week SS acknowledged that its condition had sharply deteriorated in
2010. This sentence from the report is all you really need to know about
what the status is:
The open group unfunded obligation over the 75-year projection period has increased from $5.4 trillion (present discounted value as of January 1, 2010) to $6.5 trillion (present discounted value as of January 1, 2011).
Note that this is a present value calculation. The total unfunded
obligation has grown by a cool $1.1 trillion in just a year. In other
words, if we had to shore up the TF to the level that it was just a year
ago the USA would have to write a check for $1.1 T. The unfunded status
was a disaster a year ago at $5.6T, it got worse by 20% during 2010.
The cost of “fixing” SS goes up as a result. To put things in balance
one of these two extremes are now required:
For the combined OASDI Trust Funds to remain solvent, the payroll tax rate could be increased an immediate and permanent 2.15%, (or) scheduled benefits could be reduced by an immediate and permanent 13.8%.
If you think this a ho-hum result, think again. If benefits get cut
across the board by 14% we will have many seniors who will fall into a
hole. An increase in payroll taxes of 2.15% is simply not going to
happen anytime soon. There is no support in Congress for an increase
like that. It would mean that taxes on all workers/employers would have
to go up by $110b in the first year and rise every year thereafter. This
would be a very regressive tax increase that hurts lower end workers
the hardest. For 2011 there is already a payroll tax holiday of 2%. If
the required increases take place in 2012 it would mean a 3.2% reduction
in wages. Kiss the economy goodbye under that scenario.
I underlined the TF’s use of the words immediate and permanent as this language highlights the fact there can be no delaying on the fixes necessary at SS. One thing that you can take to the bank is that nothing will happen with SS in 2011 or 2012.
This is a problem that will simmer for at least another 24 months. This
delay will prove to be very costly for all involved. Both the required
tax increases and/or the required cutbacks will be much larger than
today.
The NPV of the unfunded liabilities at SS are now growing by at least
$100b a month. One would think that this massive cost would spur some
response in D.C. Don’t count on it. As a result, SS is going to come off the rails in about two years.
Irrational expectations are the monster the government feeds to stay alive. Your (mistakenly viewed as personal ) wealth will be used when deemed appropriate.
Zing, you have nailed it. There is no larger burden on the economy.
BTW : the banks are far more irrational than the " welfare queens "
I never designed the ss system-I was just forced to pay into it..seems those in congress always exempted from it..smart fella's - or It's good to be King. The rapist Jerk from the IMF is the picture boy for so many in Government..selected not elected.
Yeah, and I hate having to pay to support the empire's military.
Derivatives (swaps) pull forward future earnings into current periods. Both parties on a derivative contract have independent valuations so both sides claim profits in the early years. The whole things is Enron, LTCM, ad nausea. Go back and re-read history based on what you know about financial markets, lending, derivatives, etc. You’ll see at least as far back as the French Revolution that it was backroom financial deals that got one party in trouble and enriched another. When the first went to collect and were told to back off it lead to war. Or the indebted party had to cut its standard of living so far that its own people revolted.
Someone's head just crashed through the Debt Ceiling.
Which one?
Damn Bismarck should have stuck to being a pastry.
You meen herring..
whats the problem? can't they just print some more dollars? works for the TBTFs.
"Trust Fund" - the biggest sickest sarcastic joke ever
yes, normally when people take money from a "trust fund" and use it for a different purpose, they get in big trouble
exactly. it's not a trust fund at all. working taxpayers are paying the monthly benefits of the retired taxpayers. shades of mister ponzi.
Been that way since inception.
Leverage....
The US is finding out what leverage does when forecasts-decisions are wrong......
With regards to the US banks.......they risked 100% of their equity with a respect to a 5% decline.....
And it happened......
Today´s banking status is dependent upon false accounting and inorganic monetary support.....
...................
The banking system itself is a money levered reserve ponzi scheme.....whose equity is based on false premises.....
.................
It is what it is.....
.................
One dances until the music stops.....
And your ass better have found a seat.
