that the SS program can be stabilized without significant and prompt
action to address the underlying imbalances. Failure to deal with the
problem in a timely way will result in a systemic problem for the US
economy in less than ten years.
While there are a number of proposals to address the imbalances, there
really are only two possible out comes. Either the 60-70% of the baby
boomer population who are highly dependent of SS are going to have the
benefits cuts, or younger workers are going to have to dig into their
pocket to pay for the Boomers for the next 30 years.
Bottom line; either a significant portion of seniors are going to be eating cat food, or the next few generations are going to be paying (unfairly) through the nose.
I have not written one of these critical pieces without getting a bunch
of complaints from the big guns who support SS (as it is) and maintain
that what I am saying is just bunk. They are wrong, I’ve been right all along.
Charles Blahous, the Public Trustee for the SS Trust Fund gave testimony (Link) to the House Ways and Means Committee on Friday. I think he laid it on the line rather nicely.
The 2011 Trustees’ report is the first in which Public Trustees have ever participated to have concluded that an era of permanent annual deficits has been reached.
This is important. It’s all you need to know. SS has turned a corner. It
is headed south. It will continue to head south as far as the broader
economy is concerned for the next 75 years (actually SS is in perpetual deficit).
Social
Security expenditures exceeded the program’s non-interest income in 2010
for the first time since 1983. This deficit stood at $49 billion last
year and is projected to be $46 billion in 2011.
These are not small numbers. The $100b shortfall in 2010-11 is a fairly
big burden given that the rest of the government’s finances are in such a
hole. Blahous said something that may have been a “tell” as to what we are looking at in the future with these deficits:
This deficit is expected to shrink to about $20 billion for years 2012-2014 as the economy strengthens. After 2014, cash deficits are expected to grow rapidly as the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers.
Blahous is not following the SS “script” with this comment. These are the projected deficits based on the SSTF annual report:
Note that the “projected” annual deficits remain fairly small all the
way out to 2018. So what is Blahous referring to regarding big deficits
post 2014? SS provides an alternate forecast that they call the
“High-Cost” analysis. This chart looks at the two forecasts together.
For Blahous to suggest to Congress that the deficits will be “growing rapidly”
post 2014 represents (to me) that the real thinking inside of SS is
that the actual results will be closer to the worst case scenario.
Should that be the result, the cumulative deficit at SS from 2011
through 2020 will be a very lumpy $900 billion.
My own review of the numbers says that we have little chance of achieving even the results of the high cost analysis. It is likely to be much worse than that.
The problem is that the economy is simply not producing enough jobs.
There are fewer workers contributing to the system. The SSTF is
anticipating “a strengthening economy”, I see no evidence of this today
and have no expectation for a turnaround in the jobs picture any time
over (at least) the next five years. The following graph says it all on
payrolls in America. The recession killed us. As of today the number of
workers contributing to SS is less than it was in 2000. Look at this at
you will understand the problem.
I think that Blahous made some important comments. One’s that will shut up the defenders of SS. The argument that those defenders repeatedly use is that SS does not impact the current deficit. That is flat out wrong:
Social
Security operations are currently adding to the unified federal deficit
and will add substantially more in the years to come.
The facts folks. SS is adding to the annual budget deficit ($116b in
2011). It is adding to our funding deficit (the amount we need to borrow
from the Public). That number was a manageable $49b in 2010 but it will
grow every year from now on. In less than a decade it will become
unmanageable.
Blahous spoke about the “Assets” of the SSTF. The believers in SS constantly point to the huge $2.6T surplus at SS and say: “There is plenty of money in the piggy bank. There is no need to mess with SS today”. That is not the case at all.
If we look at the bonds from the perspective of the Trust Funds, they are assets. If we look at them from the perspective of the unified federal budget, they are a net wash, as are the interest payments that they receive.
Folks, there are no Assets in the Trust Fund. There are pieces of paper
to be sure. But they are just pieces of paper. The merely represent
claims on future taxpayers.
