On Politics, Social Security and Spine

Bruce Krasting's picture

Assuming that no white knight (aka NJ Gov. Christie) enters the scene for the Republicans, this fall will be a race between Mitt & “O”. I’ve listened to them discuss their views on a hot button of mine, Social Security.

Not surprisingly, both sides have dodged this issue. They say we need adjustments and refer to the “need” to extend the retirement age. They also agree that some adjustments in the Cost-Of-Living (COLA) should be considered. Extending the retirement and COLAs would be implemented over twenty years they claim. These are “kick the can” (far) down the road strategies. Those who are under 50 today would feel the consequences.

You can’t blame the politicians for wanting to duck this issue. There is a monster block of voters (primarily the Boomers) who would love to see a plan for SS that pushed things out by fifteen years. If SS became a real topic in the election, it could potentially throw the vote one way, or the other.

The fact is, the next president will be forced to make major changes at Social Security. Ironically, the Social Security Trust Fund might be responsible for tossing SS into the political debate. An explanation:

Social Security actually consists of two pieces. Old-Age Insurance and Survivors Insurance (OASI) is one part; Disability Insurance (DI) is the other. What Mitt and O are talking about is the Old Age side of the story. This program is not yet falling off a cliff. However, the DI fund is. The question is, “How bad is DI?”


An answer can be found in the 2011 Social Security report to Congress. Ten months ago it said that the DI fund would be exhausted in 2018. This very convenient forecast put the day of reckoning for DI two years outside of the next presidential cycle.

The Intermediate, or base case forecast for the DI Trust Fund:



The next question is, “What’s the SSTF going to say in May 2012 about the new termination date for DI?” The answer depends on whether the folks who write the report for SS have “spine”. If they do, they will say that the Base Case for the DI fund shows it will be exhausted in the fourth quarter of 2016. That would mean that DI benefits would have to be immediately and significantly cut across the board. Those cuts would happen on or about Election Day, 2016.

If the SSTF produces a forecast that puts the death of DI in the 2013-16 cycle, then it is fair game to force the 2012 candidates to put forward their plans for fixing it. The SSTF will probably produce that forecast. If it does, it opens a Pandora’s box on the very big issue of what to do with the (much, much larger) Old Age side of the equation.

My expectation is based on the following: Look again at the SSTF report above . The forecast was that the DI Trust Fund (DITF) fund would end 2017 with a balance of only $7b. This means that the actual “go broke" date was 1/6/2018. (How to Spin a Forecast lesson 101… Gain 6 days, gain a year….)

The first Q 2012 data for the DI funds shows a 7% YoY rise in benefits. This is largely a consequence of the 3.6% COLA increase. (Ben B. maintains this does not exist). The other 3.5% reflects the rising number of folks getting benefits. Tax revenues are behind “schedule” (blame the economy). Finally, interest income is going to be under “budget”. The amount of investable funds is rapidly declining, and interest income on the DITF’s remaining cash is falling with Bernanke’s endless ZIRP.

The 2012 number for the DITF will have to be reduced from last year's estimates by about $5b. This has a multiplier effect, as the COLA re-base repeats itself with every year. The revision for 2012 will add up to more than $20b over the next four years. This minor adjustment will bring the termination date to June of 2017. It's still not close enough to bring the issue onto the 2012 political table. But more adjustments are in order.

The SSTF is stuck with a downbeat economic forecast from the CBO. It can’t have a rosy forecast when its “buds” up the street are saying it isn’t so. Adjusting to the CBO’s dour outlook will knock another seven months off the life of DI.

There are two possible outcomes in the upcoming SSTF report on DI:

A) The DI fund will be exhausted in 2017.

This is the spineless approach as the details will show that the actual date of exhaustion is January of 2017.

B) The DI fund will be exhausted in the 4th quarter of 2016.

That would be “show time”.

By itself the DI problem is solvable. To understand what is going on, look at cash flow. The mumbo-jumbo about Trust Funds is just mumbo-jumbo. The cash flow numbers:


Unless there are changes to the program, the deficits at DI will continue to grow. The long-term, unfunded cost is 0.4 – 0.5% of GDP. That would put the cost of maintaining DI at about 10% of the military, and 5% of the cost for both Medicare and Old Age SS.

