue that America is not on the road to serfdom, i.e., socialism.

Tue, 04/06/2010 - 21:47 | 289264 aint no fortuna...
aint no fortunate son's picture

+1 great comments jmc

Tue, 04/06/2010 - 22:14 | 289290 dark pools of soros
dark pools of soros's picture

jmc, forget about most of the fools here -   they see ANY piece attacking SS and they use it as evidence without even questioning what was presented.  Rabid zombies, all of 'em.


But hey, since you denounced a retard for having a gun that MUST mean you are for GUN CONTROL!!!  


same logic being used here

Tue, 04/06/2010 - 22:19 | 289295 Shameful
Shameful's picture

Can you point to a safty net system like this that looks great and is long term solvent?  There must be one somewhere in the world if it's so great, can you point it out to me?

Tue, 04/06/2010 - 22:45 | 289320 dumpster
dumpster's picture

a denninger double   i am the greatest the rest abject fools lol

such unmitigated hubris .. are you the missing puzzle to all things. or a grade 14 government checker  


Tue, 04/06/2010 - 19:32 | 289176 Johnny Dangereaux
Johnny Dangereaux's picture

I grabbed the bull by the horns and took a Chinese class at my local least I'll be a middle manager, telling all the dipshits where to put those rocks they have been breaking!!

Hopefully the Chinese will dump their UST's and we can have a reset.

Tue, 04/06/2010 - 20:30 | 289205 The_Dude
The_Dude's picture

You have no clue what you would be in for, do you....?

I'd rather be a pawn here than a serf under their system anyday.  They are not your friends, Mister RoundEye.

Tue, 04/06/2010 - 20:54 | 289223 non-anon
non-anon's picture
The Handwriting is on the Wall... read and weep!


Flemming v. Nestor

Many people believe that Social Security is an "earned right." That is, they think that because they have paid Social Security taxes, they are entitled to receive Social Security benefits. The government encourages that belief by referring to Social Security taxes as "contributions," as in the Federal Insurance Contribution Act. However, in the 1960 case of Fleming v. Nestor, the U.S. Supreme Court ruled that workers have no legally binding contractual rights to their Social Security benefits, and that those benefits can be cut or even eliminated at any time.

Tue, 04/06/2010 - 21:59 | 289276 Nikki
Nikki's picture

If you lucky fuckers collecting ss and medicare at the top of the great ponzi pyramid would at least buy a car designed and made in this country you could at least help me, help you in your quest to remain living off the fruits of others, like me. Else... I join you in living off of others as we here in Michigan progress from unemployment to welfare.

Wed, 04/07/2010 - 09:24 | 289544 hedgeless_horseman
hedgeless_horseman's picture

But how can that be when the U.A.W.'s man is large and in charge of the .gov ? Maybe the plan is to bring the high low, and keep the low low?  U.S. auto workers have been pretty high for a long time, so the drop to lower standards of living IS going to be a mother fucker.

And thank goodness you have never shopped in a Wal-Mart, else you would be a hypocrite, and a whiney one, too.

PS:  Where are my Chevy Volts?  I just sent full payment for two to GM's home office c/o Tim Geithner.  I want a red one and a silver one.


Wed, 04/07/2010 - 09:59 | 289587 Master Bates
Master Bates's picture

I don't see why auto workers think that they are entitled to everything in the world for doing something you could probably train a monkey to do for half a box of froot loops, a banana, and a mango a day.

Tue, 04/06/2010 - 22:00 | 289277 Marvin_M
Marvin_M's picture

oh Dear... not one comment regarding the ugly twin sister of the welfare state, the Militaty/Security/Intelligence/Nuclear/Private Contractor Complex which sucks up nearly $1 trillion of tax receipts...that's about half ladies and gentlemen.  The Social Security "trust" fund has been sacked and pillaged to feed this beast yet few ever dare mention it.

Many who post on this site seem to be "Generation X" vintage and younger.  You rightfully have a case in that Social Security is a black hole into which you are throwing away money.  While it is right and produtive to question government expenditures (especially wholesale waste) you should also be questioning why in a country with > $2 trillion in annual tax receipts, we cannot consider the common welfare of our citizens and the well being of our seniors to be at least as important as maintaining a global empire and police state.

Herein lies the rub my fellow humans.  And herein lies the basis of social conflict and the direction of our country in the years to come.  Choose wisely.

Tue, 04/06/2010 - 22:21 | 289299 MaxPower
MaxPower's picture

Well, Marvin, there would have been at least one comment, but you beat me to it this morning.


+1 for you.


Back to the old drawing board indeed...


