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Guest Post: Social Security: The New Deal’s Fiscal Ponzi

Tyler Durden's picture





 

Submitted by David Stockman via the Ludwig von Mises Institute,

The Social Security Act of 1935 had virtually nothing to do with ending the depression, and if anything it had a contractionary impact. Payroll taxes began in 1937 while regular benefit payments did not commence until 1940.

Yet its fiscal legacy threatens disaster in the present era because its core principle of “social insurance” inexorably gives rise to a fiscal doomsday machine. When in the context of modern political democracy the state offers universal transfer payments to its citizens without proof of need, it offers thereby to bankrupt itself—eventually.

By contrast, a minor portion of the 1935 legislation embodied the opposite principle—namely, the means-tested safety net offered through categorical aid for the low-income elderly, blind, disabled and dependent families. These programs were inherently self-contained because beneficiaries of means-tested transfers simply do not have the wherewithal—that is, PACs and organized lobbying machinery—to “capture” policy-making and thereby imperil the public purse.

To the extent that means-tested social welfare is strictly cash-based, as was cogently advocated by Milton Friedman in his negative income tax plan, it is even more fiscally stable. Such purely cash based transfers do not enlist and mobilize the lobbying power of providers and vendors of in-kind assistance, such as housing and medical services.

Social insurance, on the other hand, suffers the twin disability of being regressive as a distributional matter and explosively expansionary as a fiscal matter. The source of both ills is the principle of “income replacement” provided through mandatory socialization of huge population pools.

On the financing side, the heavy taxation needed to fund the scheme has been made politically feasible by the mythology that participants are paying a “premium” for an “earned” annuity, not a tax. Consequently, payroll tax financing is deeply regressive because all participants pay a uniform rate regardless of income.

At the same time, benefits are also regressive because those with the highest life-time wages get the greatest replacement. This regressive outcome is only partially ameliorated by the so-called “bend points” which provide higher replacement on the first dollar of covered wages than on the last.

The New Deal social insurance philosophers thus struck a Faustian bargain. To get government funded pensions and unemployment benefits for the most needy, they eschewed a means test and, instead, agreed to generous wage replacement on a universal basis. To fund the massive cost of these universal benefits they agreed to a regressive payroll tax by disguising it as an insurance premium. Yet the long run results could not have been more perverse.

The payroll tax has become an anti-jobs monster, but under the banner of a universal entitlement organized labor tenaciously defends what should be its nemesis. At the same time, the prosperous classes have gotten a big slice of these transfer payments, and now claim they have earned them—when affluent citizens should have no proper claim on the public purse at all.

Accordingly, social insurance co-opts all potential sources of political opposition, making it inherently a fiscal doomsday machine. It was only a matter of time, for example, before its giant recipient populations would capture control of benefit policy in both parties, and most especially co-opt the conservative fiscal opposition.

Within a few decades, in fact, Republican fiscal scruples had vanished entirely. This was more than evident when Richard Nixon did not veto but, instead, signed a 20 percent Social Security benefit increase on the eve of the 1972 election. Worse still, the bill also contained the infamous “double-indexing” provision which since then has generated massive hidden benefit increases by over-indexing every worker’s payroll history. The fiscal cost of relentless universal benefit expansion has driven an epic increase in the payroll tax. The initial 1937 payroll tax rate was about 2 percent of wages, but after numerous legislated benefit increases, the addition of Medicare in 1965, the Nixon benefit explosion and the Carter and Reagan era payroll tax increases, the combined employer/employee rate is now pushing 16 percent (including the unemployment tax).

Accordingly, Federal and state payroll taxes for social insurance generate $1.2 trillion per year in revenue—four times more than the corporate income tax. So with the highest labor costs in the world, the U.S now imposes punishing levies on payrolls. It thus remains hostage to a political happen-stance—that is, the destructive bargain struck eight decades ago when high tariff walls, not containerships loaded with cheap goods made from cheap foreign labor, surrounded it harbors.

Yet there is more and it is worse. The current punishing payroll tax is actually way too low—that is, it drastically underfunds future benefits owing to positively fictional rates of economic growth assumed in the 75-year actuarial projections. As a result, the benefit structure grinds forward on automatic pilot facing no political opposition whatsoever. In the meanwhile, the fast approaching day or reckoning is thinly disguised by trust fund accounting fictions.

In truth the trust funds are both meaningless and broke. Annual benefit payouts already exceed tax receipts by upward of $50 billion annually, while the so-called trust funds reserves—$3 trillion of fictional treasury bonds accumulated in earlier decades—are mere promises to use the general taxing powers of the US government to make good on the rising tide of benefits.

