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Obama: Gut Social Security Now, Don't Wait Till The Election
Incredible that a Democrat would propose loud and clear that our Social Security system should be gutted starting immediately to get an up-tick, illusory as it may turn out to be, in GDP just before the next election. But President Obama's proposal to cut the employee portion of our payroll taxes in half and also cut payroll-taxes for small businesses will do just that.
The two measures would remove $240 billion from our Social Security system during 2012 and hand it over to consumers and businesses so that they can do some magic with it.
Will that nudge up GDP? Not by much. The problem is that the money we consumers spend goes into products that are to a great extent imported. Hence, our trade deficit will rise. This has already happened with the current payroll-tax cut. Since January, it has given consumers about $80 billion in additional spending money. And true: It nudged up consumer spending.
At the same time, our trade deficit, particularly with China, skyrocketed. YTD through July, it hit $433 billion. Same period last year: $330 billion. The $103 billion increase is largely attributable to rising consumer spending (including the impact of higher prices). A humongous trade deficit like this, aside from being a terrible drag our economy, is also subtracted from GDP (GDP = Consumption + Investment + Government Spending + Exports – Imports). And true again: GDP so far this year has barely budged though consumer spending is up.
Will it create jobs? Well, let's look at our current payroll-tax cut. And we see that a few jobs are being created in the U.S., but not many, and none last month. Meanwhile, lots of jobs are being created in China. Coincidence? Maybe not. This is the result of many years of corporate efforts to offshore production and services to countries where labor is cheaper (15.4 Million Missing Jobs). So the impact on job creation, thanks again to our trade deficit problem, will be minor.
So, what does cutting payroll taxes accomplish? It reduces the flow of money into the Social Security system by $240 billion a year.
And no one can ever let a payroll-tax cut of this magnitude expire. It would be perceived as a huge tax increase. It's already happening. The current one is supposed to expire by the end of December. But heck no! Instead, an even bigger one is being proposed to take its place. So this won't be a "temporary" cut. It'll be permanent. At least until the money is gone—maybe in a decade or so if disbursements stay at current levels.
Presidential candidate Rick Perry, who called Social Security a Ponzi scheme and monstrous lie, and who wants to unwind it, couldn't have come up with a more effective plan to put his campaign rhetoric into action.
Meanwhile, in another corner of Washington, a bipartisan group of lawmakers is hunkering down, trying to figure our how to make politically feasible and perhaps sensible adjustments to our entitlement programs, including Social Security, ironically, to keep them functional for a few more decades. Makes you wonder if these people ever talk to each other.
For some people, the $2.6 trillion Trust Fund doesn't exist, and thus the whole issue would be moot. Well, for Wall Street bankers it existed enough to where they were dying to get their hands on it when President Bush wanted to privatize it. Remember? At the time, I had dinner with some of them, and so giddy were they about the prospects of all this money flowing their way that they were barely able to eat. In fact, the Trust Fund is loaded with treasuries, like any wealthy and conservative investor. Whether or not these treasuries will be worth anything in the future is another question, but not just for the Trust Fund.
Wolf Richter - www.testosteronepit.com
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Sorry for you as you must not have any Children or Grand Children. I do have Children and Grand Children and I care very much what happens to them.
<Waterfallsparkles >
Who me?, I was giving an opinion, I do not have to recieve SS.
I was stating the obvious.
So you're saying that everything ends and therefore never mind anything?
That's not gong to be of much use to me, but thanks anyway.
I think, therefore I am not?
ENTITLEMENTS, last time i checked i was forced to give part of my pay to this social security, medicare,etc, etc,.....
the deal was, i pay you now, you pay me later......thats not an entitlement. thats a forced contract.
if they want to stop these programs, cool, ill opt out...
JUST GIVE ME MY MONEY BACK, PLUS THE MONEY MY EMPLOYERS MATCHED, INDEXED TO INFLATION.
and ill take care of self, thank you
Good luck on that...Retirement is one of the first things that Governments steal..because it one of the few things people save for. That and Future medical expenses.. What did John Dillinger say about robbing Banks,"Thats where the money is"..For Governments..that's where the Capital Savings are. Other wise everone would just consume..and you can't steal my money if I don't have any. If I cash my check and then buy booze with it, I'd be better served! So they steal what I save and tell me not to worry, " We will pay it back at a future date," of course that's now under their conditions.. Look at any Dictator, Monarch, Tyrannt or Communist...To protect the poor and the Old of today we steal your savings and promise an IOU for your future. The 1st steps of Tyranny..But hey, when you steal from Peter to pay Paul...Paul is usually supporter. And when all else fails..Break the promises, after all they are the Government and have all the Guns!