Tue, 04/06/2010 - 22:24 | 289302 dark pools of soros
dark pools of soros's picture

unfortunately we have less and less discourse like this on ZH.  But GenX has bigger worries than if some safety net is going to be around in 25 years - I feel it will since they will most likely tax the hell out of the next generation and us GenXers are a lot smaller in numbers than the baby boomers and seem to crash and burn and die young anyway

Tue, 04/06/2010 - 22:28 | 289305 Shameful
Shameful's picture

Ah pay for the very same seniors that marched us to war and insolvency and waged a relentless campaign to outsource and offshore jobs.  Yes it is our duty to toil and struggle in abject poverty to make sure that they can continue in the lifestyle they have become accustomed.   I apologize for wrongly thinking that I'm my own man and had rights.  I now realize that I'm a slave.  After all it's for the common good.  Though perhaps they could advise me how t find work in the world they have left me. 

It was their right to commit me to these wars to spill the blood of my generation.  It was their rights to sell us into slavery and outsource our jobs.  It is their right to our very flesh and souls that we pay for their comfort at all costs.  Our course we will not chafe under this burden, we are grateful to live under the light of their brilliance


The Boomers were the worst generation.  They could have done something instead they chose to jump 100% into the ponzi.  Well the system is breaking you old guys better prepare, I would rather run then pay for your mistakes.  Good job with the country by the way.  Should be ashamed at what happened on your watch.

Wed, 04/07/2010 - 00:02 | 289380 DoChenRollingBearing
DoChenRollingBearing's picture

Shameful, you are correct that your generation has no duty to pay for the excesses of mine and the generation before.

I don't need nor do I want it (S.S.).  I am not even entitled to it!

For this 54 yr old, I am just keeping my capital safe.  Safety first!  Hey, that's just what they told me at the range today.

A poster above made a lot of sense saying that back in the days of the Old West that each man was responsible for himself and his family.  Been awhile since I have heard that from the MSM.

Wed, 04/07/2010 - 07:20 | 289508 jumpback
jumpback's picture

yes -- your right we should not have gone along.  we should have done what my kids and your generation has done---elect a marxist.  they will get rid of all the useless old farts who are responsible for todays problems.  by the way you should visit germany/poland to see how hitler was going to solve the problem. 

Wed, 04/07/2010 - 09:42 | 289568 Master Bates
Master Bates's picture

Dude, I totally agree.  If you're ever in Colorado, maybe we should hang out for a bit.

EFF the baby boomers.  They're a bunch of parasites.

They constantly spout the refrain "not with my money" as they take from everybody that they can.
They're against helping anybody but themselves, unless it's contractors in Iraq.  I think that many of the people who are 45+ right now are the most selfish people on the planet.

Although they got their hand up when they were our age, now they want to hoard all their money, and sell our jobs out for a few extra dollars so that they can go on lavish vacations and play the high roller at the casino.

They don't want to help us get a hand up, they just want to take their handouts from us and screw us as much as they can at the same time.
It's the whole Reagan mentality. 

"I want government out of my life, unless it's paying for the troops, defense contractors, social security and medical benefits for baby boomers, etc, etc, etc."

Wed, 04/07/2010 - 13:23 | 290075 Older Than Dirt
Older Than Dirt's picture

"Ah pay for the very same seniors that marches us to war and insovency ..."

In 1964, I was 23 years old and had a job in a factory as an expeditor. On March 19 of that year, I arrived at Fort Ord on a troop train as a new draftee -- new blood. It wasn't a choice I would have made, but the alternative was jail time as a draft dodger.

I spent a little over a year in an infantry outfit learning how to kill "bad guys" & avoid capture. Finally, I got a chance to get a job on main post (Fort Lewis, Washington) and I snapped it up.

Two years stateside -- no heroics, just 2 wasted years.Like all draftees, we didn't volunteer for anything, and we were always suspicious of those that wanted to be "heroes."

It was LBJ that lied about the supposed Gulf of Tonkin incident, and the U.S. Congress said "go get em." It took some long talks with a couple of buddies that were chaplains assistants to convince me that we were lied to BIG TIME.

It wasn't a generation that got us into this or any other "non-war" conflict; but it was our asses that were potentially on the line. Vietnam claimed over 58,000 American dead in about 10 years and hundreds of thousands that were either physically and/or emotionally damaged.

It was those of the political "persuasion" that had a "bigger vision" than we little folk. Truman's policy of containment (of the Soviet Union & China) led to Korea. Our Congress did NOT declare war. We've had troops on the 38th parallel in Korea for over 50 years!

Extending Truman's concerns about Communism, the "domino theory" led first Eisenhower, then JFK & finally LBJ to the great lie that led into Vietnam.

9/11/2001 led us to pursue Usama Bin Laden & his gang into Afghanistan. No declarationi of war!

