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On the Fall of the PU
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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"The incentive is that those with registered dependents have their income tax slashed..."
You want to keep the Income Tax around? I guess you really don't want to leave The Matrix. You swallowed the Blue Pill.
If individuals became wards of others, some would see this system as a cash cow. We would see people chained in the basement fed only mush, so that their relatives or benefactors could cash in, much like what occurs in the foster care system.
Instead return to the natural system of families taking care of their own, as well as the occasional poor uncle/aunt. Soon you would see a return of chastity, arranged marriages and orphanages. Nutrition must also become the focal point of healthcare and "social security." The best gestational nutrition yields virile, strong grandchildren.
Wow, chained in a basement and fed mush. And it would be dark too? Now, how is that different from how we mushrooms currently live? I'm just asking. Although it does sound pretty good.
The most well thought out comment I've heard in a while.
Families haven't been nuclear for a long time. Single people living alone and childless couples make up just under half the US population.
That occured because of Social Security and the raft of other "programs" that have followed. The state views the family as competition, and so has targeted replacing its functions, slowly but surely. A look at rates of single parenthood among the poor, drawn over time, is illustrative. The state and statists encourage this through subsidy and de-demonization of that and any other family breaking family twisting behavior, because the family is their enemy.
That's right. No state in the world has been as successful at destroying the family than the US corporatocracy. They won't rest until it's pure dog-eat-dog, brother against sister, parent against child, because that's how you ensure the most consumption. Families do things like "sharing" which means less spending and we can't have that now can we? Break them up so they all have to buy their own individual copies of X, Y and Z so that economists can jizz their pants watching GDP soar.
This, of course, violates our genetic programming. We're social animals, we need family, we need tribes, we require interdependent living. Try to break all that down and an epidemic of mental illness is the consequence, validated in studies across multiple species of social animals, none moreso than Homo americanus.
I suspect this is why religion is so strong in America. It's a psychological relief for people being hammered by isolationistic economic policy.
Correct. Just look how successful the mormon CULTure has been. Very much about family. Great folks, I lived amount them for 15 years, they take care of each other and their own, imagine fucking that. The fucking state really hates competition like that.
I agree with the post but those that have contributed to Social Security over the decades have the right to expect the promised returns for it especially because they couldn't very well refuse to contribute. They can't be expected to write off their investments when they didn't have a choice of making it or not. So we have to deliver something like the benefits promised to them while changing the system for the future
They paid their money (a lot of them less than they're promised in benefits) and took their chances. There is no way to unwind this evil government-growing, dependency-generating, family crushing, civilisation eating monster and its sibling monsters without a giant chunk of society taking a hit. Promises shmomisses. The governement is borrowing half of what it spends with no end in sight. No rescue is coming. There will be a collapse and those who've relied on government and loved government will get let down. It is impossible that they won't be.
As a current SS recipient who has always hated being forced to participate in the SS Ponzi, part of me would really like to see a collapse. I have two reservations about that attitude. First, I fear the effects on my son and by extension all the younger generations. Second, I fear that the people who got us into this mess will somehow elude their just desserts. If collapse comes, I suppose I'll root for those with pitchforks, tar and feathers, hoping they'll start with the politicians.
As with all things in our time the solutions are not desirable by any of us. The promised money is gone. To replace it they will have to steal it from someone else and make them promises that will never come true either. To expect the government to be less corruptible than anyone on wallstreet is laughable.
The richest country in the world has no money in the system to provide a bare minimum retirement income to the people paid 15% of their wages into the system?
Bullshit.
The federal government has assets of all kinds. Start selling them and raise the dough.
Start selling and fork it over.
You should research the original intention of SS and the conditions that it was meant to provide for. It was never meant for "retirement income". And sell productive national assets? To throw good money after bad?
Since SS is within my professional "circle of competence" I am uniquely qualified to discuss the topic, unlike most of the kibitzers here and Krasting. I fully understand the original intent as well as subsequent revisions to that intent. The purpose of the system is exactly as I stated it: to provide a subsistence income to people over the age of 65. Period. EOS.
"Throw good money after bad?" What's so good about letting assets sit around unused or wasting away while people starve? You're joking, right? I mean you cannot be that stupid.
The original age was two years higher than average life expectancy.
I would agree to that proviso being reinstated.
You should also as you claim to understand the original conditions of the scheme.
