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Social Security - 2012 Results

Bruce Krasting's picture




 

 

 

 

Social Security (SS) has released its estimates for the December data for benefits payed and taxes received. With this info, I can estimate the 2012 results that will be formally reported in five-months. It was a ho-hummer of a year for SS, it tread water vigorously, and ended up with a cash deficit of $46.7B, just a tad more red ink that 2011’s $45.6B. The pieces of the pie, and YoY comps:

 

Payroll tax receipts: $712.7B (+6.5%)

(Includes payment from Treasury Re the 2% tax cut)

Income from Tax on Benefits $27.1B (+15%) !!

(Means test)

 

Total Cash Receipts $739.8 (+7.0%)

 

 

Benefit Payments $780B (+6.9%)

(Includes RR interchange)

Overhead $6.7B (+4.7%)

 

Total cash Outlay $786B (6.8%)

 

Net cash flow loss $46.7B (+2.4%)

 

Interest income $111.4B (-1.7%)

(non-cash)

Accounting surplus $64.7B (-2.5%)

(Paper minus cash)

 

Number of Beneficiaries 56.8m (+2.5%)

 

Some thoughts on these results:

 

- The $46.7B annual cash deficit is the third in a row. The 2012 shortfall confirms it; SS will never see a cash flow surplus again. Every dollar of the cash shortfall MUST be funded by selling additional debt to the public.

 

I hope this is clear. I’ll repeat it. Social Security is adding to the debt held by the public. It is forcing the country to borrow more to fund current operations. When Senate Democrats, like Dick Durbin and Harry Reid say, “SS does not add a penny to our debt.”they are lying.

 

+++

- The Tax on Benefits is up to a meaningful $27.1b (+15%). The increase is the result of many newly retired folks who are getting SS, and also have other income (investments and pensions). This forces them to add the SS income into their tax base. THIS IS A “MEANS TEST”.

 

I emphasize this fact as there is very strong opposition to the concept of a means tax for SS by Democrats in Washington and the liberal press (Dean Baker). But it already exists!

 

Liberals don’t like means testing because it undermines the principals of SS. It makes it appear that SS is a form of welfare. The fear is that if SS is labeled as welfare, the popularity of the program would quickly wane. So the staunchest supporters of SS are avoiding a fix that could patch the finances for the worst reasons. They are supporting Roosevelt’s dreams, at the expense of the base they say they are trying to protect. Only in America….

 

The problem with the existing Tax on Benefits is that it does not cut deep enough to fill the bucket. I advocate that the tax bite for high-end seniors be increased. I will go further, and state that the means test for SS benefits should be based on assets, not just income that can be manipulated.

 

My strong feelings on means testing SS benefits are to my personal disadvantage; my SS benefits would be gone under my plan. I say this now, as I know there will be many who will throw rocks at me for my stance. I can already see the words, “I paid for it, the money is mine!” I say,"Sorry, this will come sooner or later."

 

My gripe is that the generation that is causing the problem, the Baby Boomers, is getting off scot-free. All of the proposals to tweak SS (Age and inflation adjustments) would phase in over twenty-years. With this, the bulk of the baby boomers would get a free ride. This doesn’t seem fair at all to me. Society, as a whole, will have to pay for the Boomers, but the Boomers should shoulder a higher percent of the cost. By no means should their political clout result in an unfair outcome. This is a political "Kick of the Can", "screw folks sometime in the future". A downright ugly plan at that.

 

 

 

+++

- In 2012 the Treasury paid SS $115B to offset the drop in income related to the 2% reduction in payroll taxes for the year. The operating results (including the Treasury contribution) still produced a cash flow deficit of $46.7B. In other words, the shortfall for 2012 added $162B to the borrowing requirements at Treasury. This borrowing resulted in a dollar-for-dollar increase in the Debt Owed to the Public.