GWB's fantasy of WMDs led us into Iraq. No declaration of war!

Let's get it straight. We've all been sucked into the money & war machine over our lifetimes. Like MILLIONS of others, I've played it "by the book" -- 40+ years of work & paying taxes. The outsourcing & theft of which you speak was performed by TPTB over decades at least. Most of US that you're pointing at are just like you -- folks that do the best we can to have a good life.

I've got no gripe with you re: your perception of Social Security & Medicare; but be clear about this: the taxes we AND YOU paid went into the GENERAL FUND. It was & is used for whatever the Feds want to do with it! If you really believe that, absent the "boomers," your payroll taxes would be funding an interest bearing account that would someday accrue to you (according to the provisions of the Social Security Act), do some homework.

A long time ago, successive Congresses decided that they couldn't be trusted not to spend a large reserve fund. They went to a "pay as you go" plan, and spent the money anyway. No S**T Sherlock!

What would you have done? Most of us are not "revolutionaries." Personally, I met a girl 36 years ago,and ultimately got married. We both worked & saved for a long time. We lived in a 1 bedroom, 1 bath apartment for over 25 years. Finally, we were able to afford to buy a house -- with 20% down, good credit & enough income from SAVINGS to qualify for the mortgage loan.

Unlike any stereotype of "seniors" (I don't accept that label for myself), we work out daily (heavy weights on a 4 day split routine with a couple of days a week for lighter toning exercise like yoga); we're active investors (not day traders) -- I created some DB apps to track our portfloio; we have all of our teeth (everytime I see a TV commercial for dentures or one that represents "mature" people as dottering, disabled fools AS A CLASS it pisses me off).

Drawing generalizations about any population, particularly when it is based on incomplete information, is bound to contain some degree of inaccuracy.

I don't want YOUR money. I want MY money, and the lousy, rotten SOB's have long since spent it! At the very least, we need to stop the SPENDING MACHINE!

Tue, 04/06/2010 - 22:38 | 289314 BS Inc.
BS Inc.'s picture

oh Dear... not one comment regarding the ugly twin sister of the welfare state, the Militaty/Security/Intelligence/Nuclear/Private Contractor Complex which sucks up nearly $1 trillion of tax receipts.

Maybe, just maybe, there weren't any comments about it because it wasn't the fucking topic of the fucking post.

The worst kind of thread hijacker is the kind who laments the fact that his particular hobby-horse wasn't the topic of the thread all along.

At least the state has traditionally been the locus of military power, so there's obviously a precedent for the state spending money there and hardly anyone would characterize the military as a "Ponzi scheme". Sure, there's misspending all around and I'm sure a real audit would reveal hundreds of billions wasted, but it isn't a fraud in its very essence, like SS and Medicare are, so it's not even an apples-to-apples comparison to make in the first place. Again, unless it's your hobby-horse to begin with.

As for the "few who ever dare mention it", if by "few" you mean every "anti-imperialist" douchebag walking the face of the Earth, I 100% agree.

Tue, 04/06/2010 - 22:49 | 289323 dumpster
dumpster's picture

another potty mouth . level two coffee getter for the female boss,

kicking their dog after work ./// zero hedge the dog

Wed, 04/07/2010 - 08:45 | 289527 BS Inc.
BS Inc.'s picture

Did I offend your virgin ears? Maybe you should change your name to Mr. Blue Stockings? Yes, I cuss when confronted with people who parade their self-affirmed "superiority" to the rest of the world ("not one comment", "very few ever mention") as if he alone were in possession of eyes to see and a brain to analyze data. It's annoying, inaccurate and pretentious. Perhaps those things don't get you to cussing, in which case, kudos to you.

And why would I kick a dog? Dogs are beautiful, loyal and wonderful creatures. Now, you, on the other hand...

Wed, 04/07/2010 - 09:23 | 289546 Marvin_M
Marvin_M's picture

sorry that you see it that way Mr. BS Inc., but my comments were very much on topic and in the spirit of civil discourse; counterpoint and opinion presented in fairness to the author and those in the comment thread.

Wed, 04/07/2010 - 10:39 | 289634 BS Inc.
BS Inc.'s picture

sorry that you see it that way Mr. BS Inc., but my comments were very much on topic and in the spirit of civil discourse; counterpoint and opinion presented in fairness to the author and those in the comment thread.

I really don't care how you "see it". Your comment, to the extent that it has anything to do with the topic of SS's solvency, makes the fallacious assumption that "if only we weren't spending money on the hideous military-industrial complex's toys, we'd have tons of money to spend on social welfare programs".

Yeah, right, as if people would put up with tax rates similar to what we have now and have all of it going to social welfare programs. The FAR more likely outcome, even assuming that it were possible to zero out military spending tomorrow with no ill effects, would be that people would demand tax cuts and social program spending would remain about the same as it is now, or, as I would prefer, would decrease.