In the scheme of things, the problems at DI are small. Other problems are so large in comparison. But a “fix” at DI could add another half-trillion onto the debt/deficit in the decade after it goes broke. That’s not a small number at all.

If Obama is honest, he will acknowledge the problem and propose new taxes to fill the bucket. He will say that America is too rich a country to let disabled workers fall through a crack. He will get votes for that position.

Romney has a problem. He can’t propose higher taxes that would be earmarked to stabilize DI. He will say that DI has to be cut to the point that it becomes Pay-Go without new taxes. He will get votes for that position, but it will expose him to criticism. It will be argued that this is about the 1% versus disabled workers. Obama would have a field day with that position. “O” would be protecting the widows and orphans while Mitt would be keeping the rich, rich.

There must be a fix at DI in the next four years. The next president will guide that resolution through Congress. The “fix” will either socialize the system by diverting tax dollars to it, or the program will be starved. The solution will be a cookie-cutter preliminary version of the much bigger issue of the Retirement Fund. OASI will face a much larger wall in 2017 – 20. What will happen to DI in 2016 will pave the way for what happens to OASI in 2019.

One final chart. This looks at cash flow for DI, OASI and combined SS. We crossed the red-ink line on DI in 2005. OASI went into the red in 2010. Neither fund will ever be in the black again.




Both candidates may try to point to fraud and abuse at DI as the problem. There is abuse, lots of it. But if it ended tomorrow, it would not move the needle. The required fix is much larger than the abuse.

Neither candidate wants SS to be an issue. If it becomes one, Obama has more to win and Romney more to lose.

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Don Levit's picture

Odatruf wrote:

Unlike most spending, SS is mandatory in that if Congress never met again, the funds would be authorized to be spent in perpetuity.

You are correct, except for the perpetutity part.  The funds will continue to be authorized as long as there is a positive balance in the trust fund.

All this positive balance represents is the authorization to get general revenues without an appropriation.

It is the same financial process we use to pay for those programs which need annual appropriations  -  when the trust fund is used for cash shortfalls  -  the use of general revenues.

And, you are correct when you wrote Anyone who qualifies for the program is entitled to the program's benefits.  It has nothing to do with having paid in.

Very astute, odatruf.  You have done your homework.

Taxes paid in have no relationship to benefits.  That is why benefits are based on earnings history, not taxes paid in.

Maybe if there was a direct correlation betwen taxes and benefits, Congress would have taken its stewardship of the trust fund more seriously.

Don Levit

ATG's picture

Speaking of so-called Social Security:


the grateful unemployed's picture

the next president of the united states is a piece of crap

DosZap's picture


 Thus, anyone who qualifies for the programs under the terms already in law is entitled to the program's benefit.  It has nothing to do with having paid in.


The more you paid in the larger the amount you recieve.However the system is gamed, as the one's who did put in less get MORE percentage wise back, than the higher contributors.

If you put ZERO in, hit the welfare lines.

Big Ben's picture

I don't believe that either Obama or Romney would be willing to touch the political "third rail" of Social Security. Bush made some fairly modest suggestions in that regard, the Democrats screamed bloody murder and his ratings plumetted.

Telling boomers that SS needs to be fixed is like telling an alcoholic that he should cut down on his drinking. Face it, boomers are addicted to debt and most of them don't see any problem whatsoever with running up a big tab on Uncle Sam's credit card. So the US will continue to party until the bond vigilantes show up.

Cthonic's picture

Soup lines,free loaves of bread,five pound blocks of cheese,bags of groceries;
social security has run out on you and me. We do whatever we can. We gotta duck when the sh*t hits the fan.
-- Circle Jerks, Repo Man soundtrack, 1984


onlooker's picture



There is, I suggest, a very clear, present and on-going systemic risk and danger from global banking. It was, after all, banking not welfare which gave us the phrase ‘systemic risk’. Bankers deal in risk. The welfare state deals in…welfare. Like it or loath it, there is no ‘risk’ in welfare or in social spending. They are linear and entirely predictable problems. Banking on the other hand not only deals in risk, it manufactures it. Risk is what bankers bank on.