The following words are, I think, critical to the debate on SS:
The costs that will be borne by younger generations will grow significantly each year that a new cohort of baby boomers joins the benefit rolls.
I am screaming at the top of my lungs, “How can we let this happen?”
To me, it is absolutely insane to think that the Baby Boomers (I’m one) can put the burden of SS on younger workers. This simply will not work.
The result of a policy approach that sticks everyone under 50 with the
cost of the Boomers is going to result in deep social divides. We have
enough problems in our society today. We don’t need/want Age Warfare to be added to the list. But if the plan to “fix” SS is one that sticks the bill onto young people we WILL have age warfare, it’s inevitable. The social consequences would be greater than the economic costs. Why does no one see this?
Addressing the imbalances at SS will be painful, and no one likes pain.
So the result has been that our political leaders just kick this can
down the road. I don’t think that there will be any fixes at SS until
after 2012. While an extra two years will not result in a crisis, it
will result in a higher cost of the necessary fixes. I hope all the
defenders of SS read what Blahous has said on this:
Elected officials will best serve the interests of the public if financial corrections are enacted at the earliest practicable time.
Earlier action will also afford elected officials with a greater
opportunity to minimize adverse impacts on vulnerable populations, including lower- income workers and those who are already substantially dependent on program benefits.
The big defenders of SS call themselves Liberals. Paul Krugman and Dean Baker are on top of the list. But there is nothing liberal about their position. Who is going to be most hurt by what is coming (absent changes)? The answer is clear. Older people who are 100% dependent on SS and younger workers who are on the bottom of the income scale.
The Liberals have to come to understand their dilemma. The more they put
their foot down and demand no changes to SS, the worse off will be
those that they are actually trying to help. The liberals are shooting their own constituency.
Note: On these matters I consider myself a liberal. But I
come to a completely different conclusions than those who actually call
themselves Liberals.
My position on this complicated issue:
-We can’t cut benefits across the board. Too many people would be eating cat food. That’s not American.
-We can’t put the burden of the Boomers on younger workers. It’s simply not fair. That’s not the American way either.
-The solution(s) have to be born (largely) by the Baby Boomers
themselves. Post the Boomers, SS can be a PayGo concept. But the
transition is not PayGo. It is a huge inter-generational transfer of wealth. This means that well off Boomers (there are many, including myself)
are going to have to dig into their pockets to support those in their
age group who did not fair so well. That, in my opinion, is the only
viable solution. That would be more representative of the American way. Fairness.
You'n me are on the same page -- the Great Implosion™ has to occur BEFORE Govt. will be FORCED to do something constructive!
Taxing wealthy boomers to pay for poor boomers retirement is more fair than taxing the kids.
I have been trying to start the intergenerational war for a while. Let us get it out in the open with all its ugliness. Quit pretending.
The boomers would have all the rest of us become tax and debt slaves before they would give up one penny in benefits.
However some of us right now know that social security will be means tested and caps lifted. I am already well ahead in planning my official poverty. Only honest people, stupid people, and the naive will be at a disadvantage.
I think you don't know a lot of people my age (boomer). I'm prepared, willing, and wanting to not receive one penny in SS after paying in huge. I would do this for my children and their cohorts. But only if the gov't would dismantle SS.
But it ain't going to happen - even if all the Boomers shared my view.
So what's next - a boxing match?
I work with people that make the same amount of money as me and they have saved nothing. I, making that same amount of money, have saved quite a bit. Bruce thinks that when we all retire they should get my social security. I say FUCK NO. Let them eat cat food if they are lucky enough to afford it.
Is this clear enough?
Well Fred, you have framed the argument. I on the one side, you on the other.
A question for you. Warren Buffett is a billionaire. He gets a monthly SS check. Do you have a problem if Warren gets his check cut?
That's... about one molecule in the bucket. We're saved!
Did Warren pay in?
More bullshit. Warren Buffett is not the issue. You use that argument to start stealing from people. You will not stop at billionaires and you know it. If you want to give money away give your own not mine.