The New Deal social insurance mythology of “earned” annuities on “paid-in” premiums that have been accumulated as trust fund “reserves” is thus an unadulterated fiscal scam. In reality, Social Security is really just an intergenerational transfer payment system.

Moreover, the latter is predicated on the erroneous belief that new workers and wages can be forever drafted into the system faster than the growth of benefits. During the heady days of 1967, for example, Paul Samuelson and his Keynesian acolytes in the Johnson administration still believed that the American economy was capable of sustained growth at a 5 percent annual rate. The Nobel Prize winner thus assured his Newsweek column readers that paying unearned windfalls to current social security beneficiaries was no sweat: “The beauty of social insurance is that it is actuarially unsound. Everyone ... is given benefit privileges that far exceed anything he has paid in ...”

Samuelson rhetorically inquired as to how was this possible and succinctly answered his own question: “National product is growing at a compound interest rate and can be expected to do so as far as the eye can see. ... Social security is squarely based on compound interest ... the greatest Ponzi game ever invented.”

When 5 percent real growth turned out to be a Keynesian illusion and output growth decayed to 1–2 percent annual rate after the turn of the century, the actuarial foundation of Samuelson’s Ponzi game came crashing down. It is now evident that Washington cannot shrink, or even brake, the fiscal doomsday machine that lies underneath.

The fiscal catastrophe embedded in the New Deal social insurance scheme was not inevitable. A means-tested retirement program funded with general revenues was explicitly recommended by the analytically proficient experts commissioned by the Roosevelt White House in 1935. But FDR’s cabal of social work reformers led by Labor Secretary Frances Perkins thought a means-test was demeaning, having no clue that a means-test is the only real defense available to the public purse in a welfare state democracy.

When the American economy was riding high in 1960, Paul Samuelson’s Ponzi was extracting payroll tax revenue amounting to about 2.8 percent of GDP. A half century later, after a devastating flight of jobs to East Asia and other emerging economies, the payroll tax extracts two-and-one half times more, taking in nearly 6.5 percent of GDP. So the remarkable thing is not that wooly-eyed idealists who drafted the 1935 act succumbed to social insurance’s Faustian bargain at the time. The puzzling thing is that 75 years later—with all the terrible facts fully known—the doctrinaire conviction abides on the Left that social insurance is the New Deal’s crowning achievement. In fact, it is its costliest mistake.

 


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Mon, 06/10/2013 - 19:29 | Link to Comment FreeMktFisherMN
FreeMktFisherMN's picture

SS is worse than a ponzi because at least with a ponzi it is voluntary and it is one's own stupidity if one falls for it.

cue LTER's morally relativist/statist apologist remarks

Mon, 06/10/2013 - 19:45 | Link to Comment Hedgetard55
Hedgetard55's picture

+55 million. A Ponzi where you have to play OR A JAIL CELL AWAITS YOU.

Mon, 06/10/2013 - 19:57 | Link to Comment machineh
machineh's picture

FUCK YOU, FRANK ROOSEVELT.

AND THE MEDICARE SCOOTER YOU RODE IN ON.

Mon, 06/10/2013 - 20:46 | Link to Comment Jim B
Jim B's picture

And if you are self employed, you even get to pay moar!

 

Mon, 06/10/2013 - 21:44 | Link to Comment James_Cole
James_Cole's picture

Exactly right Stockman, SS (a program which was cleverly raided by Reagan and Greenspan, something Stockman knows rather well) is the problem here. Not trillions in bailouts, trillions in 
subsidies, trillions in military spending, it's gawddamn grandma!

In truth the trust funds are both meaningless and broke. Annual benefit payouts already exceed tax receipts by upward of $50 billion annually

OMGGGGG!! $50B during a massive recession? God help us all! It's over!!

Mon, 06/10/2013 - 21:55 | Link to Comment ISEEIT
ISEEIT's picture

Denial isn't really much of a response.

This isn't Huff motherfucker.

Mon, 06/10/2013 - 22:17 | Link to Comment James_Cole
James_Cole's picture

This isn't Huff motherfucker.

Brilliant counter, I salute you sir! 