Don’t take my word for it. Andrew Haldane is the Executive Director for Financial Stability at the Bank of England. In his speech at the London ‘Future of Banking’ conference held in July 2010 he said rather clearly (Page 14),

TX-Mike's picture

How about showing us the data for the number of people receiving benefits that are not eligible for benefits?  I am not saying that would "fix" it, but I suspect we are paying in the BILLIONS each year to people who should not be receving benefits.  This includes at least two groups:

1) people who are here illegally

2) people who are not really disabled but have gamed the system 

I am completely okay in taking care of people who are truly in need.  People born with handicaps, etc.

Once we do a better job of policing #1 and 2 above, then we can credibly begin to look at other "fixes", like "means testing" for benefits, etc.

The same concept should really be applied to all "social services", including food stamps, section 8 housing, medicaide, etc.

Perhaps if we just adopted Mexico's immigration laws directly we'd get some traction on reducing our costs.  They have some very repressive laws aimed and protecting their southern border.. a bit ironic really.


Heh... I just had another idea..  How about have those of us under 50 "adopt" a senior...  I am sure it would take several of us to carry one senior's benefits, but then they could send cards, letters, maybe something they knit.  It would be nice.  I would get to see how I was helping someone's grandma survive in her old age...  lol

It's better than the jack sh!t I got in 2000 when I paid more in income tax than I will likely ever make again.  (stock options taxes, weeee fukking haw)

Henry Hub's picture

***How about have those of us under 50 "adopt" a senior...***

Well guess what, if they're able to castrate Social Security that just what you're going to be doing. You're going to be supporting your grandmother or your mother if there's no Social Security. The idea that only the old fuckers benefit from SS is bullshit. If your parents and grandparents have enough to live on you don't have to support them.

Social Security hasn't add one nickel to the deficit and it never will if it's tweaked properly. They want to loot SS to pay for Wall Street bailouts, tax cuts for the rich and endless wars. Wake up my friend!

LowProfile's picture

Seems like there's a lot of boomers wanting their gubbermint cheese in the comments here, lolz!

onlooker's picture

""If Obama is honest, he will acknowledge the problem and propose new taxes to fill the bucket. He will say that America is too rich a country to let disabled workers fall through a crack. He will get votes for that position.""

If MITT is honest, he will acknowledge the problem and propose new taxes to fill the bucket. He will say that America is too rich a country to let disabled workers fall through a crack. He will get votes for that position.

This is Politics, like so much of life it is not honest. Given the rip off of large money in the billions and trillions that has a much smaller number of participants and should be much easier to control, how you gonna control hundreds of thousands of mini-rip offsters? How will a justification be received that we give  trillion dollar $ to the world but want to make the SS folks pay the price for the decades long theft of the SS fund?

Socialism and Communism fail when the other guy’s money (that the liberal state functioned on) is gone. The money has been ponsied, taxed, stolen, gambled, and wasted away. The other guy is broke and so are most of the Governments of the World.


Born Right the FIRST Time's picture

let's all look at this responsibly folks.SS was raided to enable Ronnie to give to the top americans and not let the deficet balloon worse than it did under his "leadership'.to do otherwise would have busted voodoo economics wide open to the sunlight and prevented the decline of this country,which TPTB that from both sides wanted,well,at least their masters manted.

the solution is simple,and I like to state it this way:

we need a FLAT tax on SS ,which some would say means to raise the cap on SS taxes.that's double speak.the FLAT tax on SS would only mean that ALL americans pay the same percent,right Mr.Forbes?

goforgin's picture

Most people don't realize that Social Security would generate excess +300 billion in taxes back in the day when dollar was worth a lot more. Ronald Regan used that to lower taxes for the rich and told a long tale of 'trickle down'. Clinton used excess SS taxes to stake claim that he balanced the budget.