"Security" Bitchez.
Or is that "Trust" Bitchez?
Or "Fund" Bitches
"We're from the Govt, and we're here to help you!" </LIE>
"SS Trust Fund" would NOT do well in Germany... just saying...
It's the biggest item on the budget and while it was never meant to be the retirement fund for all Americans that's exactly how our government sold it, so now it has no choice but to stand behind it. The entire scam was started by Otto von Bismark to raise cash in a tax that 90% of German's population would never grow old enough to see. Now its grown into this monster.
I think the age limit will have to be edged up a little except for those who physically can't wait, and those who were most successful with their money and took the best care of their health are going to be the ones paying,... or more accurately, not getting paid in order to make it work for the broader population.
Ultimately, the entire program needs to be wound down to back to being a safety net in time enough for the coming up generations to devise some other means so that they don't get caught in the trap their parents are in right now.
Never thought it would work anyway, it was bullshit compounded by the Federal government basically saying, "Trust Me". That's like a big red fuck you sign flashing on the road ahead.
so many disasters man made & others
so much turmoil all over the globe
conspiracy or happenstance it almost doesnt matter
I am convinced that the powers that be, believe something much worse will happen
various theories and reasons abound, based on strings or piles of truth
things will never be what they were
may what ever it is or the series of events that lead to it
be quick, be concise, and have the best possible outcome for the worse of all possible situations
until then enjoy all the side shows
and remember that everything is temporary
Gee, think about it...Ben knows the market is going to double 2 years ago...that fucker can't even make 50% on the SS trust fund....this gov't is a bunch of LOSERS...LOL
You mean the trust fund with nothing but IOUs in it?
There's nothing to invest and make any return on.
"There's nothing to invest and make any return on."
I hope more people read that. It's really what's at the heart of it all. And the reason for it really isn't all that hard to understand: failing infrastructure, oil production systems puking, nuke plants puking, we've pushed it as hard as we can, there's no longer the easy buck to support the whole global system of endless growth.
But .. but.. the Bulls are winning. O must be doing something right so that the home team is winning.
Worked for 78yrs, until we let them put the proceeds into the General Fund.
That's four generations.
A 2.5% payroll tax 95% of Americans would never even miss.
A 14% cut in the Benefits would be a ticket to the graveyard for recipients.
That's not even an option, unless they want to start a civil war.
"General" means Screw All Americans in Congressese.
No mention that the increase would be split by employer or not. A 1.25% increase on AGI for someone making $25,000 would amount to $312.50 per year or if paid weekly $6.00.
I say do that and raise the cap to $300,000 or so for some margin of safety. People who think social security shouldn't exist along with medicare are ideologues that have never considered the real world implications personally of parents who now require $50,000 to $500,000 a year to stay alive. With downward pressure on wages a reality, not too many could afford to support the people that gave birth to them. Many people consider people who planned well now and are retired as the ideal example that everyone should follow.
I tend to look at the way things are, instead of the way things should be in a ideal world.
The way things are is that a far higher percentage of social security beneficiaries NOW, would never have the money to buy health care and live, if medicare was cut off. Prior to the bankers running wild, many used their houses and the equity that was built up as part of their funding. That is much harder to do now. Assuming that people would need 2-4 Million at least since we all know what inflation is going to do in today's dollars to fund a 20 year retirement period then we are only talking about a small percent of the upper 10% that has that kind of money. I don't have data to support the idea that most retirees NOW would have been better off without the housing bust, but it seem safe to assume that it had a negative effect. It's also a known fact that the rampant age discrimination that goes on with impunity is forcing many 62 year-olds to take the cut and get their dollars years earlier. This adds pressure to the fund. My guess is that most would rather work if the job was semi-enjoyable. In fact, pre-theft, the common figure for savings to supplement medicare was 200-300G per person. Again, pre-theft, that would have been limited to a small number of people. Now Social Security and medicare has turned from a safety net into the only visible means of support for people once in their 60s.
Then we have millions coming up that are currently emptying their savings to stay alive now before they are eligible for social security. No one seems to account for that even though it's well documented.