Sorry, but you're laboring under a misconception: any FRNs "promised" to you by the Federal Govt first has to be TAKEN from someone else, in order to be "given" to you -- most likely at the point of a gun, more likely, pointing at YOUR children/grandchildren! Fair? No way -- realistic? Unfortunately, si!
Fred, Answer the question.
IMHO there is no way that Warren should get a check. The question is how far down the ladder of wealth should we go to cut off SS benefits.
Here is my answer to that. If you are 65 and still earn $100k (150k with a spouse) you don't get a check.
The Buffet question is easy to answer. The cut off at $100k is less easy to answer I admit. But that is my solution. Cut benefits completely for the 30-40% of boomers who are in good shape. Preserve them for those that did not thrive the last 40 years.
That is some added incentive to stop working at 65, even if you are still/could be making $100k. Especially if those continuing to work have to pay FICA on their wages.
Or do you want to force them somehow, so they must continue to work, Bruce?
So not giving Warren Buffiett a social security check will fix things? Pure bullshit. You use Warren Buffett not getting SS to start stealing from everyone you want to. Your stealing will not stop at your 100k number and you know it. The question is and has been answered. Give everyone what they have paid for and promised. Equality is a good thing.
Why are you allowed here to keep posting this bullshit?
Thanks for that, Bruce. But why don't you mention clawbacks or cutting military spending? Do you just think this is impossible? Do you think Tarp and all the re-routing of tax receipts to bail out TBTF banks is ok? To me, you seem to have a kind of numbers driven myopia which dictates that if there is a problem with inadequate funding of social security or medicare, then the solution must come from social security or medicare. Even CHS makes the point that we will eventually be forced to withdraw troops and shut down bases around the world in order to rearrange our priorities for our own citizens. Why are these other expenses untouchable in your mind? Regarding the problems being caused by the current depression, isn't it at least possible that one could construe that to mean all the funds that were diverted to the banksters? This multi-trillion transfer of wealth is a more egregious burden for future generations than having the young pay slightly more taxes for social security. I agree with your idea of means-testing, which also amounts to admitting that SS is a social welfare program and of course the trust fund is a fiction.
I find it odd that people are calling you a liberal now--things must really be swinging toward the right on this site.
Very good point.
Government is perverting incentives by punishing thrift and hard work while rewarding laziness and profligacy.y
Productivity should be rewarded and encouraged.
Non productivity should be punished and discouraged.
Otherwise our country continues to go down the tubes.
http://goo.gl/FnxBZ Treasury Direct $14 Trillion Debt
http://goo.gl/TMl74 $15 Trillion in Loans
http://goo.gl/EXzal ='s $29T
http://research.stlouisfed.org/fred2/series/BASE 3 Years 300% More Dollars Printed Out of Thin Air!
in 3 years.. NOT! including TARP / TALF / FED SWAP Windows.. and / or any other.. than what is sourced and sited above..
$18 Trillion in 3 years! $18 TRILLION!
If we can as a Country afford to send hundreds of Billions to Gadaffi! then we can feed our own.
The U.S. is just barely in front of Mexico quality of life wise. Just.. and we are number 20 on the list? of developed Countries.. with mexico in trhe number 21 spot.. seriously? America is that bad off? really?
Have you been to Mexico? and we are just barely above them.. becuase NO ONE pays their fair share.. the richer you are the less you pay! all the way down to 0 fucking Tax Dollars.. and then the subsidies and then the carry forward tax credits!
America is fucked up becuase no one pays their fair share.. but look at all of these people arguing about what is put on the 24 hours news channels! look at the dance to the tune that is played and ignore the real issues.. all of them! dancing the tune played!
and then we have Bruce and all like Bruce that play the tune even louder! LOL!!! dance Monkey's! Dance!!
while Trillions are drained by the money sucking scum bankers! The FED has you dancing to any tune that does NOT! include taking away their 6% tax trough! 0.25% FED window and the sahreholders of the FED earn 6%.. well who makes up that difference? thats right dancing monkeys! YOU DO!! dance to abortion! dance to Social Security! blame the largest group of people so we can starve them and control the population and! AND!! keep the tax trough flooded for the FED!
