On the Fall of the PU

Bruce Krasting's picture

I followed what Biden and Ryan had to say about Social Security in their debate. My take on their words:


Ryan said four times that his plan was to restructure Social Security. He said his plan would not involve a sacrifice for anyone who is now 55 or older. Ryan has created a new “Red Line”. If you’re 54 or younger, you are below the red line; bend over. If you are above Ryan’s artificial red line, you get a free ride.


This is an extremely unfair plan. I can’t imagine how it could be implemented without ripping the country apart.


Ryan was referring to a version of the Simpson-Bowles plan for Social Security. A combination of increased taxes, coupled with increased retirement age and lower monthly benefits. There would be delay in implementing these changes, so that those who are now near retirement age would not be hurt.


I give Ryan a B+ for honesty. America’s politicians have to fess up to the fact that Social Security (SS) must make significant changes to remain solvent. Higher taxes and lower benefits are necessary if SS is to last another twenty-years. There is no way around that fact. Any politician, who says otherwise, is just lying.


But I give Ryan a D- for fairness. The idea that everyone today aged 54 or younger gets screwed, while those a few days older get off Scott-free is insane to me.


America’s problem is the Baby Boomers. Every day there are 10,000 new beneficiaries who are hitting up SS for a monthly check. At that rate, over 40 million Boomers will be getting their full monthly checks by the time Ryan’s “Red Line” comes into effect. After the first SS check is written, the future payouts can’t be reduced. So the Ryan plan creates a carve-out that protects a huge chunk of the Boomers. It does it at the expense of everyone who is today under 55.


That’s the plan? Protect the age group that is causing the problem? At the expense of the next few generations? None of the 40 odd million Boomers will suffer at all? None of them? Where’s the fairness in that plan?


What Ryan promised for SS is just a political lie. The fact is that all of the folks who are today 55+ probably liked what they heard Ryan saying. And that is a very big block of voters.


The Boomers are the problem. They have to be part of the solution. Any plan that gives the Boomer age cohort a free ride at the expense of the rest of the population is a recipe for disaster. The risk is Age Warfare.




Everyone says that Biden is the “smart” debater. Maybe so. His comments on SS were carefully crafted. But if you look through his words, he was just playing politics.


Joe went straight to a liberal hot spot on SS. He flat out promised that an Obama/Biden ticket would never, ever privatize SS. This was a very smart move on Joe’s part. It plays to one of the great fears that the lovers of SS have; that one-day, the Republicans will let the evil guys on Wall Street get their hands on the SS Trust Fund.


Ryan rebutted that privatization should be considered for younger workers, but Biden blew him away with one of his now famous chuckles. Biden knew that he had scored points, as he knew that even the mention of the word “privatization” would get a few hundred thousand folks to the voting booth.


On this exchange I would give Biden a B+ and Ryan a D-. Ryan is wrong on privatization, he should have known better.


Ten years ago SS was running $100+Bn annual cash surpluses. If there ever was a time to consider a partial privatization, that was it. A portion of the surpluses could have been allocated to other investments back then. But not any longer.

SS is running annual deficits now. They are in the -$50Bn range for 2012, but the red ink will grow rapidly north of $100Bn in just a few years. If any portion of SS’s current cash flow were diverted to other investments, it would mean that there would be a larger drain on the Trust Fund surplus. The fact is, privatization is no longer a policy option. So Ryan was selling sound bites of a policy that has no chance of seeing the light of day.


Outside of the attack on the privatization of SS, Biden said nothing about SS that was worth noting. As a debate move, this was brilliant. If you say nothing, have no position and avoid critical issues, you win debates.


Here’s the facts Joe Boy:


Before 2016 the SS Disability Fund will run dry. They next administration has to confront this reality. A fix is required in less than 36 months. There is a gun to your head for action Joe. You have two choices. Raise taxes or cut DI benefits. Which one is it? You can’t hide under a rock for another four years, so what are you going to do?