Your brand of nihilism is decidely juvenile and unhelpful. Put down the Red Bull, it is rotting your brain.
s/John Dillinger/Willie Sutton/
and its all over, Danny Bailey, and the harvest is in.....
elton john
If Obama wants to stimulate the economy why doesn't he allow people to cash out of Social Security? Every wise person in the country would cash out and by real investments.
They'll never end SS, but they will threaten it endlessly. It will be the perfect political football for decades. Even long after the war on terror ends. Threatening SS is far more terrifying and useful.
And I call on all you trolls to help them out. /sarc
I predict that they will keep SS going at the present payout level as long as they can, for political reasons. At some point, the money will be gone, and SS will STOP. Discontinuity. Our leaders simply cannot plan for negative outcomes. They will drive the SS bus right off the cliff.
There is no cash to cash out. It's a bunch of IOUs. The trust fund was spent on wars and welfare
Cash is a bunch of IOUs. WTF would you call it? Why do so many Americans find that impossible to believe?
Try buying some groceries with IOUs vs cash and see which one the grocer accepts.
I use FRN/IOUs all the time at the grocer and they've always accepted them so far. Perhaps you are having an intellectually challenged moment and believe there is a difference between FRNs and IOUs? You are not alone! Many people have this disease. It's incurable for most. Unfortunately, SS disability insurance doesn't cover this condition at this point in time.
Federal Reserve Notes ARE IOUs, nothing more, nothing less. Anybody that believes otherwise is a dumb fuck!
yes, that's what makes me vomit. Look, we got all these IOU's from Sam Gold. that's actually better than money.
i'll take gold or silver for my part...they can print the rest for those who are in need...What's the saying, junk in junk out?
Fine, let's just eliminate all FICA deductions and call an end to the great ponzi.
Look, the federal goverment feeds on the money they forcefully deduct from our paychecks under the guise of S.S. and Medicare. That money goes to support the endless wars, the IMF, Israel, running guns to Mexico,etc.
For what money does go to S.S. & Medicare we find that:
1) a great many pull FAR more in benefits than they ever contributed
2) In so far as Medicare ... the costs are incredible because the whole medical system in the U.S. is one government precipitated clusterfuck.
Let's just end it all.
'Reform' will never be possible, there's too many lobbyists and recipients involved.
OK, so this is the fairy tale I was told. The gubermint takes money from my paycheck to put into a retirement fund for me, as I am not capable of looking out for my own interests. (the nanny state). Said moneys were then pooled and invested on my behalf. A bureucracy was set up to shepard said investments. Now it seems to me that this has been going on for a long time, and there were times, like in the 70's when interst rates were in the double digits and your investments doubled in a few short years. I may be a fool but I would assume that the SS fund would have made out like bandits during this period and as such would be self funded.
Now what I'm hearing is that there is no "fund" or "trust" and that the goberment has been using these monies instead of investing them. Isn't that against the law? Or maybe, just maybe, the "fund" or "trust" invested in the same crappy mortgage CDO's that are now worthless and those bureaucrats tasked with sheparding the funds lost most of it through mal-investment, so that it now appears that it pays out what it takes in. Very akin to a ponzi. In other words they fucked up and now they are trying to hide their mistake by implying that there was no "fund" or "trust" and the monies went straight to general guberment accounts.
So SS is in the same boat as any state government investment or bond fund that bought the same toxic crap from the TBTF banks, who in cahoots with Greenspan's ZIRP, were forced to find a descent rate of return. That the economic stress is a direct result of the larcenous activities of the Goldman Sachs and their partners in crime. I mean, shit someone had to buy this crap, and I don't think it was you or me, and there was a boatload of this toxic crap sold.
I may be wrong, but it appears to me that this whole economic mess has it's roots in the banking scam and the reverberations continue to expand like ripples on a pond, and we have yet to see what the final manefestation will be. While Central Banks and the IMF throw billions at a multi trillion sinkhole, all we can do is watch.
The money was "invested" in Reagan's Star Wars program. I regret to inform you this was not very successful. Suicide is an option at this point in time.
Reform = pay a different crook
End it!
Reform = pay the same crook, differently.