 

+++

- There was an improvement (+6.5%) in the YoY payroll tax income. A portion of the better results are annual “Adjustments”. 2012 had positive adjustments to revenue from the prior year totaling $2.1B, while 2011 had negative adjustments of $8.6B. Taken together, the real rate of increase for revenues at SS is closer to 5.2%. This data can be used to create an estimate of total payroll income (Adjusted payroll income / Tax rate {12.4%} :

 

2011 estimated SS total payrolls = $5.658T

2012 estimated SS total payroll = $5.951T

YoY change = $293B (1.8%)

 

The ~$300B of increased pay seems like a very big number, but when you consider that inflation is running at about that same 1.8%, most folks are getting no place fast.

I draw this comparison to make a point about the huge numbers that are part of the economy. A $300B increase in worker's incomes doesn't move the needle at all. Amazing...

Note: This quickie numbers analysis does not reflect the cap of $106.5K on SS tax, nor other sources of income that is not taxed by SS. I don't think this skews the results/conclusions by much. Social Security has 155m in its pool, significantly larger than the Non-Farms Payroll (135m). These numbers cover a big slice of the American pie.

 

+++

- The YoY increase in Benefits of $50.1B (6.9%) is a reflection of A) A COLA increase of 3.6% and B) A net increase of 1.4m in the number of beneficiaries. The costs at SS rose at a pace that is far higher than the economy grew in 2012. Approximately 11,000 people enter the system every day. 7,000 current members of the club, well, they leave the system 24/7.

 

+++

- Interest income is down 2.5% in 2012. The decrease of $1.1B is modest, but also significant. The passage of time and ZIRP/QE, has caught up with SS’s investment portfolio. The interest income at SS for 2011 will prove to be the zenith; from now on, the interest income at SS will be in annual decline. This is an important milestone, a decidedly negative one at that.

The Federal Reserve has cheapened the cost of money at the expense of SS. One can argue the merits of this tradeoff, but what can’t be argued, is the consequence to SS. If the Ten-Year were at 4% (Versus the 6% long-term average) it would add $700B to SS interest income over the next (critical) ten-years.

If you listen to Bernanke, the other Fed Doves, guys like the WSJ’s Jon Hilsenrath, and all of the economists on TV, you would think that there is no consequence to the government of perpetual cheap money. Actually, what Bernanke is doing is dramatically shortening the day of reckoning for SS. The current thinking is the SS “go bust” date is 2033. But when SS releases its annual report in May, it will confirm that the date has been brought forward a few years, and the culprit is cheap money. I wish that someone other than the blog world would point these things out. Bernanke is no pal of SS, Very Important People, like Paul Krugman, love SS and also hail Bernanke's endless cheap money. I guess they don't see the conflict.

 

 

+++ (finally, sorry for running on)

- There was no crisis at SS in 2012, and there won’t be a real crisis for a number of years to come. The growing annual cash deficits are now “programmed” to happen. This gives Democrats the opportunity to say, “Hands off SS”. “It ain’t broke, so don’t try to fix it”.

My guess is that the Democrats will prevail on SS with regard to the current fiscal cliff debate. As a result, there will be no changes to SS. Should that be the outcome, in about five years the wheels will fall off the cart. By then, SS will be running cash deficits of at least $200B a year. It will be much harder to “fix” than today.

 

 

 

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Mon, 12/03/2012 - 15:30 | 3030438 americanspirit
americanspirit's picture

May I suggest a massive public works/infrastructure upgrade program - a mega WPA. Put someone like Elizabeth Warren in charge of keeping crooks like Haliburton out of the primary contractor picture and then give the sub-contracts exclusively to small firms currently employing under 100 people. Let them hire as many unemployed & retired people as they can handle to perform on the subcontracts. Put all electricity lines underground, repair all the bridges, plant 1000s of urban gardens, re-build dams, etc etc. This is one area where only government can do the job because there's no profit in it for big finance or big industry but of course if such a program were implemented without safeguards to keep their bloody hands off they would gut it in a minute. And before anyone objects on the basis of socialism think about the costs that will be incurred if our infrastructure deficit isn't dealt with toot sweet, and then offer an alternative.