The retirement side of SS will run off the cliff in 20 years according to the CBO. But that estimate is off the mark. It is not possible to run the SS Trust Fund to zero; a minimum of one-year’s worth benefits has to be retained as a minimum reserve. Over the next decade there will be at least one recession, when that happens the SS death spiral will be advanced by five or so years (as it was from the 08 blowout). The reality is that the SS drop dead date is closer to ten-years away from today. You can pretend this does not exist, but that makes you a liar.


Ryan has a bad plan, Biden has no plan at all. As it turns out, Ryan’s plan of “55 and under get clobbered” is about right. That is exactly the way this is going to play out. Either there is legislation that screws everyone 55 or under, “the Ryan Plan”, or there is the Biden “Do Nothing Plan”, and in about ten-years SS falls off a cliff. Either way, the same folks get screwed.



I think America needs a new political party. I would call it the Purple Unders Party (PUP). Purple, because it is the color when Blue and Red are mixed equally. Unders, for that group of people who are 55 and under.


The funny thing is that the PUs are out there. They will be voting for either a Red or a Blue. One fringe or the other will win, the PUs will all lose. Those PUs make up most of the population, and well more than half of the votes.


What a stupid system.



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cgagw's picture

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pfairley's picture

Do we really expect the younger generations to support the Baby Boomers social security? Like they were so good about helping around the house and all before?

  Many of them think "Fight Club" was a great novel and movie.

 Wait untli  things like the EU, Arab revolts, & China Sea bankrupt us some more. We keep electing people that have no clue on how to work together and solve problems.

 I am not buying a shotgun and storing canned food, but a complete rewrite of many of todays programs and lifestyles seems likely.

 Like if they have children, retirees will be required to help their children around the house, do errands, live in the basement and shut up, give up voting rights, keep being useful slave labor.


pfairley's picture

Do we really expect the younger generations to support the Baby Boomers social security? Like they were so good about helping around the house and all before?

  Many of them think "Fight Club" was a great novel and movie.

 Wait untli  things like the EU, Arab revolts, & China Sea bankrupt us some more. We keep electing people that have no clue on how to work together and solve problems.

 I am not buying a shotgun and storing canned food, but a complete rewrite of many of todays programs and lifestyles seems likely.

 Like if they have children, retirees will be required to help their children around the house, do errands, live in the basement and shut up, give up voting rights, keep being useful slave labor.


Big Ben's picture

On this exchange I would give Biden a B+ and Ryan a D-.

Biden has no plan, he gets a B+. Ryan has a plan, he gets a D-. This is exactly why there will never be any fix for SS. Anyone who proposes changes gets punished. It is not like in school where failing to turn in an assignment results in an automatic F.

By the way, I give this article an "F" because it is hypocritical to continually bewail all the problems with SS and then give a "B+" to a politican whose only plan is to score political points by attacking proposals to fix it.

mofo's picture

So.....after 12 years of Bush wars and building other countries it's now time

to make future retirees pay for it? Funny thing is I never heard anyone mention

cutting congress's pay and benes?And how can we afford to give muslim countries

foreign aid? WAKE THE HELL UP AMERICA!!!!!!

Henry Hub's picture

Good job Krasting. Excellent hit piece on Social Security as usual. I especially like injecting generational warfare into the discussion. Your checks in the mail from the Peter G Peterson Foundation. I hope you put the money towards your retirement.

Diogenes's picture

What a total crock of shit this article is. The boomers aren't the problem. They have been paying into the system all their lives with the promise that it was for their retirement. Now as they reach out for what they were promised, you want to pull the rug out from under them.

The boomers didn't invent Social Security. It was in place before they were born. They were not responsible for running it either, it is a government program. 20 years ago the government assured us it was fixed and by contributing a higher percentage of their salary the system could be saved. They have paid and paid all their working lives.

Now you say that's all bullshit. It's not true now and it was never true. And the boomers were supposed to figure this out and fix it. All the while the government who was in charge of the whole deal said everything was fine.

Bullshit, bullshit, ten tons of bullshit.