GW Bush claimed that US budget was almost balanced and if not , the pile of taxes would soon be so high that US wouldn't need it: so he cut taxes for the rich even more. But, he didn't cut Social Security taxes but he spend trillions on the military and subsidies to the rich.

And now.. you got thieves like Krasting tell you that you are a welfare queen should you expect to collect from Social Security. What did Krasting do all his life. Oh, he is a hardworking stiff that spent his life on Wall Street.

riphowardkatz's picture

Get real. Reagan and a Democrat congress. Obama just gave the biggest  bail out to the rich in the history of man kind. He has the same Fed Reserve chairman that George Bush did who was mentored by the Fed Chairman of Clinton. Typical boomer. Give me.My turn. Class warfare. 

Don Levit's picture

Once cash outgo exceeds cash income, tapping the trust fund is the same financial dynamics if the trust fund was exhausted:  new revenues must be raised.

If the principal and interest had been left intact in the trust fund, instead of lent to the Treasury, spent on current expenses, and lowered the deficits, new revenues would not have to be raised.  The bonds would simply be cashed in.

Don Levit

Piranhanoia's picture

Some of you are too young to even understand the concept of social security.  It was a safety net for people in this nation to keep our poorest out of poverty.   Anyone else remember?   Some are unaware that it has been looted by each government that refused to collect or consider making the payments into the sytsem required by law.  It has been looted to pay for interest on wars, giveaways to corporations,  free land for oil companies and a lot of entitlements that it was not intended for.   Bruce wont discuss these issues because it won't justify his argument.

Is Governor Pine Barrens your pal Bruce?  You think that dimwit is your salvation to loot the people that did all the work so you can skim off the top?  Honestly, are you part of the mafia like fat bastard?

It is depressing to look at your screeds.  You don't have the intellectual honesty to write a balanced piece, and it has become obvious you simply don't have the basic knowledge. You are only competent to write political hit jobs on anything that might keep your dreams of fucking the 99 with your little 1%.


Born Right the FIRST Time's picture

in his 2003 SOTU address,the shrub stated that SS faced a deficet of 1.75 TRILLION DOLLARS.a number so huge,that no one could see how to to fix the problem.then he entered into a war of choice that cost around 3 trillion,refused to pay for it,and gave more tax breaks to the "producers'.hell,he wouldn't put the cost of the war on the books.this is how SS got raided!

riphowardkatz's picture

Not trying to be a jerk but you call Bush a shrub which is neither original nor funny and you keep incorrectly spelling deficit.

LowProfile's picture

True enough, but the theft has been from both sides of the aisle for about 50 years.

ilovefreedom's picture

Wait until they learn that the debt ceiling charade is made possible with IOUs to the SS trust fund (which isnt supposed to happen).

LowProfile's picture

This is why I'm going to enjoy watching these fucks get what's coming to them.

They should have paid attention.

They should have voted for honest politicians, not the ones that pandered to their prejudice, or promised them free shit.

They should have taken to the streets to demand the law be applied correctly.

They should have taken steps to RELY ON THEMSELVES.


LowProfile's picture

Oh, we understand it quite well.


Take your broken socalism dreams somewhere else, we're all stocked up on broken dreams here already.

gckings19's picture

dont blame anypone but yoursleves.  baby boomers have been voting in liberal tax and spend politicians for 40 years and now you are worried about social security.   go f yourself.   you should have been more prudent, dikheads.   baby boom generation lasted until 1964 i believe.   they have destroyed this country.  from the greatest generation to the worst.   i hate those fukkers.



goforgin's picture

Such a shame. They've could have spend the money on themselves, instead they spent it raising you! I suppose you built and payed for the infrastructure around you yourself too.

Kobe Beef's picture

@ goforgin:

Infrastructure, huh? You mean like airports, roads, and bridges? Where have I heard that one before?

riphowardkatz's picture

The boomers are the most pathetic generation this country has known. The same ones that fought against Vietnam have supported both Democrats and Republicans that have gotten into multiple wars. Kudos Boomers a job well done. Infrastructure? You mean the levies in New Orleans? You mean the falling bridges? The public schools with no siesmic upgrades? You mean the crumbling highways that have no funding?