Mon, 12/03/2012 - 22:14 | 3031404 Oldwood
Oldwood's picture

Sure more shovel ready stuff huh? How about we build us some of those big empty cities like China has! We keep going down this road of empowering an ever larger government because we can just imagine all the great things that could be done for the good of man. And then we see what happens. Yet still so stupid we will do it again, but harder this time. How about we just use the last of our credit line to buy guns and bullets for everyone and just cut to the chase. Its bad enough to commit suicide, but to drag it out and suffer so long just doesn't nake sense.

Mon, 12/03/2012 - 11:18 | 3029595 spooz
spooz's picture

Right.  Bush's tax cuts have done wonders for employment. Pay no attention to the rising inequality. Lets just keep it up.  Sooner or later the piss will start to trickle down.

Mon, 12/03/2012 - 11:03 | 3029554 Bob
Bob's picture

Yeah, the govt borrowed money from good faith compulsory investors in the social security fund.  Obviously Treasury spent the money, just as they do all the money they borrow. 

It wouldn't make sense to borrow money and not spend it, would it?  Does anybody ever borrow money to just let it sit, uselessly bleeding interest expense?

Meanwhile, it would make no sense for the SS Trust Fund to hold cash that uselessly loses value to inflation, right? Duh. 

So what we have now is the SS TF needs to liquidate a small percentage of its assets--Special Issue Treasuries--to cover outgoing cash obligations.  On a regular basis.  Sorry, we won't be able to help you roll over more debt, Uncle Sam. 

Oh, Noes!!  Sam now has to sell debt to somebody else to come up with the cash (since he doesn't wanna increase his revenue base)! 

BFD.  Sell more debt.  If you don't like it, raise more revenue, say, by eliminating the ceiling on earnings subject to the payroll tax.

Let the fucking Fed buy it if nobody else will. 

Mon, 12/03/2012 - 11:01 | 3029546 masterinchancery
masterinchancery's picture

As the Supreme Court ruled long ago, SS benefits have no connection to taxes paid, which are just a general revenue source. Everyone in Congress knows this.

Mon, 12/03/2012 - 10:49 | 3029508 Joe Davola
Joe Davola's picture

I emphasize this fact as there is very strong opposition to the concept of a means tax for SS by Democrats in Washington...

 

I'm surprised by this statement and would like to see references, since it doesn't fit into the Democratic playbook of 'someone else has more than you'.

Mon, 12/03/2012 - 10:39 | 3029483 SKY85hawk
SKY85hawk's picture

I disagree that we baby boomers are getting off scott free.

We paid into the fund as it was priced during our working years.  You can't blame us for the Fiscal Irresponsibility of the gummint.

You would get a lot more credible attention if you were shouting out about the Fraud and Waste in Medicare!

 

Mon, 12/03/2012 - 14:40 | 3030262 LawsofPhysics
LawsofPhysics's picture

"You can't blame us for the Fiscal Irresponsibility of the gummint."

---------------------------------------

LMFAO!!!  Who'd you vote for again all those years?  Did you revolt when the gold and silver window was closed and all other manners in which the constitution was disregarded?

Go fuck yourself.

Mon, 12/03/2012 - 20:15 | 3031173 chubbar
chubbar's picture

Are you "revolting" now with all the egregious acts of congress going on as we speak? Just sayin.

Mon, 12/03/2012 - 18:02 | 3030023 forexskin
forexskin's picture

@SKY85hawk

We paid into the fund as it was priced during our working years.  You can't blame us for the Fiscal Irresponsibility of the gummint.

bullshit again. you were (effortlessly) sold a ponzi where the hurt you experienced paying in is far smaller than that which will be experienced by those who have to pay for you.

you just want the benefits of the ponzi, and somebody else to pay the cost. sorry, but at some time in the future, our grandchildren will be eating cat food while you golf in florida because of this.

now tell us how that's fair, or how long you think it will last?

ringo's law: everything government touches turns to crap. learn the lesson for when these shithead pols make big sparkly promises (we just need your vote). obamacare anybody?

Mon, 12/03/2012 - 12:11 | 3029770 Abaco
Abaco's picture

You mean the fraud and waste that IS medicare.