So, to the extent that you had a point that was on-topic, your point is superficial and wrong. There is no way the population of this country would stand for taking $1 trillion (your number) away from the defense budget and simply transferring it to the social welfare budget. No way, no frickin' how.

Wed, 04/07/2010 - 11:58 | 289803 Marvin_M
Marvin_M's picture

understood...unfortunately if the entire $1 trillion were zeroed out as you say (hardly possible and not necessary anyway to make the social benefits programs solvent), we would still be left with government expenditures in excess of tax receipts.  The current budget deficit is $1.3 trillion and counting.

The point of my comment was not that we should divert all tax recepts to social programs but that we should take a hard (dare I say soul searching) look at our priorities and moral responsibilities both to the people and to the concept of fiscal prudence.  Ongoing maintenance of 700+ global miltary outposts, in over 100 countries and all that entails does not qualify as prudence, again in my humble opinion.

The military, etc. complex is just one (the most egregious) example of how the government has squandered the fruits of our labors.  I did not vote or play into this madness but the commenters are correct in the observation that the bulk of this insanity has occured on the boomers' watch.  Sorry that this has transpired; we saw this monster born and bred by the Vietnam War but we could and did not stop it.  My implied warning is offered in good faith to the generations that will follow us.  Choose our future carefully...

Wed, 04/07/2010 - 00:21 | 289394 Goldfinger
Goldfinger's picture

guilty conscience? just admit it all  contractors are on permanent welfare. if otherwise, please ignore.

Wed, 04/07/2010 - 09:06 | 289540 Marvin_M
Marvin_M's picture

fail to connect these dots at your peril kind sir...pouring half of the nations tax wealth into a voracious, wasteful, imperial war machine is fraud at its most evident.  The term "Ponzi Scheme" is an over-used euphemism for the villain du jeur.  SS and Medicare are in essence insurance plans not unlike life insurance and annuities.  We have paid into them at increasing rates throughout our 40+ year working careers.

It has become fashionable to vilify social programs by those who don't need them and those for whom, through the mis-allocation of citizen taxes, the government will one day deny these programs.  Trust me I was where you are 20 years ago and now I am somewhere else.  Watching your own parents, those of whom do not have personal fortunes, struggle to maintain dignity of life in their declining years is the first step of enlightenment.  Seeing oneself on the doorstep of one's own final 20 years is the second.

America needs to take a step back and think about the path we will take.  We have strayed very far from the compassionate ideals infused by the framers in the Preamble to the Constitution.  America has not become what was foreseen in this simple and elegant passage, in my humble opinion. 



Wed, 04/07/2010 - 10:42 | 289638 BS Inc.
BS Inc.'s picture

SS and Medicare are in essence insurance plans not unlike life insurance and annuities.  We have paid into them at increasing rates throughout our 40+ year working careers.

Wrong again. SS and Medicare's contractual structure, to the extent that it even exists, provides FAR, FAR more limited "rights" to recieve benefits than my contracts with a life insurer or health insurer. Anyone who cares to "read the fine print" can see this with even a cursory understanding of the actualities of those programs, as opposed to the fine-spun rhetoric of those program's supporters.

Tue, 04/06/2010 - 23:55 | 289330 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The Doelarr is dead.  Greenspan said about SS and pensions, "We can guaranty cash, we can not guaranty purchasing power."  Think REAL.  Get physical.

Also, SS does not exist in actuality.  After Ronnie Reagan took out loans with SS money, replacing it with IOUs, and then returning the money, GHWB decided to take it out, replace it with an IOU, and...thats it...there is still currently an IOU sitting in the vault.  This is why we, "Pay as we go."  Too bad Barry et al do not explain what "Pay as we go" means to Joe Sixpack.  Viva la Rev!

Ill Bill Feat/ Immortal Technique-War Is My Destiny:

Tue, 04/06/2010 - 23:33 | 289354 HungrySeagull
HungrySeagull's picture

Straight cash for a 16,000 dollar MRI procedure aint happening. Straight cash for 1000 per day stay isnt happening, 600-1000 dollars for Ambulance or much more for Life Flight not happening. Once considered shipping a sick relative 5000 miles by life flight using a 34,000 expenses trip for everything needed to safegaurd said relative. That didnt happen either.


Now, I can take car to shop and replace the struts for 1500 dollars or pull routine maintinace for whatever it is listed behind the shop manager's wall.


Healthcare needs to do the same. Charge 1000 for MRI, 300 for the ambulance and maybe 500 per day for a non monitored bed.


I grew up in a time where a steel framed bed, oxygen/gas and medicines were on a tray and a few linens, med dressings etc in the room. That's it.