You wanted to have your cake and eat it too. Now you are finding out life doesn't work that way. 

LowProfile's picture

Not to mention they let the JFK assasination slide.

DosZap's picture


If you had a brain you would be dangerous.

STOP blaming millions for the issues a FEW caused,you must be younger to be so naive.

riphowardkatz's picture

Start taking responsibility. Renounce your failed philosophy of theft and wealth redistribution. Tell your friends and family that stealing is wrong regardless of what happened in the past. Become and advocate for allowing each person their life liberty and pursuit of happiness. Leave the producers alone. Denounce taxation. Reject the philosophy that mob rule (democracy) is how we decide what is moral.

LowProfile's picture

This guy is a mench!

This guy is an ass!

LowProfile's picture

Don't lump them all in the same group.  Some of them "get it".  Treat each on on an individual basis.

Besides, some of them are still pretty spry, and like to do more than sit around, eat, and play the occasional round of golf.  And those ones usually have quite an impressive skill-set to boot, might even learn ya somthin'.

goforgin's picture

Krasting is a yodeling fool. He presents Swiss cheese arguments full of holes designed to to make lower classes amiable to yet another epic theft--monies that they paid into Social Security. He is a Swiss banking gnome, a member of the elite nationality that for eons benefited from debt slavery. Switzerland  has always been a heaven for illegal money from all sorts of psychopaths: genocidal murderers like the Nazis, African dictators, drug traffickers, national treasury looters, tax evaders etc.

Switzerland is the home for some of the world's largest money managers. The world's elites amassed a fortune of $200 trillion, and most of it is stashed in Switzerland.

Do not be dissuaded by arguments of this Swiss propagandist.


riphowardkatz's picture

I will not be disuaded by your ad hominen's that is for sure. Heck of a job at name calling, you get an A+ for that. 

lindenlee's picture

I work with seniors, mostly those 75-95. They are really good at stretching a dollar, and most have saved in addition to that, all their lives. They didn't live beyond their means, sacrificed for their kids, and were happy to do so. They don't feel that they are "entitled", but just that they paid ther dues (and they did), played by the rules, and can't understand why their children and government are now calling them "useless eaters", wanting to get rid of them. ("Yeah, Grandma, we know you paid all that money, but it's OUR turn now, so go away and die")

They have watched politicos steal their SS trust fund monies to spend on buying votes, and give SS benefits for illegal aliens and ne'er-do-wells who are just out for a cheap check. They have watched the purchasing power of their money go down the tubes. And yet, they are too proud to "be a burden on their children", so they tighten and tighten their belts, until there's not much else to tighten. 

I assure you, they aren't worried about their golf club memberships, but how they are going remain independent and healthy. And it hurts them in their souls to be treated as "greedy old codgers" (as many on this forum have said). They are as self-sufficient and as independent as they can be. They don't want "something for nothing".

I also am a boomer, and know many of my age who are not only paying for college for their kids, working longer hours (if they still have a job), taking care of aging parents, and are stretched to the max. They will do whatever they can to keep their parents off of Medicaid, and not be a burden to the taxpayers.

Therefore, I am shocked at the attitudes of so many on this forum who would throw these people away as useless. Have you no grandparents are great-grandparents? Are YOU willing to take the responsibility for caring for them day and night? Or do you just want them to die and go away so you don't have to be bothered?

The political aspect is very difficult, and YES, those programs MUST be reformed, and YES, we have a Congress of cowards... BUT, let's not put the generations at war with each other. The seniors are not the cause of the younger generation's problems. If we war with each other, each grabbing for our piece of the scraps from the table, the politicians will have won, and our society will have lost. Hitler could not have done better.



riphowardkatz's picture

I am not at "war" with boomers. I am at war with the philosophy of thae majority of boomers which is reflected in the people they have elected. Once the boomers stand up and say wealth redistribution is wrong it is immoral. Stealing is wrong it is immoral. Once they tell there children I was wrong to teach you that taking from one person and giving it to another regardless of their wealth is wrong then I will stop despising the boomers. Are you going to step up and be one of the first? Or as I have heard lots of boomers say it is "your turn now"

DosZap's picture


Once the boomer's stand up and say wealth redistribution is wrong it is immoral

Oh,I agree...............except your putting it to us as though NO ONE put out their OWN wealth.How can expecting back what you put in be called wealth redistribution?.