Mon, 12/03/2012 - 11:19 | 3029587 Winston Churchill
Winston Churchill's picture

You made a bad investment.

Eat your peas like Madoff's investors had to.

The whole scheme's intent was to provide INSURANCE against living beyond

thae average lifespan,or for disability.The moment that intent was corrupted,

all participants had warning of the fraud.

 

Mon, 12/03/2012 - 20:12 | 3031165 chubbar
chubbar's picture

I have a hard time viewing money taken out of my paycheck involuntarily as an "investment". Perhaps we just have a different definition of investment.

Mon, 12/03/2012 - 11:26 | 3029627 spooz
spooz's picture

So are you advocating haircuts for all holders of US debt securities or just the SSTF?

Mon, 12/03/2012 - 11:36 | 3029657 Winston Churchill
Winston Churchill's picture

Everybody is going to take a haircut.South of the navel as well.

The US debt is never going to be paid . so why should the SS portion be

any different ?

We are flat broke, and just waiting on the liquidation sale.

Trouble is theres not enough left for the liquidators fees.

Mon, 12/03/2012 - 12:08 | 3029755 spooz
spooz's picture

Fine, when the US decides to haircut its debt, SS solvency will have to be looked at differently.

Mon, 12/03/2012 - 10:57 | 3029538 StychoKiller
StychoKiller's picture

Hmm, and just WHO keeps voting these fiscally irresponsible jerks into office over and over?

Mon, 12/03/2012 - 10:56 | 3029530 Bruce Krasting
Bruce Krasting's picture

This is a bait and switch. You say hands off SS because Medicare is much more busted than SS. Bad logic for not addressing the problems at SS.

Yes, there is fraud in all of of this stuff, especially medicare, but this was an annual report on SS. The fact is, this program is headed for trouble too.

Mon, 12/03/2012 - 11:08 | 3029568 SKY85hawk
SKY85hawk's picture

Of COURSE Fraud & Waste in S.S. should be rooted out! 

But, treating FICA money as revenue instead of TRUST Fund assets is not fiscally responsible.

No wonder the gummint is broke.  They have exempted themselves from the very rules that other corporations are held to.

Mon, 12/03/2012 - 14:41 | 3030264 holdingontomypants
holdingontomypants's picture

There was a reason they named these mandatory social security and medicare deductions (tax) and not contributions. By calling it a TAX they know its non refundable and they even got the backing of the supreme court for case law on that. Its a welfare program and they get to choose who , when, and how much they want to give us after whatever retirement age happens to be the currently selected. Mine has already been adjusted to age 67 and I was born in 1965.

Mon, 12/03/2012 - 11:10 | 3029560 Daily Bail
Daily Bail's picture

Good post, Bruce.

Means testing is the only way out of the unfunded entitlement nightmare. There are no other choices. These programs can't survive any other way. The math doesn't lie. The problem as we've seen in the past week is that a huge number of DEMs don't want to cuts to entitlements.

As you wrote, the Left fears that if means-testing takes hold, that the next step would be to get rid of the programs entirely, which is horseshit.

It's bizarro world again. DEMS should embrace means-testing b/c it doesn't hurt the poor and middle class, but instead they are running away screaming.

Fuck politics.

Nothing is getting solved anytime soon by Washington.  That much is assured.

Mon, 12/03/2012 - 11:30 | 3029633 MachoMan
MachoMan's picture

You could means test SS...  but means testing healthcare is a clusterfuck of epic proportions...  what needs to happen with the healthcare industry is that all of the monuments to god called giant hospitals need to go belly up...  and a shit ton of money recouped for needless testing/procedures.  If you allow government into the healthcare arena, then you'll have J6P competing with the money spigot propping up medical costs (and don't say it's going to be held at $250k/yr and above).  As it stands, J6P is but a single medical calamity away from bk...  let the market support the prices and see what happens.

Mon, 12/03/2012 - 19:10 | 3031066 Freddie
Freddie's picture

Means testing means taking from the responsible and giving all their wealth to Obama voters/unions/Democrats/illegal aliens.  It is called tyranny.