Today you walk into any room and will find tens of thousands of dollars worth of electronic CRAP and fancy beds that can bend in contorted positions for you.


Give me a break. Maybe that is why no one can pay straight cash for anything.


The very system of health care and associated is it's own Cancer that will bring a general collaspe of the host.


Regarding social security, wait about 20 years or so, all the old ones will die off and allow the new crop of workers to have a chance at something.

But these workers are not going to get much of anything stuck in service jobs that cannot be exported overseas.

Wed, 04/07/2010 - 09:49 | 289575 Master Bates
Master Bates's picture

"wait 20 years or so"

You know, some of us don't have 20 years.  The economy has been shit for half of the 10 years I've been in it.  Now I have to wait another 20 years for opportunity?

Why don't the baby boomers sell their McMansions, live in a ghetto apartment, and then cry about how the young need to wait 20 years for opportunity.
I say we cut em off now.  They've done nothing but cut our opportunity, and we need to support our families just as much as they did when they borrowed from us 30 years ago.

As far as health care, the amounts that they charge for it simply don't add up.  My aunt was in the hospital for 4 days and had surgery.  90 grand was her bill.
Now what could the hospital do in four days that was worth 90 grand?  In a room half the size of my ghetto apartment?

When my dog has surgery, it's like 1500 bucks.  Why is it 90000 for a human to have a comparable surgery?
So six fat women can sit around at a desk and type once in a while?  So a doctor can see you for five minutes and charge you 800 bucks for it?

Health care is broken.

Wed, 04/07/2010 - 11:28 | 289715 DoChenRollingBearing
DoChenRollingBearing's picture

Health care system may be broken and the Boomers may have taken too much.  OK.

But, it is up to YOU, not boomers with debted-up-the-wazoo McMansions, to make your own future.

You can find work, however skewed our .gov, our ridiculous .gov spending, and the all the greedy B*****DS have devastated our system.

Find the opportunities that are out there.  (My daughter got a job (paralegal) with just a BA in French and English, she is doing fine in the rat race)  Work hard.  Save more.  Think over your priorities ($1500 for your dog's surgery?).  Spend less, although having a small crappy apartment sounds like you are there.  Stay healthy, all my wife's family (Peruvians) think that doctors are "quacks" anyway. 

Wed, 04/07/2010 - 11:35 | 289723 DoChenRollingBearing
DoChenRollingBearing's picture

Last 2 MRIs I got cost me $550, total.  You can shop around, why throw money away?

Don't take the ambulance if you can drive there or have someone do it for you.  If one of those urgent-care clinics can take care of your problem (like they did my last injury) go there NOT the emergency room!

Those at risk (old, weak, etc.) should not travel thousands of miles away!

OK, there really are bad emergencies that cannot be planned for.  But, anyone can THINK and lessen risks and cut costs.

Wed, 04/07/2010 - 12:31 | 289925 Oquities
Oquities's picture

you're talking about the people who pay for their own care.  those who get an ambulance at no cost will often call it dozens of times throughout their lifetimes, and just tell themselves the "government" provides it, so "whatev." 

i'm with you philosophically, but realize that the entire moral dynamic has changed.  when the handouts accelerate, the "get mine" mentality is like that of the NASDAQ stock bubble - and the crash of social services is just as inevitable.

Tue, 04/06/2010 - 23:38 | 289362 mark mchugh
mark mchugh's picture

I think you're missing the point here.  Social Security wasn't set up to be unsustainable; it was criminally mismanaged by the Treasury and Congress.  Taxpayers have paid in 2.4 Trillion more than SS has paid out.  Congress pissed that money away and the Treasury let them.

I'm genuinely surprised that you'd hold this view, Tyler.  The problem with SS is simply that you can't trust our Government to manage money.  It was never intended to be the Ponzi scheme it has become (and that's all it is).

But consider this: A true retirement Ponzi scheme, run efficiently, will work out better for most people than the notion that if you pour enough money into the Wall St. cesspool casino, they'll be a nice wad of cash waiting at the end.  It hasn't worked in Japan and it won't work here, either.  Know why?  Because these people are sociopaths.

I'd rather pay into a Ponzi scheme than subsidize thieves

Tue, 04/06/2010 - 23:55 | 289378 Shameful
Shameful's picture

Do your homework.  Was a ponzi from day 1.  FDR never set aside the money properly.  Just another scam that got played on us.

And why on earth would you want to invest in a ponzi?  Would you rather knowing invest in a ponzi then invest yourself?  "I know this Madoff thing is a scam but maybe I'll be one of the lucky ones!"  A big part of it is our monetary system.  If money didn't rot we wouldn't need to gamble with savings.  We must have sound money if we can save without gambling.