Offthebeach's picture

Sucks to be last in line in a Ponzi racket.
Youths aren't buying in, enough, false Federal Reserve fluffed assets with trashed real incomes to pick up tax/debt burdens for services they'll not get.
It's in their favor for asset decline, tax/gov/debt collapse. Generally, people, generations do what is best for them. Previously, starting with a little and now a lot, it was most beneficial to slide taxes into the future via borrowing.

nah's picture

balance the budget.... you want super subsidies and power for the political elite just for the sake of it


its gunna cost ya'

Manic by Proxy's picture

But, but as a Boomer soon-to-retire I'll still get my check, right? Then everyone else can just go f@ck themselves. Oh, and have really nice Depression.

Bam_Man's picture

Alpo? Do you have any idea how expensive Alpo is?

These people will not be able to afford Alpo. It will be strictly generic kibble for them.

OC Money Man's picture

This analysis is almost childish.  The writer says that 10 years ago "social security was running a $100 billion surplus".  And monkeys fly!!!!!!

Social Security has been "on budget", which means that Congress could treat it as pay-go, rather than a long term liability .  The baby bommers" buble contributions went into the system and the Congress spent the bubble on crony capitalism and the welfare state to get reelected.  This explained the overwhelming power of incumbancy. 

Now baby boomers are retiring and pay-go means that Congress has to pay for the liability by taking money away from crony capitalism and the welfare state.  This is a viceral threat to Democrat incumbancy.  That is whe they are coming up with scams like Obamacare to add 21 new taxes on the middle class.  Young people do not believe they will ever collect a dime from social security.  Privatizing the bulk of the program means that politicians cannot spend your money on their friends.   

The writer gives Ryan a B+ for honesty and a D- for fairness.  I give the writer a D- for honesty and an A+ for fairness to politicians.   


Bruce Krasting's picture

There is only one way to measure surplus or deficit. That is to look at cash. Accounting gimmick and phoney interest mask what is going on with cash.

SS has run big CASH surpluses in prior years. They took in more money than they paid out. These are actual cash numbers. Note that the big surpluses have now turned to red ink.

Could some of that big CASH horde have been used to by stocks? In theory yes, But now that there is a deficit, that option is gone.


Cash in Billions

2011 -45














Don Levit's picture

Bruce: You are showing negative numbers the first 2 years only.

Those positive numbers in all the other years does show a positive cash flow into the trust fund.

That positive cash flow merely means that no Treasury interest or principal needs to be redeemed to make up for the cash shortfall.

But you seem to be assuming the positive cash flow remained in the trust fund.

That is not the case, as the money was loaned to the Treasury to pay for current expenses, and lower the deficits.

If that was not the case, intragovernmental debt would not have grown in those years.

Don Levit

GMadScientist's picture

If you make it my problem, I get to decide how to "solve" it.

Leraconteur's picture

He said his plan would not involve a sacrifice for anyone who is now 55 or older. Ryan has created a new “Red Line”. If you’re 54 or younger, you are below the red line; bend over. If you are above Ryan’s artificial red line, you get a free ride.

This is an extremely unfair plan. I can’t imagine how it could be implemented without ripping the country apart.

There is no choice. The country will be ripped apart regardless. Seniors have no job other than to vote themselves money from the public treasury and will vote for SS in its present form no matter what. Ryan was merely telling them what they need to hear to get elected.

Hopefully they will change their minds and lie to us, because the country needs to be told bitter medicine and telling the truth won't get anyone elected.

The Truth?

OASI, DI and HI has to be cut -25% to -43% now, today, to existing payees. Benefits to all future recipients cut the same and taxes raised.

To not cut all and raise taxes on all will cause national fiscal catastrophe and loss of social cohesion.

Politics no longer matter. This is now just about mathematics.

Cut benefits, raise taxes. For all.

That puts OASI, DI and HI back closer to solvency and reduces or eliminates them as a drag on the annual deficit and accumulated debt.

GMadScientist's picture

Good call. This was Ryan backstepping the rhetoric that was fed to the Pugnicant base on the campaign trail. Move to the center to save face, nothing more.

hooligan2009's picture

cancel the trust funds and all benefits...there; solved it for you....