GM bond holders got "means tested" because unless the UAW got EVERYTHING - it was unfair.

Let it all crash now because they will loot 401Ks, IRAs next and and the list goes on and on.   There is never enough money for these people to steal.

Mon, 12/03/2012 - 12:14 | 3029779 Abaco
Abaco's picture

BS.  There is no need for the government to be involved in health care at all. Charity for those who can't take care of themselves.

Mon, 12/03/2012 - 15:09 | 3030345 MachoMan
MachoMan's picture

Why is this BS...  seems like it was precisely what I was advocating...  although, I'll posit that some form of a social safety net is not only practically necessary to keep the mob from knocking on your door, but it's probably necessary as a human (morality and what not) to ensure those without actually get to live (although obviously everyone differs on the amount of support). 

In this situation (at this level), subsidies for health care aren't to benefit the end users, but instead to benefit the medical professionals/hospitals/bureaucracies and keep them afloat/bail them out.  If we wanted to benefit end users, we'd implement a pay as you go system for most everyone (i.e. get the government the fuck out of it)...  and prices would miraculously immediately fall into what people could afford...  go figure.  [it hasn't been too long ago that local doctors accepted home made jams and jellies, deer meat, knives, dogs, etc. as payment for medical services...  think doc hollywood].

Mon, 12/03/2012 - 11:52 | 3029698 blunderdog
blunderdog's picture

Means-testing healthcare subsidization isn't insurmountable, it just can't be done on a Federal level.

There are already tons of big hospitals that administer their own "welfare" programs to provide care for destitute patients.  They're really the best example of programs that can work, too, because they're envisioned and run by the folks delivering CARE, who are the only folks with a clue about how to do it anyway.

Mon, 12/03/2012 - 15:13 | 3030370 MachoMan
MachoMan's picture

That isn't means testing...  that's charity...  and/or the pains of the hippocratic oath (if you're a business).

[and you proved my point]

Mon, 12/03/2012 - 15:30 | 3030433 blunderdog
blunderdog's picture

I'm not sure what the point of the distinction you're making is, but OK.  I don't think "public health" concerns should be dismissed by calling the care-providers "charities."  There really are reasons why SOME standard level of health-care should be maintained in an industrialized society: it's actively harmful to permit the poor to incubate and spread diseases, and if some basic level of "subsistence care" is necessary to prevent a measles outbreak which could kill thousands of people, I can see legitimate interest in coordinating things ABOVE the local level.  (This needn't be government directed, but it's hard to figure how someone could generate profits providing care for people who can't pay, so obviously no one is going to try.)

I think we have to get rid of Medicare as a matter of national policy, but there are a lot of people who are going to be severely impacted, so unless we start having an adult conversation of the issues involved, nothing's going to change on that front.

We have derived about as much benefit as possible from subsidizing the healthcare industry.  It's pretty much all misallocation of resources at this point.  Gramps just doesn't have a legitimate "claim" for a new hip or knee at the age of 75, and it's really about time we start admitting this to ourselves.  Sadly, we've moved in the reverse direction with the new plan to subsidize our health-insurance companies.

Mon, 12/03/2012 - 16:13 | 3030549 MachoMan
MachoMan's picture

The point was that "means testing" in the context of this article exclusively means by the government...  private individuals or organizations do not means test...  they simply give charity (subsidized medical care) to whom they consider worthy (could be anyone, based upon any criteria not otherwise illegal).

The other issue is that given externalities/tragedy of the commons, some form of government involvement is likely necessary; if not inherently, then practically as public "buy-in" is necessary, given private actors are no more comforting than uncle sugar...  From inception, government involvement necessarily creates misallocation of resources.  The policy decision is to determine when this misallocation is too much of a burden to mitigate the risk of externalities.  There is no answer other than, if left unchecked, government will mercilessly expand.  [it will do so even if checked, but at a slower pace].