Wed, 04/07/2010 - 00:53 | 289417 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Fo Sho...I mean, what do you expect from a guy with the middle name Delano....House of of three banks who sold Civil War bonds....Warren Delano Jr., FDR's Grandfather, ran drugs during the Chinese Opium trade....the same trade that the Forbses and other rich east coast blue bloods made a grip of their money.  It's all in house people!

Wed, 04/07/2010 - 02:12 | 289466 mark mchugh
mark mchugh's picture pretending to be a capitalist country is the answer.

Here's your homework.  What you call "investing" is actually the result of the biggest Wall St. bailout ever.  The 401(k) pipedream.  Sure, we'll watch your money (tax deffered) for forty years.  And hey, for twenty years, it almost seemed like it might work (and I think it's cute that you still believe) because people blindly threw money at the greediest mother-fuckers on earth.  Party's over now.  So when you calculate the piss-pour returns of the last ten years, don't forget inflation and remember those saps still owe taxes on whatever's left.

100 million dollar CEO's?  Million dollar a year traders who do nothing more than front run others?  We created these monsters.  Look at a tweny year chart of the Nikkei - that's our future, if we're lucky.

Yes, I would rather invest in a Ponzi, where current obligations are paid from current receipts.  No razzle-dazzle.  Collect and payout. Low overhead.

Wed, 04/07/2010 - 08:38 | 289531 BS Inc.
BS Inc.'s picture

And hey, for twenty years, it almost seemed like it might work (and I think it's cute that you still believe) because people blindly threw money at the greediest mother-fuckers on earth.  Party's over now.

Any "theory" that relies on exchanging one group of leaders considered morally bankrupt with another group of leaders who have hitherto not been morally bankrupt and giving the latter group the same essential powers as the former used to have is bound to fail.

Everyone on the planet is equally greedy. Only circumstance allows them to exercise or not exercise that greed. If you found yourself in a situation where you were on Wall Street, you'd be just as greedy as the people you condemn today. I'd wager my life on it because that's human nature and, even if you don't think you are subject to its dictates, you are.

Wed, 04/07/2010 - 10:25 | 289616 mark mchugh
mark mchugh's picture

Dear Blossoming Sociopath,

Just because you don't have a conscience, you shouldn't assume no one does.

You're missing all the points here.  You shouldn't trust anyone to babysit other people's  money.  The boomers have already leant out 2 and half trillion dollars and the discussion seems to be that they don't "deserve" to be paid back principle, let alone interest.  I disagree.

The Wall St model is also a fail, but there's a lot of people who don't understand that yet.  This bogus government-backed rally is only setting us up for a bigger trainwreck.  Don't get me wrong - if you want to take your after-tax dollars and put them at risk cause you think Steve Jobs is going to make you rich, g'head.  That's what capitalism supposed to be.

What surprises me here is the notion that it's OK to pay Goldman 100 cents on the dollar, then turn around and Welsh on the obligations to your grandparents ('cause fuck them).

FYI - I left my big "financial services" job because I couldn't in clear conscience let my employer clip people 2.5 to 3 percent annually.  When you compound that out over thirty years, they've taken half!

Wed, 04/07/2010 - 11:16 | 289692 BS Inc.
BS Inc.'s picture

Dear Blossoming Sociopath,

Just because you don't have a conscience, you shouldn't assume no one does.

I don't have to assume anything. I watch what people do as opposed to what they say they will or want to do. So far, my takeaway from life is that, at best, "good" people are lazier than "evil" people. At worst, they are actually all the same, you included. As Nietzsche would say, you're just too weak to be able to do anything about it.

You're missing all the points here.  You shouldn't trust anyone to babysit other people's  money.

It's called "the division of labor". Who said anything about "trust"? You write up a contract and if one side doesn't adhere to the specifications of the contract, you have a case to take them to court.

What surprises me here is the notion that it's OK to pay Goldman 100 cents on the dollar, then turn around and Welsh on the obligations to your grandparents ('cause fuck them).

I don't know who is more surprised, you or me, considering that nowhere in my reply did I mention jack squat about Goldman. So, if that's your main counterpoint, that I support Goldman's bailout but not making good on promised to Grandma, you're 100% wrong.

Wed, 04/07/2010 - 13:14 | 290048 mark mchugh
mark mchugh's picture

That was a cheap shot, sorry.

Look, here's the deal - the governmen took the surplus and spent it.  What's done is done.  I'm not suggesting that we crush future generations by actually making them pay the full bill.  Just don't trust the government to manage money - they can't

But to suggest that the Wall St. model is somehow better is absurd.