Widowmaker's picture

For every bullshit plan there is a legion of fraud bankers dripping with hubris who will get record bonuses from said racketeering engineered to fail.

Bruce Krasting reminds me of the scientist of Frankenstein, who thought surely that the victory in creating "life" from a bastardized process would remove the culpability of whatever monster he created and damages it caused.  Bailing out failure because "no one saw it coming" makes it alllllll okay.  

Bicycle Repairman's picture

If Paul Ryan and discussions like this are the future of the Republican party, then the Republican party has no future.  And if there is no party to challenge the Democratic party, then this country has no future.

malek's picture

So in deduction you believe the Republican party would be the only available positive future for this country?

We're freaking doomed.

Widowmaker's picture

And the 1% said, "MISSION ACCOMPLISHED!!"

Pass the war drums, it's time for the peasant youth to fight something something something dark side.

Archon7's picture

Or, how about the "realist" plan...  at this stage in the game, there are no real fixes that involve keeping the country solvent, since no matter what solution is proposed, it will be met with, "In principle, I agree that we need to fix SS, but I think you need to fix it by taking away the other guy's SS, not mine".  Therefore, the path of least resistance will be taken, which is, "We'll pay everyone the benefits we've promised. Hmm... what do we need?  Another trillion?  Just a sec... CTRL-P.  Another trillion, coming right up...."

Pemaquid's picture

The Boomers are the problem.

That's right, Bruce.  What this country needs is more polorization.  Us verses them.  Why not pick on the WW2 generation?  Does anyone think we will have it so good? 


GMadScientist's picture

If a particular subset of the population is responsbile for the lion's share of Medicare Part D abuse (as just one example), then, yeah, they need to get called out on the carpet.

The "last refuge of the scoundrel" is a poor subsitute for a cogent defense.

Bruce Krasting's picture

Please do keep in mind that I am a Boomer!

I can speak about my age group and the problems WE have caused.

If I was 30, and throwing stones at SS your criticism would be valid. But I'm throwing stones at myself, so I think I'm justified in doing so.

dwdollar's picture

You're one of the few Boomers willing to admit there is a problem. I congratulate you on that Bruce. But I'm guessing you have substantially more in retirement savings than the average Boomer, which gives you ample room to criticize SS and not feel threatened by cuts.

Nothing will be done about SS just like nothing will be done about every other major problem affecting this nation and the world. It's full steam off the cliff. IMO, that's the only fair plan at this point.

malek's picture

 But I'm guessing you have substantially more in retirement savings than the average Boomer

That alone cuts it for you?
Maybe you should distinguish further between those who have more in retirement savings because they saw it coming and therefore never expected much from SS, and those who were dumb in that regard but amassed large savings with hard work or luck.

GMadScientist's picture

Fair warning was shouted from the rooftops...that's more than most should expect from life.


LawsofPhysics's picture

Fair enough Bruce, but let me only add the following comment; Not all boomers are created equal.  Go ahead, take more away from those boomers who have served their country.  Go right ahead, I double dog dare you.  My father and several Uncles, all who have now been very successful in the private sector and are still very physical fit and well connected may have another plan for the rest of you boomers.

long soylent green...

GMadScientist's picture

As in "Duke Cunningham successful" in the "private sector" <wink>

Lackeys for parasites: still parasites.

Audacity17's picture

When SS was implemented VERY FEW lived passed 65 years old.  Why in THE FUCK??? are people getting it at 65 now...should have already been moved to 75.

ZackAttack's picture

There are a tremendous number of people who work non-sedentary jobs whose bodies are absolutely worn out by the time they reach their 50s.

Ryan is turning Medicare into a voucher system and phasing out Medicaid in order to give the top income tier a 20% tax cut, so I guess you'll get your wish when life expectancies fall back to their 1920s norm.