I don't have a problem with medicaid or medicare per se...  my biggest problem is that I'm not allowed to dictate the level or degree to which I contribute to these programs.  Doctors offices have been turned into medicaid profit centers, banging out as many clients as possible in an hour.  The risk here is in the quality of service (total shit).  The question then becomes how valuable is free healthcare if the service is terrible?  This disporportionately impacts medical professionals in that the jackoff GP/general surgeon/etc. gets to milk the cash cow, while heart surgeons, et al, get the top line monkey hammered down [can't put less of a heart surgery on the shelf in the same size box]. 

In short, I agree with your post, but for your definition of "means testing"...  I'll also posit that things WILL change if we do nothing...  this is what always happens to unsustainable systems.

 

Mon, 12/03/2012 - 18:35 | 3031004 blunderdog
blunderdog's picture

    The question then becomes how valuable is free healthcare if the service is terrible? 

Yeah.  I *have* health-insurance and don't take adequate advantage of it because the places practical for me to visit are overwhelmed giving prescriptions for cough-medicine to anxious mommies for impoverished children.

This problem is best labeled as the "billable hours scam"--if a doctor knows they'll get $40 per office visit, even for a healthy person for whom no treatment would be effective, they'll schedule the visit and see the patient, resulting in folks like me not wanting to bother with the trouble of getting potentially important preventative care.

Unless/until insurance-compensated practices are able to turn away the hypochondriacs and non-compliant types, we're going to see costs continue to escalate and quality of care continue to decline. 

Mon, 12/03/2012 - 10:53 | 3029522 MyBrothersKeeper
MyBrothersKeeper's picture

Not to mention all the people recieving benefits of dead people...illegally.  Or the fact that Clinton stold money from the SS trust fund to balance the budget among other things.  Just remember that when it does go officially bust the law says it's recipients must immediately take a 25% cut in payments.  When that happens i'm sure it will be George Bush's fault.

Mon, 12/03/2012 - 10:44 | 3029495 Eireann go Brach
Eireann go Brach's picture

Thanks Bruce, could you also write a piece on the Credit Suisse announcement this morning whereby they are charging a negative -20 on their accounts to keep cash there!
What is the tactic behind this "due to current market conditions" move?

Mon, 12/03/2012 - 10:58 | 3029540 Bruce Krasting
Bruce Krasting's picture

Travelling, but I'll try to give this a review later.

More evidence of stress, is the quick answer. Also more evidendence of ZIRP monetary policy, and some negative consequences.

Mon, 12/03/2012 - 14:42 | 3030271 boogerbently
boogerbently's picture

BK

You snivelling little bitch. With all the REAL waste and ripoffs, I can't believe you guys object SO much to us getting the $$ we paid in for 50+ years.

You seem (otherwise) intelligent enough, and are able to do research, so why don't you find an equivalent amount of "wasted expenditures" and rail about them? You anti-SS ZH'ers don't realize YOU are part of the brainwashed masses. "It used to be 17 workers paid for 1 retiree, now it's 3......" Ha, Ha. It's because all the money that was accumulated to pay for all the baby boomers was looked at as "surplus", moved to the general fund, and spent on other projects. How about BEFORE you become part of the PROBLEM, you work to ending the programs that were started with, and are funded by MY (stolen) retirement money?

Supporting the "Evil baby boomers/End Soc Sec" agenda is like supporting Corzine/Ponzi/Enron, and all the other THIEVES.

If you're not smart enough to be outraged (as we are) by that, at least be smart enough NOT to fall for the same type of scam. Remember, Obamacare will be considered YOUR fault, by your kids.

It's sad even the "intelligent" crowd isn't smart enough to see this.

Mon, 12/03/2012 - 16:17 | 3030564 holdingontomypants
holdingontomypants's picture

"How about BEFORE you become part of the PROBLEM, you work to ending the programs that were started with, and are funded by MY (stolen) retirement money?"

Isn't it our money? Aren't you just as responsible for where it is today? So for 50 years you never voted so whereby you don't feel you have any responsibility and accountability in this mess?

Or are you just taking the position I got mine and fuck the rest of you? I may be 20 years behind your 50 years but my 30 years has some say in your monthly allotment.