I simply call it it's mine, mofo, and I want it back.

Was it NOT mine?,came out of my checks......................so that slams your wealth redistribution assertion to hades.

Taking for someone with no vig, is wrong............it's theft.

riphowardkatz's picture

there you go with the fairytales you put your money in and now you want it out. You didn't put half the money in that you will want out if you live to 100. You didnt put 1/1000 of the money you can take out of medicare. Stop making stuff up. You didnt put anything in compared to what you will want to take out. 

And btw your employer was forced at the point of a gun to contribute half of what you claim you put in.  

Crisismode's picture

" I am at war with the philosophy of the majority of boomers which is reflected in the people they have elected."


And, pray tell us please, exactly which politicians that YOU voted for are the pristine, almighty-holy paragons of virtue who would have kept us from this mess?


Which politicians of the last 50 years would have been the correct ones to have elected?


Please tell us.


LowProfile's picture


Which politicians of the last 50 years would have been the correct ones to have elected?



riphowardkatz's picture

The cause of the candidates who ran is the philosophy of the people. If the ethic of previous generations held to one simple principle that stealing and wealth redistribution are wrong no matter how many academics, so called leaders or majorities say it is right then plenty of candidates would have stepped up. If instead of protesting and bickering over mundane diversions between republicans and democrates the majority of boomers would have said enough is enough we will not support theft plenty of people would have been available to represent you. That was not the boomers ethic. They wanted to take from one person and give to another and the candidates that represented that philosophy stepped in and now it is their turn to take from others and give to themselves. 

Will you be one of the people to say that stealing is wrong? That two wrongs don't make a right?  

BTW Ron Paul is a step in the right direction.  

Crisismode's picture

My contention is that the SYSTEM itself is broken and unrepairable, and that no matter what people are elected, the overwhelming majority of them will be corrrupted by the unbelievable flow of cash through Washington.

We are far, far too late to be trying to change the system by electing the "right" people.

In order to create an equitable arrangement of government, the old one must be completely discarded, and a brand new one put in its place. However, as long as those currently in control, remain in control, that will never be allowed to happen.

It's like asking a group of addicts, in a warehouse full of their favorite substances, to walk away and leave it all behind. Never going to happen.


LowProfile's picture


People like you make me think this country has what's coming to it.

Andre's picture

"BUT, let's not put the generations at war with each other. The seniors are not the cause of the younger generation's problems. If we war with each other, each grabbing for our piece of the scraps from the table, the politicians will have won, and our society will have lost. Hitler could not have done better."

Which is the whole point. Creating a victim society is a great way to achieve social control:

  • men vs women
  • gays vs straights
  • all the "minority races" against the white middle class
  • rich vs poor
  • "Save the world" environmentalists vs skeptics
  • gun owners against the firearm phobic
  • non-Muslims against Muslims
  • Democrat vs Republican
  • Disabled vs non-disabled (ADA)
  • old vs young vs middle-aged
  • blue collar vs white collar

By inserting the government into the business of the people in the name of "social justice", the groups are set against each other. They need to go to the legislatures and courts to protect or extend their social viability.

A fractured society is thus seen as a more easily controlled society. The fact it is less stable and productive is apparently irrelevant.


LowProfile's picture

Almost junked you for this:

The seniors are not the cause of the younger generation's problems.

Because, they most certainly ARE.

But the rest of your comment made up for it.


Andre's picture

Well, the original lines (in the quotes) were from lindenlee, WAY up above. Normally the stuff I reply to does not get so many replies it's an issue, but I will remember that in the future.

As for the reason you were going to junk me, it is interesting that, despite the  kind reply, you concisely demonstrate another issue affecting things. It might be best described as "binary thinking". Let's look. 