Tue, 06/11/2013 - 01:37 | Link to Comment 401K of Dooom
401K of Dooom's picture

Ummm, excuse me but how, when and why did this raid occur?  You are lying through  your teeth about this claim you make.  Would you show us the laws that were passed to do this raid on the trust fund?  There is no raid on SS as the money is being given out to the "recipients".  You did not mention the TEFRA act which increased the payroll tax to it's current level of 12.5% of income, passed during the Reagan administration.  And do not tell me that they raided the additional funds from that

Tue, 06/11/2013 - 06:46 | Link to Comment AmCockerSpaniel
AmCockerSpaniel's picture

>>>The Social Security Act of 1935 had virtually nothing to do with ending the depression<<< Well for starters this statement is wrong. SS moved many employed workers to leave their jobs for SS. This open jobs to the younger unemployed. So that helped to end the depression. So you don't like SS, and want out. Go for it and work for the government. Many of those employed by the governments (local, state, and national) have an opt out on SS. Wife was a teacher and opt in. So she paid for the insurance, and she should get it.

Tue, 06/11/2013 - 08:10 | Link to Comment fiftybagger
fiftybagger's picture

"So you don't like SS, and want out. Go for it and work for the government."

Wow, can we put you in charge?  You'd run this thing off the tracks faster than even obungler's minions.

Tue, 06/11/2013 - 14:09 | Link to Comment fche
fche's picture

"Not trillions in bailouts, trillions in subsidies, trillions in military spending .."

Those are problems too.

"it's gawddamn grandma"

... and her peers' tens of trillions of unfunded liabilities.

"$50B during a massive recession"

This is not cyclic stuff like unemployment payments, do keep up.  Plus $50B is just the start.

Mon, 06/10/2013 - 19:29 | Link to Comment kaiserhoff
kaiserhoff's picture

The whole federal budget is a mickey mouse cash basis fraud.

The biggest mistake was allowing welfare recipients to vote.  That needs to be fixed, and soon.

Mon, 06/10/2013 - 19:45 | Link to Comment wisehiney
wisehiney's picture

The biggest mistake was allowing non property owners to vote. - Fixed for you.

Mon, 06/10/2013 - 19:52 | Link to Comment otto skorzeny
otto skorzeny's picture

You forgot the "white male "part-also crucial.

Mon, 06/10/2013 - 20:47 | Link to Comment Jim B
Jim B's picture

Yawn!

Mon, 06/10/2013 - 20:54 | Link to Comment A Lunatic
A Lunatic's picture

The property owners (banks) are the only ones that DO get a vote.........-Fixed it 4 U........

Tue, 06/11/2013 - 02:23 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

Do you know that these days they prosecute and deport white landowners who vote before they officially become citizens?

They can't even vote in local or state elections, to voice how their income taxes and property taxes are used. God forbid that they'd vote against more spending and more taxes.
/s

Personally I don't have a problem with these ppl voting. Compared to all those who don't pay taxes, but benefit from them.

Tue, 06/11/2013 - 02:27 | Link to Comment beaglebog
beaglebog's picture

Nah, the biggest mistake is the substitution of Reason with Voting.

Tue, 06/11/2013 - 03:04 | Link to Comment bunnyswanson
bunnyswanson's picture

"voting is the best revenge" 

Tue, 06/11/2013 - 08:11 | Link to Comment fiftybagger
fiftybagger's picture

"The biggest mistake was allowing welfare recipients"

There.  Fixed it for ya.

Mon, 06/10/2013 - 19:32 | Link to Comment q99x2
q99x2's picture

I like David Stockman. He's cranky like me. My version below.

Time to get real.

The Central banks gather money from nations around the world. Their primary function is to fund black-ops and pocket as much of what is left over. If there ever was an accurate way of budgeting Social Security you'll never know anything more than what the central banksters tell you.

The banksters stole everyones wealth and when the shit hits the fan we are coming for them and going to take it back.

End of story.

Mon, 06/10/2013 - 20:08 | Link to Comment disabledvet
disabledvet's picture

ah, if the STATUTORY purpose is not to fund the Federal Government. The only reason it can do so is because of the amazing ability of the US economy to create wealth and jobs. Good luck beating the returns of SSI if you worked from the 1950's up to the 1990's. Simply put all of Wall Street combined can't compare. Having said that i do agree without serious reform this thing is in danger of "being bankrupted" in the sense that the rest of the Federal Government will struggle without those surpluses to spend. "Money for thought" as the Fed continues to monetize..."though at less of an increase" (the real meaning of 'taper' yes, yes? in other words THE INCREASE IN PURCHASES will taper off...but not the purchases themselves.) I'm not an expert in the fixed income space...and looking at the area "like trading an equity" i agree is dangerous. but it's what i'm doing and why i'm still sticking with "the trade" as it were.