TBT or not TBT's picture

Life expectancies are primarily rolling over due to overconsumption of cheap carbohydrates and industrial vegetable oils, which generates lots of sick-care revenues to providers of palliative non-solutions to the chronic diseases these eating practices just about always produce.   

Sick care revenues for older sufferers are paid for by government "insurance" programs, which are not insurance but payment plans for voters who have developed the related diseases.     Older voters who ate healthily have the insurance but receive a lot less of the sick care "benefit" provided to their peers, for failure to have chronic diseases related to eating loads of cheap carbohydrates together with industrial vegetable oils.

GMadScientist's picture

Curious world you inhabit where every medical ailment can be traced to diet. Very "scientific".


Pemaquid's picture

You, Sir, have obviously never worked a job that requires other than sitting on your ass.  Asking pencil pushers to hold off retirement till 75 might be doable but not for everyone else.

TBT or not TBT's picture

Nonsense.   People have been working their whole lives for a good hundred thousand years or whatever.   This "retirement" thing is a mere blip.

GMadScientist's picture

"Retirement" used to mean dying of "old age"...at 45.

Stuck on Zero's picture

Everyone is in a state of panic over $100B deficits in Social Security.  On the other hand there's nary a comment when $23T is handed over to the bankers.  A single new fighter plane fleet will cost that much or more.  Lets focus on the really outrageous government expenditures first.


GMadScientist's picture

I'm all for prioritizing problems correctly, but if you look at the goober piechart, SS and Medicare are 2/3rds of the US budget.

There should never be a deficit on an insurance program; would you be cool with your bank account showing a $1000 "deficit"?

Mediocritas's picture

Nah, I'd say SS reform is right up there as the major issue because banksters are the biggest SS beneficiaries of all: corporate welfare.

dexter_morgan's picture

“A republican stands up in congress and says 'I GOT A REALLY BAD IDEA!!' and the democrat stands up after him and says 'AND I CAN MAKE IT SHITTIER!!'”  

                                                                              Lewis Black                                       

Bicycle Repairman's picture

The willingness of many of the commenters here to completely abandon their SS benefits without any kind of struggle simply doesn't ring true.  The complete unwillingness to look at the big picture is so stupid, it simply cannot be realistic. 

Is this some kind of Grover Norquist boiler room production or similar?  There's no other explanation for it.  This whole conversation is faux.  Very few, if any, Americans are ready to fold the SS system.  Cutting the military or reforming healthcare are the priorities.  SS doesn't even enter the conversation.

You guys are whack jobs or operatives.  Which is it?

Encroaching Darkness's picture

Let's see, a "benefit" is a scheme that takes money from my paycheck over my working life, minimally addresses or ignores inflation, and returns less than if invested when I'm old. Further, since the future is unpredictable, the return is subject to reduction (or cancellation) if those running the scheme think it should be, for whatever reason; it has no cash value (you cannot cash it in at will, or sell it), and you have no choice in whatever the money is invested in .

Would you buy a life insurance policy that read like this?

"This whole conversation is faux.  Very few, if any, Americans are ready to fold the SS system.  Cutting the military or reforming healthcare are the priorities.  SS doesn't even enter the conversation."

Didn't a Manhattan socialite once say she didn't know how Nixon could have been elected, since no one she knew had voted for him? As to cutting the military or reforming healthcare being "the priorities", how would either one lower unemployment? Some 20% of the population is out of a job, but that doesn't even make your list of "priorities"? What crowd do you run with?

You have yet to figure out that SS is no longer a benefit, it is a LIABILITY; to the country (will eventually bankrupt us as it is), to the political class (you cannot even mention reforming it without being lathered with ridicule by the media and opposition party) and most especially to those who pay for it, out of their paychecks, week after month after year. Between inflation and demographics, they will now be getting less than they put in, guaranteed by the math, and cannot have a choice to opt-out of it (and we haven't addressed the iron link between SS and Medicare).

We are neither whack jobs nor operatives; we simply see the facts and can do math. What is your solution to a system guaranteed to fail, more money?