The solution is revolution by people who want to put an end to corporate control of government, with at the very least an amendment to the constitution saying corporations have no rights at all to participate in political campaigns. But more would be better. All countries would be better off to no longer allow corporations to exist indefinitely like the US did at the beginning. Individual owners and partners who own business are liable for what the business does, and this is as it should be. Those in charge of businesses should be liable for the acts of those businesses. It would cure a bunch of ills if there were no limited liability. Strict laws not allowing businesses to get too big would be a great step to help stop the buying of the government too. Yet still, even with those things done, when the few rule the many, the few will be subject to carrots and sticks to curry favors, so adding more participatory democracy would also help to combat the problems of the puppet government.
You are dancing on the edge of breaking the law by advocating the overthrow of the govt ... Be careful, or DHS will brand you a lone-wolf terrorist and whisk you away.
Over 11% of SS payments go to SSI. Half of that is fraud.
I have a rental property in a lower income area, so I see a lot of it. I have only one time rented to Section 8, believe me that was enough, but may Landlords on the block do rent to Section 8.
What was interesting was that recently I was contacted by a Group that helps to get Homeless people re-established and they pay for their housing and food until they get a job and back on their feet. To qualify for the housing and the help they have to participate in a Day program. Where they have to work for a non profit organization 5 days a week for no pay. Like Goodwill, Salvation Army, etc. This helps them build skills and eventually get gainful employment with some work history. They also have to be Drug Tested every week and they have someone come and check out their residence every week.
This program made sense to me as they still had to get up and go to work every day for their substance. It was not just given to them with no strings.
You would think that even that 300 pound woman could stuff envelopes or something for a non profit orginization during the day. Something usefull for society.
Only half? Wife and I count so many people we know collecting SSI it's just plain insane! One particular relative loves living on unemployment and not looking for a job. He trained his kids to do the same.
Starving is unbelievably painful. None of these lazy SSI recipients work for our money. If they were lead to believe they truly would not eat unless they worked, they'd every one of them start working immediately.
This system is so screwed it's not funny. Anyone who doesn't see it is blind. Oh, another lady we heard about from a friend weighs over 300 lbs and collects SSI. She gets friends to collect federal money to "help" her do her chores, then she collects kick backs from the friend.
I should call the FBI on this (fill in blank).
Land of the free. Home of the brave.
Joseph Jones,
you assume much do you not?
Only half? Wife and I count so many people we know collecting SSI it's just plain insane! One particular relative loves living on unemployment and not looking for a job. He trained his kids to do the same.
First are the folks you know collecting because they are of age to do so?.(as they PAID IN?)
Or are you confusing WELFARE with SSI??.
Two totally separate issues, and arguments.
Big Difference.
Wow, I only know one person on SSI and she is a woman who was disabled before adulthood, so had no money paid into social security.
As for the 300 pound woman, likely she has diabetes, which then makes it likely that she has neuropathy which is incredibly painful. The taking kickbacks from workers does sound wrong.
Okay, so I'm not so judgemental, but actually I have diabetes and neuropathy myself, but I have never had myself deemed disabled. I was in a wheelchair a lot at one point, but I still was painting my rental houses from the wheel chair while taking care of small children. I was in better financial shape than others, so I still had options of work that was flexible for my problems. I am in much better shape now than when I was wheelchair bound because I gave up processed food and it restored my health. But, still I understand what they might be going through that you might not be able to see from the outside.
You're missing the big picture, if we could only cut off the disability payments to all of the 300 pound women, we'd get the budget balanced and reform America's economy. 300 pound women are worse than Al Qaeda!!
/sarc
We need more people scamming the system and not paying in their share. That's how you build a strong system that will last!
/sarc
If you want to put on 300 lbs and collect SS disabilty, it's OK with me and you would be insane to do it.
"300 pound women are worse than Al Qaeda!!"
When you stop and think about that statement the truth of it hits like a nailgun to the forehead. Think of the issues solved should food stamp benefits be cut drastically or allow the people who use foodstamps to only buy fresh fruits, vegetables and unprocessed meats. So long diabetes, hello healthier lower class.
You hit the nail on the head pretty much. The problem is that fruits veggies and meats cost more than grain. However, I think all they'd really have to do is make it so foodstamps pay for no premade food. Grains could still be included. It's the additives that are causing the obesity, most especially the MSG and all its other names to make a clean label. I intend to write a book about it, but I have at least 6 months more research to do before I am ready. I wonder if anyone will be buying books in 6 months.