The pedestrian questions to an Ideologue who is against social security are: can you afford to support your parents ? Not only cost of living but all medical expenses as no insurance is available to them ? If you can, congrats. Have you thought about the dollar output for 20-30 years as inflation goes vertical along with the specter of chronic illness and disease striking that could take millions over a few decades to maintain. Just the prescription drug cost would out of most people's ability to pay for so the ideologue against social programs like that can only be seen as a proponent of early death for a large swath of the population.
Not just those over 62+, but the millions that will soon join them. As no kids or charity will have the kind of money they need to make up for those safety nets.
That type of person is normally classified as a true sociopath.
To me, it's a typical elitist type of view that I see here that tend to blame the victim for the housing crisis and act as if iPads, cable internet and starbucks were singularly responsible for the crash felt around the world.
That is so far from reality that it's useless to argue with but nevertheless for a site that seems against bailing out the rich at the expense of the middle class, it seems like they are very confused on where the nation's priorities should be; crush the middle class far further than has already been done and let the people go who delivered a knock-out blow to the economy? Conversely make small adjustments to policy to make the funds cover the cost of the program.
Everyone has an opinion, but what I rarely see espoused in any of the view points are people carrying out the change in policy to what would happen in the real world as in "every action has an equal and opposite reaction".
My opinion is "bring out your dead" would be the end result of piling bad policy on bad reactions to crimes that were never prosecuted.I'd love to see the financial net worth of the parents and the person who are favor "let em all die". I'm willing to bet that most of them couldn't or wouldn't support ALL parents needs for 1 week much less multiple decades simply because they either don't understand the micro economic effect on families who were brought into existence by their elders having no support or don't understand how fast a net worth of 20 Million can be brought down to zero with say a divorce and a set of parents in need with investment income dried up and the other pillar of wealth gone too : housing.
Bravo, it is rare when someone espouses a cogent opinion like this.
To follow-up, the Tax Code is the real problem. Why should folks making all their earnings on passive investments pay 15% when wage earners pay 35% (hedge fund managers biggest winners) and then why would the passive income not be subject to the SS taxes? We reward those who invest, not those who work and create. A manager of a Taco Bell pays a higher percentage in taxes than a billionaire who lives off passive earnings.
... then why would the passive income not be subject to the SS taxes?
Maybe because passive income doesn't count in computing SS benefits, just salary & wages?
It's cogent nonsense, based upon a pragmatic response of how to best make an evil system less evil. It's a solution only in the sense that it kicks that can farther down the future road further than your imagination can understand.
Like all government solutions, this is just sowing the seeds of the next problem that the amazing politicos "have" to "solve."
As for taxation, it should be zero, as it is theft, pure and simple.
You hit the nail on the head. The financial sector of the economy (which creates NO real value) is a cancer that the broader sectors of the economy (which actually produce things of real value) can no longer support.
Don't worry, this greed and attitude that people can extract real wealth, using passive money "interest", from the economy will come to an end. As more and more people wake up and/or fall of the grid and begin dealing directly with one another (by necessity) for good and services they need, all the "paper" world will burn (it already is). Just wait, and hedge accordingly.
Note also that every dollar that comes into existence enters as an asset on the banker's balance sheet and a liability to all the rest (govt., business, people, etc.). Debt based money.
While I agree that our tax structure is high and skewed in favor of 'passive' earnings over worker created earnings, NotApplicable's point of capital accumulation has merit and must be considered.
That national arrogance and corruption is going to bring the whole thing down, well, that's a subject for another post.
Don't throw out the baby with the bath water. The financial sector has always provided value, in the form of capital aggregation. (could you imagine anyone building an auto plant out of personal savings, for instance?)
Where the disaster comes into play is when banks extend credit through notes that have legal tender privileges. Without legal tender laws (and the FDIC preventing insolvency), these notes wouldn't trade at par, but at a discount that reflects the institution's credit risks. But since this market stablilizing mechanism has been obliterated, the system has instead been used as a tool of wealth transfer.