WAKE UP PEOPLE!
sorry Troll some of this was for the ignorant masses! not you.. some of it was for you.. but mostly not! so sorry buddy.
i stopped reading at 'liberals'.
Jo,
You have to engage them on their level... so that you can reach them and then pull them up.. it is tough, no one has ever wanted to take the time to educate them.. thusly the Country looks like it does.. we have no choice but to try to un-program the 24 hours a day, 7 days a week of poison that they are inundated with.
if not us? then whom? will take the time to engage for the betterment of us all!
it really is the Matrix, after a certian age their minds can Not! make the switch. Old dog new tricks and all that.
if a broad plan education for the masses is not enacted... we are all doomed!
My best to you and yours Jo as always, JW
There is one one solution as it already in the works. Print Money until the dollar becomes worthless in order to honor the promised entitlements.
Bruce you also forgot about Medicare which is running about $600 Billion in deficits, and it will get much worse since every day about 10K boomers are retiring every day. Medicare will be running $1 Trillion deficits in just a few years. You would have to tax everyone at 100% just to meet Entitlement Obligations.
Politicans won't cut entitlements. Those that try will be quickly voted out as the large voting block are boomers + existing retirees. Few boomers have any retirement savings and they are all counting on entitlements to get by.
You're right. Medicare is an even bigger/more pressing problem. I have no idea what to do with this. We are going down the road to where the solution is is to cut medicare, kill 30-40% of the boomers and the problems at SS are solved.
You will have to eliminate 60 to 70% of boomers to balance entitlements with revenue. Consider that SS when redline in 2008 (at least for some months) and the first of the boomers retired in 2008 (born in 1946), and that was for the boomers that opted for early retire (not at 65 with full entitlements)
As what to do. Do nothing to fix the problem. The dollar will collapse, and the US will break up into the divided states, when states are forced to print there own currencies in order for commerce. Best option is to move into tangable assets to preserve some wealth.
While I am on a roll, don't forget about peak oil and declining energy production. This will have a major impact on the global economy as the world must endure with less every year. Be prepared to downsize (smaller car, smaller home) invest in energy efficiency (more insulation, energy efficient applicances), and plan your long term career around declining energy consumption. Avoid having children.
Where do we start Bruce? Shall we kill the richest boomers and distribute their wealth amongst us? Shall we kill the dark skined boomers and preserve our Aryan heritage? Shall we kill the Jews, or maybe the Catholics.
A civil war is a great war to solve problems, it worked so well in Bosnia, and Peru. I'm sure we can find a target number and kill our way to success.
Do you know how stupid you sound when you suggest murdering your way out of financial stupidity? If this is the best reasoning you can come up with perhaps you would be better suited to a life tending the terminally ill where you can watch death arrive every day and wonder when your turn will arrive.
We all have exactly the same right to be alive as you do, and when you facetiously mention murder as an expedient resolution, you give everyone the same right to kill you as you claim to have to kill them. Is that the world you want to live in?
Take your rhetoric down a notch. You are becoming obnoxious and tedious.
Let's make it simple by killing all the fucking boomers. The bastards have assfucked the whole planet; pissed away the democratic, intellectual and economic capital it took Western societies hundreds of years to accrue; stolen from their kids; stolen from the third world; sat back and smiled as the politicians shipped jobs to dictatorships just to keep consumer prices down; voted in their millions for cockmongling liar politicians election after election; got fat as their own governments toppled democratic states in the name of fruit companies, banks and oil firms - and the fuckers *still* think they're the centre of the world. Piss on them. With a cherry on top. A cancer cherry.
Let's see how you change things. When things don't change it will all be your fault. And you aren't killing anybody.
Of course you're just ranting, but do you like sounding like a nazi?
all these old people let the government turn into this monster!
all these old people are to blame for the mess we are in!
all these old people should have to suffer what they wanted! and made happen!
so! Yes! FUCK THEM! cause they Fucked U.S. First!