Bingo! It was an insurance against a combination of things unlikely to befall most individuals: A) Not having a support network(family, charity, savings, friends, subsistence level job) AND B) Being an outlier in terms of lifespan.
The actual result of this and other programs was preordained. It sought to REPLACE family, charity, savings, friends, and productive work amongst the aged, WITH A SINGLE RELATIONSHIP, THAT BETWEEN INDIVIDUAL AND STATE. These programs are evil, civilisation and culture destroying monsters to be unwound sooner rather than later.
This space reserved for future retorts to paid operatives.
Read thru the original wording. NOWHERE are such adjustments mentioned.
"It sought to REPLACE family, charity, savings, friends, and productive work amongst the aged, WITH A SINGLE RELATIONSHIP, THAT BETWEEN INDIVIDUAL AND STATE. These programs are evil, civilisation and culture destroying monsters to be unwound sooner rather than later."
It provides a subsistence level stipend. It doesn't replace family or friends economically and certainly not emotionally.
Productive work? Don't worry people are working into their 70's. As to whether people are doing productive work or not, it's none of your goddamned business.
Charity? Fuck you.
Culture? Don't even try forcing your BS culture on me.
To be unwound? Just as soon as you get the votes, buddy.
You got it right. The US government has taken 200,000 thousand or more dollars from me telling me someday I will have a pension for life and when I get close to getting it I am the problem.
Keep posting.
I would only agree to higher SS taxes if we reinstate state sanitariums for the truly infirmed and poor houses for elderly who want to "retire" with insufficient savings. SS was never meant to be a federal pension and if you can't afford to retire and provide for your medical needs from your savings then fuck you. Keep working or die. This expectation that you live off of SS for 30 years and run up millions of dollars of debt in your end of life care while we pile on over a trillion dollars in debt every year is bullshit. I believe we will see several more financial crises over the next two decades increasing in both frequency and severity and real choices will need to be made. I think Bruce is right about an eventual PU party and I have the feeling our young leader will be a dictator. The Excess Generation will reap what they have sown.
I am sure that Madoff's victims felt that his Ponzi was unfair, too.
Hopefully, future generations will not fall for governemnt ponzis after learning about the one we experimented with in the 20-21st centuries. Our bad luck to have been the suckers this time around.
It may be that the debate between Biden and Ryan showed the style, class, quickness, and dominant sides of both. As far a policy or what can be projected from what is within them, it may be worthless. A 5 page document would be handy with a page for different issues. Yes, more lies maybe, but at least no interruptions.
Fuck all this!
Implement a fucking fairtax - comsumptive tax at a hard line 23% (that can NEVER be raised/fucked with/monkeyed around by any bastard lying politician) - eliminate the fucking IRS, accountants, and do away with all the fucking subsidies, loopholes and out-and-out tomfoolery by these damned politcial hacks, and this could be over.
That it's not even looked at at all by either party makes both a sham.
If ANYONE REALLY studies the fairtax proposal - in detail - they'd get it. Too bad people are too partisan/too ignorant to do so.
Every single person I know that has - loves it.
I give both of these LYING, COMPLETE POWER MAD TINKERING DOUCHEBAG fuckers a hard F
EPIC DAMN FAIL
America’s problem is the Baby Boomers.
No, the problem is taking cash out of the trust fund and putting low yield treasuries back.
SS trust funds were supposed to be invested in higher yeild securities, not freikin low yield treasury paper.
But then it was a ponzi all along, another tax on the American people made up to look like a benefits program.
Its just another form of welfare bottom line, and welfare benefits can be changed at any time.
I'm over 55 and I don't expect SS to pay out anything meaningful when I reach 65. Whatever it pays out is gonna be in very debased dollars too. Monthly SS check might pay the light bill if I'm lucky.
But we could see currency collapse before then and dollars in those SS checks would be worthless.
Hell, the govrenment might collapse by then, and SS would vanish along with it.
You all will get your SS check. It won't buy fuck all. That's it. Promise kept. Enjoy.