No mention that the increase would be split by employer or not. A 1.25% increase on AGI for someone making $25,000 would amount to $312.50 per year or if paid weekly $6.00.
I say do that and raise the cap to $300,000 or so for some margin of safety. People who think social security shouldn't exist along with medicare are ideologues that have never considered the real world implications personally of parents who now require $50,000 to $500,000 a year to stay alive. With downward pressure on wages a reality, not too many could afford to support the people that gave birth to them. Many people consider people who planned well now and are retired as the ideal example that everyone should follow.
I tend to look at the way things are, instead of the way things should be in a ideal world.
The way things are is that a far higher percentage of social security beneficiaries NOW, would never have the money to buy health care and live, if medicare was cut off. Prior to the bankers running wild, many used their houses and the equity that was built up as part of their funding. That is much harder to do now. Assuming that people would need 2-4 Million at least since we all know what inflation is going to do in today's dollars to fund a 20 year retirement period then we are only talking about a small percent of the upper 10% that has that kind of money. I don't have data to support the idea that most retirees NOW would have been better off without the housing bust, but it seem safe to assume that it had a negative effect. It's also a known fact that the rampant age discrimination that goes on with impunity is forcing many 62 year-olds to take the cut and get their dollars years earlier. This adds pressure to the fund. My guess is that most would rather work if the job was semi-enjoyable. In fact, pre-theft, the common figure for savings to supplement medicare was 200-300G per person. Again, pre-theft, that would have been limited to a small number of people. Now Social Security and medicare has turned from a safety net into the only visible means of support for people once in their 60s.
Then we have millions coming up that are currently emptying their savings to stay alive now before they are eligible for social security. No one seems to account for that even though it's well documented.
The pedestrian questions to an Ideologue who is against social security are: can you afford to support your parents ? Not only cost of living but all medical expenses as no insurance is available to them ? If you can, congrats. Have you thought about the dollar output for 20-30 years as inflation goes vertical along with the specter of chronic illness and disease striking that could take millions over a few decades to maintain. Just the prescription drug cost would out of most people's ability to pay for so the ideologue against social programs like that can only be seen as a proponent of early death for a large swath of the population.
Not just those over 62+, but the millions that will soon join them. As no kids or charity will have the kind of money they need to make up for those safety nets.
That type of person is normally classified as a true sociopath.
To me, it's a typical elitist type of view that I see here that tend to blame the victim for the housing crisis and act as if iPads, cable internet and starbucks were singularly responsible for the crash felt around the world.
That is so far from reality that it's useless to argue with but nevertheless for a site that seems against bailing out the rich at the expense of the middle class, it seems like they are very confused on where the nation's priorities should be; crush the middle class far further than has already been done and let the people go who delivered a knock-out blow to the economy? Conversely make small adjustments to policy to make the funds cover the cost of the program.
Everyone has an opinion, but what I rarely see espoused in any of the view points are people carrying out the change in policy to what would happen in the real world as in "every action has an equal and opposite reaction".
My opinion is "bring out your dead" would be the end result of piling bad policy on bad reactions to crimes that were never prosecuted.I'd love to see the financial net worth of the parents and the person who are favor "let em all die". I'm willing to bet that most of them couldn't or wouldn't support ALL parents needs for 1 week much less multiple decades simply because they either don't understand the micro economic effect on families who were brought into existence by their elders having no support or don't understand how fast a net worth of 20 Million can be brought down to zero with say a divorce and a set of parents in need with investment income dried up and the other pillar of wealth gone too : housing.
"People who think social security shouldn't exist along with medicare are ideologues that have never considered the real world implications personally of parents who now require $50,000 to $500,000 a year to stay alive."
Sheltered life?
2/3 of the world's population lives on $3/day or less. Have you been contributing to THEIR retirement/care?
I'm not as vapid as many here are, I'm sympathetic, but I'm a realist, and it should be quite apparent that there is NO way in hell that this can all continue (well, sure, maybe for a bit longer if we continue to rape and plunder abroad, but that's becoming increasing harder to do since we've populated the globe with weapons and pissed off people).