Oh and by the way: Anyone willing to claim to be a practicing Christian Scientist is allowed to opt out of Social Security.  You don't pay in and you're not covered.  Now there's a "real man's" solution.

Fun Fact: Former Goldman CEO / Treasury Secretary Hank Paulson claims to be a practicing Christian Scientist.  Funny story:  When Goldman's moment of truth came, he didn't pray for a gold meteor to land in his back yard as much as look for a way to stick the taxpayer with bill.  His prayers were, and continue to be answered (Thank you, Jesus).

The US mortgage market is now 100% socialist (once you go over 95% - the rest is make believe), but somehow that kind of socialism is perfectly acceptable to so-called "capitalists."  Why?  Because without goverment intervention Wall St. would look like Detroit.  So to frame this argument as ideological doesn't make any sense.  Wall St. bankers are not alpha-males, they're welfare cases.  Extremely well-compensated welfare cases.

To keep their gravy train rolling, they need to steal.  If you don't like socialism, start with Wall St.  Of course, that would mean Dow 3,000 (which I'm cool with).  I think you'll find pretty quickly that all these supposed "survival of the fittest" clowns aren't so fit.

Wed, 04/07/2010 - 00:30 | 289402 torabora
torabora's picture

Mark! You're singing my song.

Wed, 04/07/2010 - 08:54 | 289536 Jake3463
Jake3463's picture

The baby boomers will consume every damn resource before they leave.  It was what they've been doing since they came of age.

Wed, 04/07/2010 - 12:01 | 289817 JR
JR's picture

It is finance, not baby boomers, that has stolen America’s wealth.  Most baby boomers, those born between 1946 and 1964, have had to live “within their means” on the paychecks of two wage earners most of their lives. And they’ve paid their way. As a result of the tax increases instituted by the 1983 Amendments, over the last 25 years the Social Security system has collected more taxes than it has paid out.

In 1983…a 30-year-old baby boomer needed to commit 44 percent of his income to meet the carrying charges on a median-priced house.  That same year, 65 percent of all first-time baby boomer homebuyers needed two paychecks to meet their monthly payments…

By the end of the 1970s, Fortune magazine estimated that baby boomers had effectively lost ten years’ income when compared with the earnings of the generation just preceding them. Throughout the 1980s, corporate “downsizing,” “streamlining,” “merging,” "offshoring” and "globalization"  eliminated whole levels of middle and upper management.  In the 1990s, salaries barely kept up with the cost of living and taxes.

And, now, the “boomers” are getting old, and the “healthcare” that they'll rate as depicted on the graph of Obama health-advisor Dr. Ezekiel Emanuel—what he calls his  Reaper Curve—is bare “minimum.”  They aren’t productive any longer, you see.

As to the  current plight of boomers,   Zero Hedge reported in January in “Observations On The Aftermath Of The Artificial Recovery From Dean Baker,”  the Co-Director of the Center for Economic and Policy Research, these statistics:

  • Baby boom cohort is in its peak saving years (ages 46-64)
  • Defined benefit pensions are disappearing
  • Most have little savings
    • Median 45-54 -@$50,000
    • Median 55-64 -@ $60,000
  • Housing equity vanished with crash (Many underwater)
    • Median 45-54 -@$30,000
    • Median 55-64 -@$70,000
  • Proposals to cut Social Security
  • Seniors face large and growing health care expenses even with Medicare

Further complicating matters, the one certainty associated with the Obama regime, high unemployment, will persist…

It is the international banking cartel operating on America’s shores under the moniker, the Fed,, not the baby boomers, that has gamed the American system, commandeered America’s property rights and wrecked the American Dream.

Wed, 04/07/2010 - 09:29 | 289551 Lndmvr
Lndmvr's picture

As a care giver to my 92 year old mother in law who in the last 18 months had a fractured pelvis, intestine surgery, H1N1, hip replacement. When an elderly person you know is laying on the floor in pain at 3 in the morning, You want any and everything you cab get done for them. She paid what they asked from her check for years, and didn't know any better. I care not what the gov spends on her. That said, we hope she passes at home with us instead of in stinky diapers in some crap ass old folks home and spend all our waking hours on edge and our nights listening for the slightest bump. It's real people out there. I have no answers.

Wed, 04/07/2010 - 09:55 | 289582 Master Bates
Master Bates's picture

Part of me feels the pain of this woman, and wants to make sure that she's cared for in the best way possible.

But then there's our health care system.

What you described to treat her could have easily cost a quarter of a million dollars and upward.

So I mean, healthcare is grossly overpriced, and that's not her fault.

But at the same time, should we really be spending 250k every six months on somebody who won't live five more years anyway?
I mean, at this point in her life - where is the quality of life?  I hope I die before I'm that old, personally. 
If not, if I have all of these problems, I hope that they pull the plug on me.