This appears to be the plan. This will be worse for the people than declaring SS and Medicare defunct and void and moving forward with no replacements.
You are 100% right. The Govt will not cut entitlements. That will never happen. That's just the way it is, and they really, really, really don't give a shit.
Great Implosion™, here we come!
Could someone - TYLER!!! - help me write a macro that automatically prints the following, when someone writes the phrase "Social Security Trust Fund":
"There is no "Social Security Trust Fund" that can obligate any Congress to spend money to or from any "Social Security Trust Fund" or other device or deception of similar intent.
Please see:
Fleming vs. Nestor
Helvering vs. Davis"
Alternative wordings are acceptable in equvialent to the main idea here.
PLEASE HELP ME!!!
CW
There is no legal committment on this. Congress can change the payoyt rates anytime they want. Technically they could cut off all of them. But they wont. This is not the issue you think it is.
Thank you, sir, for replying.
"Technically they could cut off all of them. But they wont."
You understand. However, "it is the issue I think it is". We're both screaming at the top of our lungs here. You state:
"Folks, there are no Assets in the Trust Fund. There are pieces of paper to be sure. But they are just pieces of paper. The merely represent claims on future taxpayers."
There are NO claims on future taxpayers, "merely" or otherwise. That's what the Supreme Court stated in the 2 cases listed! If SS is "for the general welfare" and must be "national in scope", does the "general welfare" include Sovereign Bankruptcy and Civil War?
SS WILL be cut - or eliminated, but it will happen. The questions are how and when and by what group. Congress, maybe, but there are other forces at work, with evil intent.
CW
The only way to fix an illusion is with a better illusion. Fiat money is at the heart of the real problem, Social Security is merely the problem du jour, a symptom of the madness but not the root, not the cause, not the true element that must be examined and resolved.
The fiat allows many indescretions, it papers over fault lines and hides rotten foundations. What if we purchase gold with 1/5 of the money in the Social Security funds, or whatever treasury promises exist in a dusty file cabinet drawer. 20 percent of something is better than 100% of nothing.
Either the fiat dream continues and we add a robust and fully funded social safety net to the dream, we weave some gold into the rot and some balance to a system that thus far only enrichens the corporations through defense spending and wall street speculation based on free fed & treasury money aka loans, or the fiat dream fails and the world goes to hell in handbasket anyway so whats the difference?
In a fake economy full of lies, what is the danger of another huge lie?
Social Security is merely a symptom of a dying monetary system and a corrupt oligarchy who have destroyed the wealth of a nation. Social security becomes a moot point when we can't purchase foreign oil, when we can't run the electric grid, when we can't supply the cities with clean water.
Its like worrying about a shoe shine, when your shoes are full of holes, you have no socks and the temperature outside is 20 below zero.
The Rich who are bilking the Economy that was built by Laborers will have to pay.
End of story, it is a bill and trying to cause infighting of the middle class will be Exposed!
You have two choices.
1. Pay via taxes in an equal shared way.
2. We cut your heads off and take what we need to survive.
http://urworld.pbworks.com/f/beheading500.jpg
Generally people like you include the upper middle class as " rich"
It has been rare in history that a rebellion of poor people alone has succeeded, a few examples to the contrary notwithstanding.
All the rabble that participate in such events are usually hunted down and exterminated like the vermin they are.
What I own is mine and it would be exceedingly difficult for a poorly armed and organized rabble to take it from me.
You know that is the same thing Manuel Noriega said right before he woke up in a U.S. Jail.
The thing about chaos and revolution is they are unpredictable, and unfair. The best way is for those who have been exploiting this country into the ground, the upper 1% of the nations wealthiest, to just cut it the fuck out and let things stabilize again. Greed, apparently being infinite, the chances of that happening are somewhat below zero.
If you back a beaten dog into a corner and keep poking it with a stick, it will try to kill you even if you are more powerful, smarter and better equipped. A man can overcome one beaten dog, but when it is a pack of beaten dogs they will kill you and shred your flesh.