Keeping older people alive somewhere means the premature deaths of younger people elsewhere ("opportunity costs"). Sadly, that's the point that we've gotten to. It's got nothing to do with supporting any cause, rather, it's about seeing reality, and once we see reality Then we can talk about what needs to be done (though I don't advocate prescribing things, as that means that there will be those who will become entrenched in serving such prescriptions, even after the point at which circumstances change).
Holy shit, what a daunting wall of text.
You could've just said, "It's everyone else's responsibility to care for my aging parents!" That would've saved some time.
Followed up by the classic rationale, "but, we had to do something!"
Yet never once noting the flaw in the basic premise of the idea that we can steal from today's workers in order to pay for yesterday's.
I agree with Dburn's drastic outlook. It seems to me that we will be forced to go back to the old custom of keeping disabled parents and other relatives at home with the younger generation. The other problem of rising cost of healthcare needs to be addressed too. Big pharma, biotech companies and government grants are constantly producing new drugs and treatments. The cost is shifted down to everyone using any medical service. So now a night in the hospital is more than $1000. We need to stop all taxpayer funding (research grants) for research into new cures if only the wealthy will have access to them.
It didn't work for 78 years. It went into the general fund when Pres. Johnson tapped into it in 1965 with the "unified budget". Been a slush fund ever since.
'Johnson tapped into it in 1965 with the "unified budget".'
Yes, and do you know why?
Because the US was starting to go broke fighting "commies." Strains of empire building( I believe Eisenhower warned us of this) were starting to show. By the time Nixon got in to office things were pretty much all but over: high levels of govt lying, complete disconnect between the USD and gold, declining oil production, rising manufacturing elsewhere.
It was, in retrospect, a pretty standard path for decaying empires.
It worked so long because we had a growing population of young workers and an expanding economy.
Demographics is destiny.
Can we do a clawback lawsuit? Oh wait, the people who benefitted most from the ponzi are dead and buried. Nevermind.
+55
The Ponzi always works great in the beginning, and everyone is happy.
None of this woulda happened had we let Al Gore put it in his lock box.
von Bismark didn't do this to the States. FDR did. Of course, it's a Ponzi, and never was anything else, but medicare and medicaid are worse, much worse.
The whole damn thing will be means tested, and soon. The biggest losers will be government employees who are double or triple dipping.
It's pretty much happened to every state/govt. All have been based on the growth Ponzi. So, the question would be, Then what? When we toss out all the bums, install (or get rid of) whatever govt, then what? We'll still be tempted by the growth story.
The whole program, which FDR knew was a Ponzi scheme when he proposed it, needs to be wound down...period.
FDR knew was a Ponzi scheme
can i get a link to that please?
not denying what you say, just want to pass it on
Also, FDR and his party fought (successfully) against the Clark amendment, which would have made SSI participation voluntary; their objections were that such an amendment would compromise the monopoly status of SSI and would introduce competition.
So, if you define a Ponzi scheme as a financially unsound investment operation whose existence is dependent on a constantly increasing investor base promised ever-extending future returns, then SSI qualifies. That said (and I am NOT an FDR fan), FDR's initial promises were much smaller than the current "we'll pay for your retirement" SSI promises, and, of course, life expectancy in 1945 was 66 years, while it is 78 today.
Whether or not it was a classic Ponzi scheme at its inception, it is now: the current investor base will NOT recieve the promised benefits, period. Most Ponzi schemes don't start with the goal of becoming Ponzi schemes, but when the fundamentals are inadequate from the beginning, their evolution to insolvency can be foreseen. Such is the case with SSI.
Again, well said Keri!
You know, the patent injustice, obvious Ponzi-esque unsustainability, and criminally statist monopolistic nature of the Social Security system was instantly evident when my father first explained SS to me during a long car drive when I was 16 years old back in the 1970s, and my outrage and disgust over the entire welfare state boondoggle has only grown over the years since.