It's not right for other people to bear my burdens.

Wed, 04/07/2010 - 14:03 | 290176 RockyRacoon
RockyRacoon's picture

Up to this point I've refrained from replying to your missives, Mr. Bates.  But, I'll have to say that your view is a bit skewed.  Were you to be visited by the Grim Reaper looking for your soul you might have a different view.   Your perspective is quite narrow it seems.  It would be unfortunate for you to have a serious car crash and have a doctor say, with his best bedside manner, "Mr. Bates, it will cost 6 million dollars to get you to a position of living in a wheelchair the rest of your life.  It's a no-go, Mr. Bates."   Yep, I know, your view would be that the plug should be pulled.  Sure.  That's a brave stance with the view thru your computer monitor rather than thru an oxygen tent.

While I'm at it, how about you return all the benefits you got from the plundered Social Security benefits that I'll one day expect to be returned to me, the payer.   I could not possibly list all the benefits you've received from the government we all abhor.  Let's start with your educational benefits (actual or indirect), and go down the line from there.  The list would be mind-boggling.  Of course, you did not ask for any of them, but you got them nonetheless.  Give us old Boomers that money back.

My stance is that we have what we have, and steps must be made to mitigate the damages.  All those damages done by Legislators and Presidents and Courts who are ineffective, greedy, ignorant, and all the other synonyms you can muster.  I don't know the instant solution, but cutting off folks who have lives to live isn't the immediate answer.   Perhaps the creation of a commission like the base-closing sort would be a good idea.  I have no answers but at least I don't advocate mass-murder -- how is that constructive?

Wed, 04/07/2010 - 11:41 | 289742 Oquities
Oquities's picture

for my 40 years as a working dwarf for snow white, my employers and i have paid enough into ss and medicare that, compounded at 5% or so, would net me a million dollar pot.  that would pay for all the retirement and health care i need.  instead i will/may get annuitized payments of about $19k for 20 years.  also, when i'm 65 in 8 years i'm sure that a government controlled geriatric sustainability council will decide my fate. 

Wed, 04/07/2010 - 11:56 | 289793 JR
JR's picture

First, social security contributions were forced on the people. Contribute or jail!  And, now that there’re some budget problems brought on by the rulers who invented mandatory retirement contributions, everybody has a suggestion on how either the money paid in can be taken away or the shortage can lead to more contributions at the point of the gun.

The point is, as we started our working lives we didn’t ask for this additional government burglary scheme.  When there was resistance, it was quickly decided to have employers take out our “contributions” on behalf of the government with just a notation or two on the regular paycheck.

It’s pretty revolting, IMO, to discuss SS in the same equation as welfare when “Social Security” represents actual ownership of the funds by the contributors.  After those funds are misappropriated by Congress, it’s the same rulers who then decide how much and when they will be returned.  If people had been given a choice, there would never have been a Social Security program and there wouldn’t be one now. Why?  Because it’s a losing proposition and always has been.

The reason the system is headed for trouble is that Congress spent the money on something else and changed the rules.  Congress keeps increasing the number of welfare roll people getting SS who didn't pay in.  SS disability benefits for drug addicts and alcoholics are out of control. Those receiving SS who never paid into it now include the poor elderly, the blind middle-aged, the disabled young in the city and suburbs who receive federal Supplemental Security Income and millions of legal and illegal Mexican immigrants.

Because the government lies about inflation and uses it as hidden tax on citizens, SS has become the rulers ATM. And now that it’s time for the Boomers to access that ATM, the ATM account mysteriously appears overdrawn and so,  SS needs to be cut, the recipient age postponed, payins increased and a means test engaged—just when the Obama Reaper Curve is kicking in.

It turns out that FDR’s contract with the people was just one more government burglary.  Every penny that was put into that “trust” was somebody’s money. If there are people getting it that didn’t put into it, that’s illegal.  It’s just one more government trick. Eventually our representatives will just tap our bank accounts any time they need money.  The last step, as in the feudal system, is when the Lords of the Manor hold all the money.

The average monthly benefit in 2009 was just over $1,050, according to the Social Security Administration.  And, because the Fed says there is no inflation, there was no cost-of-living adjustment, or COLA, for Americans receiving SS checks this year.

Fri, 04/09/2010 - 03:43 | 292771 mark456
mark456's picture

Good linux hosting package offered by ucvhost which not only provides the best in terms of hosting packages but also believes in truly being there for the customer, 24x7. cheap hosting Moreover , they offer unlimited bandwidth as well as nearly 1GB storage along with database maintenance, email facility along with storage, availability of sub domain and many other important features for a very low price. windows hosting Thanks forex vps

Do NOT follow this link or you will be banned from the site!