One flaw in this logic though is that they will never put that restriction on foodstamps because the corporations control the government, and the food processing corporations would never allow that.
With modern technology (think chicken McNuggets) that's 300 lbs of sausage! Win-win, bitchez!
If I needed pork rinds I'd swap my organic lettuce stamps for $ on the black market. I'd get a six pack, too. Of malt liquor.
Schiff finds a couple of bugs in Obama's plan:
http://www.businessinsider.com/obamas-job-plan-to-save-country-please-its-more-of-the-same-2011-9
People are getting tired of blank checks to Wall Street and other corporate political sponsors. Time for a stealth tax cut for corporations and the people willl be grateful for the extra pennies. Unless if you make 20K or less and then you might be taking home less.
As we've reported, taxpayers making $20,000 or less actually will take home less this year with the Social Security tax cut replacing the Making Work Pay Credit.http://news.consumerreports.org/money/2011/01/social-security-2-percent-reduction-paycheck-withholding-change-2011-irs-tax-cut-middle-class.html
The stock market is a ponzi scheme too. It is easy and encouraged to put money in 401k & IRA and notoriously hard to get any out. "Buy and hold", "don't time the market", mantras designed to separate fools from their money. Now that the lowest rung of the scheme is ready to cash out the whole scheme should fall apart quickly.
The stock market itself is quite easy to get into and out of.
The 401 and IRA, not so much, but all it takes is a phone call (tell your guy to send the paperwork), filling out the paperwork and sending it back, waiting 3 or 4 weeks, and surrendering about 40% to taxes and penalty.
Ask me how I know...
... because in 2007 I went through the motions to do it (to buy 100 one-ounce Krugs) ... but was talked out of it at the last minute by "smarter people". Yeah. That worked really well. I'm still down 20% by staying in, and would be up over 120% had I done it <he kicks himself in the ass again>. It would only have cost me 20%, since I'm still down 20, anyway (20 + 20 = 40). Would have made up the tax hit, the penalty, and still would have near 100% gain. Shit, shit, shit!
Last time I listen to someone "smarter" - This means you, Dad, Wife, Mr. Financial Services Guy, and Ms. H.R. Benefits Person. Fuck all o' y'all very much.
I did, however, kill off the account and quit monthly contributions, just letting the existing balance ride. I've been buying an ounce a month since 2007 instead of stuffing money into a losing proposition, so at least I have that. It's quite the little stack after four and a half years.
You should look up the definition of Ponzi scheme. While the current market may be manipulated beyond belief, a ponzi scheme it is not. 401's and IRA's may well be another type of scheme altogether but you WILLINGLY put your money into them because the GOVERNMENT offers you a TAX FREE return.
The difference is that nobody forces you to contribute to an IRA or 401K or invest in the stock market.
the hell they don't
what are your options?
you're like, "if you don't like verizon, you can always go to AT&T"
except that they have exactly the same policies and deals.
red team, blue team. Illusion of choice.
You will obey the precious.
Are you fucking stupid or what? Has anyone ever threatened ot put you in jail for not contributing to a 401K or IRA?
Nobody forces you to put your money into the 401k. Pay the taxes on it, do your own work, and invest/trade wisely. But no, you're looking for that magical mystical free lunch, tax free in, tax free out.
ah i remember Al Gores SSN lockbox. what an idiot. and what a corrupt so and so, taking money from BUDDHISTS. the CEO of Buddha wants what is it exactly? and global warming. what a joke Al Gore, the ice caps aren't melting, it just seems that way. George Bush is the real godshead, we should worship his magnificent understanding of spending trillions to control poor Muslims. we're not controlling them, damn, must be Al Gores fault?
At least he said it. Now we've got a box that looks like the Grand Canyon.
the amazing part, and validates thoughts, is that when I started working in 1970 I signed a w-4 and while doing it the office mgr working with me said I woudl not see a penny of social security becasue it was a fraud ponzi scheme and people generally knew it.
Fast forward some 40 year sof different parties in WH, Senate an dhouse control and not one thing has been done to fix social security. So either they all are dumb kicking the can down the road pols, or are totally corrupt. Or both.
Actually remember when Bush 2 spoke at State of Union and suggested privatizing Social Security and the Dems laughed and hissed at him. Kind of like the Jow Wilson thing last year,
Its so out of control. Its a matter of when we actually crash and burn as we are on way down now.
The only way to fix Social Security is to make it mandatory that all of the Senators and Congressmen retirement funds are put into Social Security and not a seperate retirement fund.