I may have allowed 30 years to go by while the government plundered our trust fund but I think you have 20 years on me of inaction to address this and other issues as well. At least now you are retired you still have time to vote for the rest of us and go make some noise at your congressional district office to save the next generation behind you.

Mon, 12/03/2012 - 15:36 | 3030448 MachoMan
MachoMan's picture

First, whining about it isn't going to bring the money back.  It's gone...  deal with it.  This is the natural consequence of political apathy.  [as a general unsecured creditor of the fund, even if you wanted to just get your money back, you'd only get a fraction, at best (note: your debtor is insolvent)].

Second, the SCOTUS has already determined you're not entitled to the SS money if the government doesn't want you to have it...  it's simply just another tax where you get nothing in return.  Insolvent counterparties make terrible friends.

Third, if you haven't made plans to withdraw captured monies from the system, I suggest you do so immediately...  what you can get back now will likely be the entirety of your future retirement.  Please do not look to me to pay it on your behalf.  Best of luck.

Mon, 12/03/2012 - 17:51 | 3030895 GFKjunior
GFKjunior's picture

Apathy towards politics is not the same as withdrawing in disgust.

Tue, 12/04/2012 - 00:00 | 3031633 MachoMan
MachoMan's picture

Certainly...  but baby boomers and their predecessors rode the american pony for all it was worth...  no one was worried about the SS trust fund when housing was skyrocketing were they?  [grand pappy needs another HELOC].  When we left the gold standard?  et al...  they never withdrew... 

To quote the watchmen:

Dan Dreiberg: What happened to us? What happened to the American Dream?
Edward Blake: "What happened to the American Dream?" It came true! You're lookin' at it...

Mon, 12/03/2012 - 10:36 | 3029474 A Middle Child ...
A Middle Child of History's picture

None of it matters because the beast is on the gobble and all that matters is we are all going to be in it's belly...

Ok Woggie, saved you the effort on this one. Find another story to post on.

Mon, 12/03/2012 - 10:34 | 3029471 HurricaneSeason
HurricaneSeason's picture

Why don't we cut social security payments by 20% and save $156 Billion and start paying down the debt? The only way to fix the problem is bring the jobs back from the $300 a month labor countries so there is a tax bass for government. If that happens, the prices at Walmart and the gas station skyrocket from protectionism and much higher labor costs.  We are going over the cliff, eventually. Any thing we can do to tighten the belt or make things worse now, will have little effect when we fly over.

Mon, 12/03/2012 - 11:31 | 3029642 MilleniumJane
MilleniumJane's picture

So really, let's cut Grandma's $800 a month check by 20% when she's already eating Kal-Kan for supper?  I agree, the SS system is broken, but go after the fucking big fish and get some fucking justice first before going after the poor.  The poor always get fuckin' shafted and the real robbers always get away scot free.  It frustrates me to no end that the root of the problem is displayed as "Too Big" to tackle, so let's go after the small fish who might put up a protest but at least they haven't "gifted" police departments hundreds of thousands of dollars to protect their asses.  Our country can spend billions of dollars on idiotic and purposefully ineffective programs like the War on Drugs and the fucking endless $10 million dollar grants studying condom use and sex education in Africa and studying owl shit, but god forbid we let Grandma have a decent standard of living at the end of her life.  It's bullshit.  The Empire-building fascist Ponzi scheme must be put to an end first, then we can find some solutions to the smaller problems.

Mon, 12/03/2012 - 16:08 | 3030531 Chuck Walla
Chuck Walla's picture

So really, let's cut Grandma's $800 a month check by 20% when she's already eating Kal-Kan for supper?  I agree, the SS system is broken, but go after the fucking big fish and get some fucking justice first before going after the poor.  The poor always get fuckin' shafted and the real robbers always get away scot free.

The elite and their political lap dogs make the rules defining justice.

Remember, its laws and rules that make a scam into a system.

FORWARD SOVIET!