Mon, 06/10/2013 - 23:08 | Link to Comment LongBallsShortBrains
LongBallsShortBrains's picture

,,,,,,,,,,,

They're commas,,,,,,,

Don't be afraid to use them....

Mon, 06/10/2013 - 21:17 | Link to Comment WAMO556
WAMO556's picture

Interesting!

Similar to Frank Herbert's OMNIUS - The Evermind!

Tue, 06/11/2013 - 09:33 | Link to Comment Taint Boil
Taint Boil's picture

 

 

Another Dune reference …. I see a lot of them here. The best science fiction series ever and is a must read. Some of the parallels and similarities to our current situation are amazing; Frank Herbert was a genius in my mind.

Mon, 06/10/2013 - 19:32 | Link to Comment ShrNfr
ShrNfr's picture

If I did accounting the way the government does it, I would be sharing a cell with Bernie Ebbers or a crypt with Ken Lay, depending on who got to me first.

Mon, 06/10/2013 - 23:10 | Link to Comment LongBallsShortBrains
LongBallsShortBrains's picture

Only if you aren't Corzine.

Mon, 06/10/2013 - 19:32 | Link to Comment eddiebe
eddiebe's picture

Let's not forget the lock-box.

Mon, 06/10/2013 - 19:41 | Link to Comment world_debt_slave
world_debt_slave's picture

those that foisted and reaped the beginning ponzi are long gone and they don't have to concerned with what they have perpetrated on future generations.

Mon, 06/10/2013 - 19:43 | Link to Comment wisehiney
wisehiney's picture

SS is not as regressive as you think. The earned income tax credit refunds the employer's and the employees share (and then some in most cases) of social security taxes deducted from paychecks. The middle class mule gets kicked again. The hidden phase out of deductions and credits also effectively increase tax rates beyond what is advertised. These phase outs will affect 2013 taxpayers much more than before. So bummercare taxes are not all you have to look forward to!

Mon, 06/10/2013 - 21:39 | Link to Comment Umh
Umh's picture

True. Especially for those with real low incomes for their working life. If you make minimum wage for 35 years SS will be 90% of that.

Mon, 06/10/2013 - 19:53 | Link to Comment essence
essence's picture

Medicare is several times the budget blowout than Social Security but notice how it never gets any flack. That wouldn't be because its constituency is Big Pharma, Lawyers, Insurance and the Medicos would it?

Way to go Stockman, going after granny while fat cats get windfall profits.
Nevertheless, count me in but only if everything gets cut. That includes the NSA, CIA, DHS, ESF, Military,Congresses perks & retirement, Michelle's O  22 servants  .... the works.

Mon, 06/10/2013 - 20:04 | Link to Comment FreeNewEnergy
FreeNewEnergy's picture

I see there's a serial red arrow puncher on the loose, but I'll take my chances with this off-topic comment.

Watching CBS News with Scott (puke) Pelley tonight, they put up a graphic that showed over 400,000 private contractors with top-secret clearance and then over 700,000 government employees with same. The numbers went by so fast, and I was so alarmed, I didn't get the actual figures, but over 1.1 million people have top-secret clearance in the USA.

What's so startling about this? Well, just figure that if each one of these were handed 300 names to investigate, using Prism, or whatever else is at their disposal, they could take a full day to put together a dossier on everybody in America, and it would take less than a year.

I thought top secret meant, like TOP SECRET, like maybe only 200 or even 2000 people have this kind of clearance. Naw. Way off. Your every move can be monitored, just as what I've been reading on the internet and writing right now is.

We're screwed. Game over.

I'd like to think that there's another country to flee to, or, my first thought, to stand and fight. Reality is that if you stand, you will be shot. If you flee, they will find you, that is, if they let you out of the country.

This was a great country when I was a kid in the 50s and 60s. Now that I'm almost 60, I realize that the country I loved so much is now lost. I've suspected it for a long time - since 9/11, for sure - but I am convinced. True patriots are few and far between, pretty much on our own, now.

This is Germany in the 30s, except larger and deeper. Everything is controlled and dictated. We have lost all our freedoms.

Sorry to sound so depressed, but that number - of people with top secret clearance - absolutely floored me. We're completely out-gamed, out-manned and out-gunned.

Good luck to all. Hope we make it through to some better future, but I have serious doubts.

Mon, 06/10/2013 - 20:19 | Link to Comment otto skorzeny
otto skorzeny's picture

Never underestimate the incompetence of large governmental bureaucracy. Remember- the USSR had a massive internal spying apparatus at their disposal and look at the result there.