That is the tenous line the uber wealthy seem strangely ignorant of, they have lived in the protective sphere of great wealth for so long, they have lost there fear of the mad dogs, but the mad dogs don't really care.
Either we live like a civilization in which we all participate in the common good, and build a country of fair and equitable laws and systems, that provide a chance at a decent life for all who participate, or we descend into chaos with every man for himself and millions with nothing to lose ready to take what they can from those who stole from them for generations.
Its not about charity, its about self preservation. You'd think even the rich and stupid could figure it out.
Moral Hazard writ LARGE!!
Brilliant post. Truth spoken to power.
Disobey.
Read the whole mess. Very few have any idea how 1983 "save SS" worked out. Working people up to 40k or so per year paid in as did the employer(who deducted the cost on their taxes). SS is capped. Remove the cap and it is solvent in the future.
The reason it is not solvent right now is that SS program was put "on budget", ie the surplus was used it to fund tax breaks and wars. The paper in the fund are IOU's owed to it by the US gov't.
If the money owed had not been taken out of the fund and got normal interest the fund would be large enough now that the SS contribution could be abolished.
What they want to do is to raise the contribution again and use the surplus for tax cuts for those who fund their campaigns. They also want to disallow the inflation adjustment on cap level on contributions. IE the rich would pay in less the higher inflation goes. And raise the retirement age. A huge fund to help with taxes so the rich don't pay.
Thanks Bruce, good stuff.
How many older "naturalized citizens" (immigrants), who never worked in the USA nor paid any taxes in to SS, get to collect SS at some point? My understanding is that they get to collect some non-zero amount. I'm not anti-immigration, but should people who never "paid in" get to "take out"? Do you have any statistics?
>>should people who never "paid in" get to "take out"?<<
You mean like those US citizens who were around when Roosevelt started this scam?
The ones who never paid a dime into it?
Or the "greatest generation" who paid very little into SS and nothing into Medicare, yet took out and continue to take out tons?
Is that who you're talking about?
A million fuckn bux to hide 1 damn person for a year? Hell he could've given me the bitch for 50k.
didn't the asshole US gov't rob this fund blind, and put IOU's in it? That's it, every lawmaker works for zero until it's paid back. Goddam bastards. We are just so screwed people have no idea.
WTF is everyone talking about? Every single retiree who is eligible will receive every dollar that SSI promises!
There is absolutely no question that will happen.
The only question will be what are those dollars worth?
My best guess is that they will be worth zero, exactly the same as the promise from SSI.
As of today SS payouts are COLA adjusted. So if you ramp up inflation to 10% a year as you suggest it just increases the amount SS has to pay. As far as SS goes, high inflation is the worst possible outcome.
COLA is based on CPI.
The CPI has been rigged for years as John Williams' Shadowstats show http://www.shadowstats.com/alternate_data/inflation-charts
This will increase, either hidden (more CPI gaming) or outright by reducing COLA.
Exactly.
If inflation is what the government says it is (instead of any reality based equation) the government "saves" buku bucks in transfer payments.
There's not even a pea being moved around under any of the shells in this shell game...so there will always be only one winner ;-)
Which speaks to why they purposely propagandize what the real inflation number is.
Wage earners feel it and see it...they don't exclude food & fuel ;-)
Bullshit rant, so long ponzi money picked out of thin air is around all this shit about debt and deficits are socially constructed abstracts (and symbols) a "believe" system that can be removed and or changed, it means absolutely nothing.
Have you seen "young people" recently? Have you listened to their vapid music or tried tyo muddle through their popular film? Have you spoken to any?
Recently I observed many REDDIT posts where they were actually giddey because Obamacare allowed them to suck off parents insurance until they are 26. Bad enough they live with Mom and Dad, drive their cars, eat their food, and wait for the opportune zine editing job.
Fuck the young!
I say shackle all of the bastards twenty nine and below. Toss them into work camps where they can manufacture American made goods for Tofu and Redbull!
Nothing but upside to that.
Having raised my share of children and cared for more than few grandchildren, I do not share your view point!
Work ethic is taught by parents.....
I junked you for being a troll.