Mon, 12/03/2012 - 12:58 | 3029950 HurricaneSeason
HurricaneSeason's picture

I believe that's what the tea party and republicans are talking about when they say something has to be done about entitlements. They don't mean a government working retiring from a job and starting their retirement checks, while they turn around and take the exact same job again, or similar, to get their 2nd set of retirement checks coming in. They aren't talking about people collecting $5K to $10K a month from government retirements(that opted out of social security and based on 8% return a year) or "private" companies paying the same that were bailed out by the pension guarantee corporation. Grandmas $800 check is want they want. They wont put a number on it, though. Cutting the payroll tax by 2% helped make it a little worse, but how bought throwing out a number like a 20% cut to social security payments?

Mon, 12/03/2012 - 13:18 | 3030010 forexskin
forexskin's picture

bullshit. they don't want that $800 check from grandma, cause repeated often enough to be effective, their 'kindly' feudal illusion breaks, with consequent unacceptable (for the elite) dislocations.

Mon, 12/03/2012 - 13:33 | 3030045 HurricaneSeason
HurricaneSeason's picture

They don't wat the $800 check, they only want about $160 of it. If they can take savings rates from 1% to negative 4%, they'd like that too. I bet the banks are drooling over the Swiss starting to pay a negative interest rate outright instead of just inflation. They were settling for fees here. The IRS should be gone and there should be a sales tax until the budget balances and set up roadblocks with guns to collect extra to pay done the debt. No loopholes, just back roads.

Mon, 12/03/2012 - 13:41 | 3030069 forexskin
forexskin's picture

ha, you're describing the typical warlord situation at the end of every empire. check out toynbee's history - it appears your insight is right on - but not particularly desirable.

except the current PTB would never allow it - the dislocation comes first. i'd just prefer to hand my son a functioning republic, not a disintegrating empire.

a negative savings rate is the beginning of the end - its a perversion that says we as a society are no longer capable of improving our situation - imperial tribute aside.

Mon, 12/03/2012 - 19:14 | 3031076 The Alarmist
The Alarmist's picture

If Granny can afford Kal-Kan, there's still plenty of room to cut her benefits.

Mon, 12/03/2012 - 11:29 | 3029637 spooz
spooz's picture

I wonder what impact it would have on our economy if we cut off more funds from those that spend everything they get.  Lets just keep taxes low and let the elites grow larger piles.  The surest path to Neolib New World Order is creating a peasant class, and your plan will speed it along a bit. That, and it will decrease the surplus population.  All good!

Mon, 12/03/2012 - 13:34 | 3029978 forexskin
forexskin's picture

sure. that those who spend everything they get having no choice is implicit in your statement. what are the spending choices? strictly hand to mouth subsistence? not so often in this country. lots of poor decisions based on the poorly understood disincentives toward saving and acquiring wealth preserving assets? much more often.

you better take a better look at how the elite acquired it's wealth (power). simply, fiat issue makes everything we own worth less (savings, "investments'), and everything we need (food, energy, etc) cost more. the cost of these needs is a rounding error for the elite, who arbitrage fiat issue and are consequently able to buy our assets at a discount, and collect rents on our needed items.

net result, effective rationing, and a more powerful nexus of control to squeeze us. further moving toward entitlements only steepens the curve of dependance and serfdom for the dependent.

it ain't the tax policy. that's to keep us fighting. its the government power and its persistent further incursions - spending and promises of future spending (ponzi). no amount of taxation could cover the cost of the accrued promised benefits - estimated variously between $80T and $200T. once those promised payments are approached, its hard reset of some form. somebody's going to take the hit.

ask yourself - why can't anyone save enough for their own retirement? simple, the nominal dollars and assets acquired during productive years are worth a lot less when its time to retire. its deliberate, and its the illusions made possible by fiat issue and the culture of entitlement.

Mon, 12/03/2012 - 13:05 | 3029966 HurricaneSeason
HurricaneSeason's picture

Yeah, raise the income taxes on "job creators" by 2% (not even back to where they were, I suppose) and watch the job losses in China. I'd like to see a list of some of these job-creating DBEs, MBEs, WMBEs, solar panel companies and road repavers. Sometimes they DIDN"T build that "company" and the president is well aware of it.

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