Theos's picture

Im 26 - Id gladly fold it. It's not going to be there for me, and I have lived my professional life knowing this. 50% of my income goes into savings, so my "QOL" is much lower than it could be... But buying useless shit doesnt really ring my bell, so it works out. 

To the people who bought in to the ponzi and saved next to nothing? Congrats, you let Bernie Madoff take a chunk of your output, and lived beyond your means on what you had left. Now your dependent on a monolithic bureaucracy lead by sociopaths, which you also electedl. Its going to be sweet when they decide you're no longer needed. Enjoy your decision.

TBT or not TBT's picture

I'd take the deal where I and my employer no longer pay SS taxes, in return for renouncing the benefits, without blinking an eye, and so would tens of millions of other americans.      Tens of millions further would take more than a blink of an eye.   Let's say five minutes thought.    It is a ponzi scheme sold to the public by Ponzi like figures to gain power and influence in their own time.    That's it, that's FDR's and every other social democrat's legacy.

11b40's picture

Sure you would, and chances are good that you would be better off in your old age for it.

Of course, chance being what it is, you may also be broke and infirm at 75.  Then what?  Well, you would become a burden on the rest of us, that's what.  Would you also be willing to sign some kind of eugenics contract if that happened, so that society would be done with you and your lack of contribution?

a growing concern's picture

Just show me where to sign and I'd sign in a heartbeat.  I find it hilarious and sad that people my age actually think there's going to be anything there at all when we get to retirement age (I'm not even sure the USA will still exist).



Mediocritas's picture

Here's an idea.

Scrap social security almost entirely as it stands and replace it with "incentivized social security". The human race managed to survive tens of thousands of years without public SS, we'll manage again. Plenty of other animal species demonstrate social security in operation without requiring some monolithic government to administer it.

The problem with government spending is that there is too much distance between the supplier and consumer. Those doing the spending don't particularly care about return on investment because they don't personally and immediately feel the pain when a poor investment is made. This is compounded by the receiver of government spending who, by and large, feels perfectly fine about ripping off the government as much as possible, wherever possible. My wife grew up in the USSR, she provides endless stories of people scamming the public purse as much as possible with no remorse. The same is true in the USSA. The whole process of public SS is faceless and that's the problem. (Same goes for Wall St ripping off "The State", it's a faceless crime).

The way to massively reduce waste and scamming is to put the receiver face to face with the spender and ensure both take a social hit for screwing up. Ditch faceless social security and force people on the public tit to instead latch onto, (register as a dependent), an individual (or several) who approve of it. That means that baby boomers (for example) in need of SS have to convince the family to support them, you know, exactly the way it was for thousands of years, just with a modern twist in that the family receives an incentive for doing so.

The incentive is that those with registered dependents have their income tax slashed depending on the number of dependents meaning the cost of public SS instead gets shifted to a lower government tax take as that tax is redirected from the provider to the dependents. The main difference is that there are now millions more brains deciding where to make the SS spend and the individuals on both sides of the spend have a more powerful social contract not to piss it against the wall. Family doesn't hand money to an alcoholic relative without oversight, the government's SS doesn't think twice.

Even if the incentive was a credit rather than just a tax break, even if the size of that credit was as large as the current SS spend, the outcome would still be a net improvement as more brains and more facetime would result in a wiser spend and more motivated use. (I don't favor a large credit because it's just as open to faceless abuse as the original SS system).

If an SS dependent can't find anyone to provide support? Tough shit. Learn to be less of an asshole so that someone actually cares about your well-being, or get a job.

Yeah I know it's cold and callous and I'm a terrible person. But if you buy the thesis that Bruce continually presents, that SS is ultimately doomed, then the situation I describe above is going to happen one way or another, like it or not. No amount of avoidant "I don't want it to happen therefore it won't" thinking will change that fact.

[edit] Yes I know, military spending, healthcare captured by big pharma, Wall St milking the middle class, corporations legally treated as individuals, excessive income inequality, a corrupted SCOTUS, etc, etc. Loads of other big(ger) issues to deal with. No shit Sherlock. This thread is about SS reform. Don't thread-jack.