By implication, and to paraphrase, you might make the statement "Seniors are the cause of the younger generation's problems." This is not exactly what you said, but the inclusiveness of

"...they most certainly ARE."

does seem to imply the paraphrase is an accurate expression of your sentiments. What is interesting and so divisive about this kind of language is its lack pf distinction. Some unquestionably did cause the problems. Cheney comes to mind, plus a host of others, yet it is the judgement by artificial distinction (age) that makes the trouble. It is like saying the mine strikers the Pinkerton's agents shot were the same as the Wisconsin Teacher's Union of today, or that Keynes and Hayek both being economists, thought the same.

I seriously doubt that you are an evil git, but "all or nothing" language tends to reveal "all or nothing" thinking, which is overly simplistic at best. It is difficult for the young to realize how much has changed over the years, and even more difficult for them to not apply the standards of today to the actions of years ago.

LowProfile's picture

Got some that get it.  I'll be looking after them well.

Got some that don't.  I'll make sure they don't starve, but that's it.


AFA this corrupt, convoluted, inefficient, bullshit system is concerned...  Let's figure out what they paid in, give that back, and be done with it.

Those that expected more than they paid in?  FUCK YOU.

sansnobel's picture

Why does it matter that the "numbers"don't add up.  Shit they have not added up in years.  TPTB have taken the path of deficit spending in perpetuity and this is blatantly obvious.  Social security has been a ponzi scheme for years because they rob it to pay for other bullshit spending programs.  The fact that it will be insolvent really does not matter because in todays "mark to fantasy" wonderland it really does not matter.  Need some money Little Timmay?  Well just call up your old uncle Benny at the Fed and he will fill that gaping hole in your ledger.  Nothing matters anymore, they will print more digital dollars to paper it all over and there's nothing anybody can do about it.  Face it guys, we are Neofuedalistic slaves.  Hell have you seen Bond yields, I would say that nobody wants to step up and dump US Paper out of fear of what we may do to them militarily when they do.  Don't worry about granny getting her check.  She will get it right on time, problem is eventually it wont buy shit....


WTF_247's picture

All of the reckless spending in the US and other countries around the world is coming to a head all at the same time.  Nothing will change untill the masses of "haves" who pay taxes stand up and say no.  The "have nots" are growing in number.  We will reach a breaking point where the haves that pay almost all of the taxes say screw it - we are not paying anymore.

This will force the hand of govt to do a major restructuring - they have no choice.  This could also lead to civil unrest as those who think they are owed X realize they are not gonna get it. I would imaging that unrest will largely be made up of public employees who think that $120k per year pension ++ full medical is a guarantee.  When they realize they are going to get nothing, or severely reduced benefits, it will get ugly.  The same with SS, Disability, Medicare etc.  

At some point, there literally is no money to pay what people think they are owed.  No amount of rioting or even overthrowing the govt would change that fact.  Do you think if Greece went into a civil war that would change the outcome of no money for the supposed benefits owed??  Nope - not even a 100% default would solve that.  The amounts promised exceed the ability to tax the citizens to pay for those benefits - and you still need some money to run government.

People will have to face facts and plan to deal with what will eventually happen.  There is no rosy scenario that can magically solve it.  Politicians only care about getting re-elected.  I think a lot of them may fear more than that when the SHTF.  There are only 2 choices - proactively choosing to alter it now and deal with the consequences or, have it forced upon the population with no choice.  The longer the politicians pander with false facts and lies/ommissions to get re-elected, the worse the outcome for the average citizen. 

FMR Bankster's picture

This is a default coming via inflation. Already is. And it won't be reported as such either. The Fed will keep buying Treasury bonds, prices will rise rapidly for basic goods, the goverment will use interesting "adjustments" (hedonic, quality, ect) to claim prices are really rising 2-3% when they are rising 8-15%, and eventually we will be like Europe and Japan. The only real difference is cultural. japan could print for a long time because they used to have a high savings rate. (no more) Europe has more difficulty because of a single currency and they are not a fully integrated country.