Neither will your Bernanke bucks you worked hard to save.
stackables be good tho
Off Topic: Here's some good news (for a change!):
'Guinea worm' close to extinction
as always, awesomeness via good ole BK.
janus is so happy to have you on ZH.
maybe the party should be called the purple velvets (cause we still want the revolution to be the jeffersonian velvet-sort...i'm just praying that they don't insist we become the purple-passion ultra-violets...i mean ultra-violents). no matter, where ever we fall on the revolutionary prism, the results will be the same: no more universal sufferage; no more faith in this mendacious filth they call 'democracy'.
besides, purple is the color of royalty...works for janus. oh, our highschool mascot was a purple hurricane trimmed in gold...sweet!
whatever the case, boomers like you, CD, wolf richter and a few others are more than welcome in the New AGE...it's fair to say we'll need you.
but we won't be fooled again...
http://www.youtube.com/watch?v=SHhrZgojY1Q
the who?,
the janus
Bruce wrote that the time to privatize SS was 10 years ago, when it was running a surplus.
From a cash perspective, Bruce, there has never been a surplus.
When I think of a surplus, I think of some pre-funded investment that is left intact, that is simply liuidated.
Every dollar of principal and interest of the SS trust fund surplus is "liquidated" via new general revenues - the same way we pay for all expenses, whether in trust or not.
I agree with those commenters who say the crux of the problem was the looting of the SS trust fund (the borrowing of the Treasury to pay for current expenses). Bear in mind, though, what the Treasury borrowed was the excess FICA dollars, which was real cash, and the interest earned off the principal dollars, which was fake cash, which appeared in the guise of credited "intragovernmental debt." The borrowing created a liability to the Treasury and an asset to the trust fund. The government, since the borrowing occurred, had the luxury of spending the liability part to pay expenses and lower the deficits.
While this cash was used, there was no impact on debt. Intragovernmetal debt remained the same. The government had the use of the liability part for many years to pay expenses, amd lower the deficits, with not a penny of increase of debt. I assume the reason that debt did not increase was because this was in the form of a promise to repay, than simply the trust fund "giving" the money to the Treasury.
The asset part remained in the trust fund, but it was an unfunded asset for the funding (excess FICA dollars and so-called "interest") went to the Treasury.
Currently, the SS trust fund is running a cash flow shortfall. Interst is not considered as cash, when it is tapped to pay benefits, for interest, as I stated before, is not cash, but unfunded Treasury debt which was "credited" to the trust fund. You cannot redeem an unfunded asset for cash.
Principal that is tapped is not considered as cash, for the extra FICA dollars were spent, when it was lent to the Treasury.
So, what Bruce considers as "surplus" in the SS trust fund is true, only from an accounting standpoint. From the standpoint of cash, every dollar of principal and interest in the trust fund, whether it was part of the "surplus" ten years ago or not, was not surplus that could be simply liquidated, as most reserve funds do. Rather, tapping trust fund principal and interest is the same nechanism used at trust fund exhaustion: new general revenues will be needed to make up for the cash shortfall.
From a cash perspective, the trust fund is empty today, and it was empty 10 years ago.
Don Levit
It is a little worse than that. Every "surplus" dime paid to social security went to growing the central governement of the United States. The non-surplus dimes, those paid out again, went to undermining family and the civil society in favor of the state, by incentivizing people to rely on a single relationship in their lives as a payment plan for their old age expenses, their relationship as an individual with a state. This was an evil program even at the beginning.
Not sure exactly what Bruce means in saying that 'privatization is no longer an option.'
But whether public or private, investing SocSec's shrunken reserves solely in gov't bonds instead of a balanced portfolio costs it about 300 basis points a year in return.
Modern publicly-sponsored pension plans (Chile, Singapore, Norway, etc) all allow for equity investment.
A solely debt-based plan like SocSec (designed in 1935) is doomed to poor returns and niggardly payouts.
NOTE:
One of my many flaws is colorblindness. I can see red and blue, but the shades in between all look the same to me.
When I first wrote this I referred to the political center as "maroon". To me, that is the color that results from mixing red and blue.
I have about a dozen emails from art teachers taking me to task over this gaff. Purple is the result of blue and red. Maroon has nothing to do with this at all. Sorry about that.
So I fixed the article. The MU is now PU. The MUP graffiti is now PUP graffiti.
Your humble(d) scribe,
bk
The way i see it, the politics we need now are the politics of common sense, and the right color for that policy is transparent.
If everything was always on the table, visible for anyone who wants to know, no more secrets and no attempts to paint over the truth, regadless of how ugly it may be. Then we might know where we stand and what needs to be done to solve the problems before they escalate into something no one can handle.
From MUPpets to PUPpets...
Paul Ryan is around the same age as me.
I run my own business and have never been involved with politics. Has Paul Ryan ever had a business and never been involved with politics? Yes I know, unfair to a point, but this young man seems totally unsuited to be in politics as he has never run a small business like me, and has been what you call a career politico all his life.
He is not justified in telling a lollypop lady how to conduct herself, never mind a country.
Fuck you Paul Ryan, get a job, preferably running a small business and after a while come back and tell the rest of us joes how it should be done.
Inthemix96
You forgot to mention that motor-mouth Biden has never run a business; he's been a politician collecting a government check nearly all his life.
Very thoughtful, President Obama. Like you have ever done anything but give yourself a handjob.
Very good laughing boy,
This thread is about mr ryan, not the peace prize winning cunt running your country at the moment. Or did that escape your fucking tiny one sided mind?
I have no love for any one of the fuckers either being or trying to be your ruler. But on a thread for ryan, I thought it may be relevant to stick to it.
I don't believe you can run for public office until you've proven that you're completely unqualified for the job.
The country is below the red line.
Neither side cas rescue it, too late.
They will of course pretend that they can, as that is their S.S.
PHOTO OF THE DAY - The Truth About Paul Ryan
Presented without comment.
Not one of your better pieces of work, Bruce.
First and foremost, Social Security is NOT and entitlelment program. My soon to arrive SS check is not a federal benefit. It is a return on my investment that I started making when I was in Junior high school, over 50 years ago. Every dime of wages for most of those years had a portion witheld, and my employer paid an equal percentage. I am very aware of this second part, since I have also been an employer for over 30 of those years. Today's percentage is 7.5% for both parties, or a total of 15% of wages.
If you averaged 30K/yr over your working life, you will have invested $180,000. Averaging $375/month investment over 40 years compounded monthly at just 1% gives me a personal investment of $1.3 million.
Today's average SS check is $1230/mo. If I had that $1.3 mil, and took it down at the rate of 3%/yr, the monthly check would be $3277....and it would last for 33 years. If I died early, I could pass it on to my heirs.
I am not in favor of eliminating SS, or of turning it over the vipers on Wall St. Maybe my return would have been 1%, or 5%, or minus 50%. There needs to be a guaranteed program, but don't tell me that something I bought and paid for does not belong to me. It is not a fucking benefit or entitlement. It is ROI. It is an Earned Retirement Program.
If the wealthy need to be taxed at a higher rate, so what? They are the ones who have benfited the most from all the money the government robbed from the SS Trust Fund over the years. They are the ones who the laws are written to benefit. Their investment in lobbyists, political partys, and politicians have paid off handsomely for them.
Anyone who looks at this knows that simply increasing the amount where SS deductions stop (currently $110K), immediately changes the equation in a very positive way.
Or, we could, as I thought I heard Congressman Rayn suggest Thursday night, implement means testing.
I assure you, it will get fixed. All you under 55's can relax. I don't care how much you do or don't like it, society has a responsibility to the greater good, and when voters get to decide, eventually the chickens will come home to roost in the nest of the wealthy. Wait & see.
The Weimar Republic had responsibilities too, and met them, by printing up the money to do so, as we are doing. This program and your "investment" have already turned to shit and the reckoning will unfortunately occur in your lifetime. Ever looked at the CPI? Doesn't include fuel or food, which retired people do consume.
Why is it the responsibility of the government to make sure there is money available for me to live on when I'm old? This whole notion that the government has to be safety net has led to nothing more than two sides debating a position that was flawed from the start. The problems facing Social Security and Medicare insolvency are two examples of why the government run programs do not work. It will not matter who or what party is in office. If that were not true the programs would be operating successfully, and we would hear nothing about these programs. This is the problem with American...Americans.
11b40, you are full of shit. Just because you were robbed by the state for your entire working life and did nothing about it, does not mean that anyone owes you anything. The older generation should have ended social security and the rest of the welfare/warfare state years ago. They failed to do so, and now reality will end it. No one is getting back any of the money stolen from them by the state. The money you paid in was not "invested" it was consumed, and now it is gone.
So this must mean that at this very moment you are working tirelessly to end social security and the welfare/warfare state. Where can I read about your efforts and when we can expect the end result? We'll wait for ya to get it. Or are perhaps you yourself terminally constipated?
You and Bruce are both full of shit.
You and Bruce and I have invested in a fraud, AKA: Social Security.
Nobody owes you anything.
You were made to invest in a Ponzi scheme which will collapse, just like those that invested in Bernie Madoff's fund did.