Mon, 06/10/2013 - 20:26 | Link to Comment dick cheneys ghost
dick cheneys ghost's picture

Wapo did this in 2010.........not bad for MSM.........

 

http://projects.washingtonpost.com/top-secret-america/

Mon, 06/10/2013 - 21:07 | Link to Comment Stuck on Zero
Stuck on Zero's picture

We should just grant every U.S. citizen Top Security clearances and then we can spy on them at will.

 

Mon, 06/10/2013 - 21:34 | Link to Comment Chuck Walla
Chuck Walla's picture

FreeNewEnergy -

Amen, + 100 million. It was a great country once, but the progressives, always selling nirvana one welfare check at a time, bought the idiots in wholesale lots.

 

LBJ said:

“I’ll have those niggers voting Democratic for the next 200 years.”

– Lyndon B. Johnson

 

Much of the social history of the Western world, over the past three decades, has been a history of replacing what worked with what sounded good.

~ Thomas Sowell 

 

 

 

Tue, 06/11/2013 - 02:29 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

Can they vote if they have a felony record? And not all felons do prison time, is that right? Just asking.

Tue, 06/11/2013 - 07:13 | Link to Comment FreeNewEnergy
FreeNewEnergy's picture

Thanks for the links, guys. Even my figure of 1.1 million spies was low. According to ABCnews, it's more like 1.4 million. So, u pays ur taxes so the guv can spy on u. Nice system.

As many others have expressed recently, starve the beast.

After a good night's sleep, I'm a little less despondent and more resolved to expose SpyNet. Glad I was able to live in this country when it was free. Ain't so any more, but we need to make changes.

Fight or flight, bros. I'll fight. After all, what do I have to lose?

"Freedom's just another word for nothing left to lose..." -- Janis Joplin, Me and Bobby McGee

Mon, 06/10/2013 - 22:39 | Link to Comment ISEEIT
ISEEIT's picture

So I'll go for the 'long' shot..

North Korea really has been a lab all these years. The games played there were truly for 'scientific' purposes. They advertise it now. Having Dennis Rodman pop in for a visit really was just a lark for these 'jewels' running the show.

Barack obozo is a crowning achievement. They make this guy 'President'? Seriously?

It's all bizzaro world on purpose and they want you to know that.

Mon, 06/10/2013 - 20:10 | Link to Comment spooz
spooz's picture
Austerity: the greatest bait-and-switch in history


Scottish economist Mark Blyth discusses the stupidity of austerity as a means of recovering from recession:

 

"Governments today in both Europe and the United States have succeeded in casting government spending as reckless wastefulness that has made the economy worse. In contrast, they have advanced a policy of draconian budget cuts--austerity--to solve the financial crisis. We are told that we have all lived beyond our means and now need to tighten our belts. This view conveniently forgets where all that debt came from. Not from an orgy of government spending, but as the direct result of bailing out, recapitalizing, and adding liquidity to the broken banking system. Through these actions private debt was rechristened as government debt while those responsible for generating it walked away scot free, placing the blame on the state, and the burden on the taxpayer.

That burden now takes the form of a global turn to austerity, the policy of reducing domestic wages and prices to restore competitiveness and balance the budget. The problem, according to political economist Mark Blyth, is that austerity is a very dangerous idea. First of all, it doesn't work. As the past four years and countless historical examples from the last 100 years show, while it makes sense for any one state to try and cut its way to growth, it simply cannot work when all states try it simultaneously: all we do is shrink the economy. In the worst case, austerity policies worsened the Great Depression and created the conditions for seizures of power by the forces responsible for the Second World War: the Nazis and the Japanese military establishment. As Blyth amply demonstrates, the arguments for austerity are tenuous and the evidence thin. Rather than expanding growth and opportunity, the repeated revival of this dead economic idea has almost always led to low growth along with increases in wealth and income inequality. Austerity demolishes the conventional wisdom, marshaling an army of facts to demand that we recognize austerity for what it is, and what it costs us."

http://boingboing.net/2013/06/10/austerity-the-greatest-bait-a.html

Mon, 06/10/2013 - 20:50 | Link to Comment Jim B
Jim B's picture

What austerity? 

Mon, 06/10/2013 - 21:02 | Link to Comment Accounting101
Accounting101's picture

Greece, Italy, Ireland, Portugal, Spain where unemployment rates are 25% plus. How about in this country with police, fire and teacher layoffs? That austerity. Stop being a rube.

Mon, 06/10/2013 - 21:27 | Link to Comment nmewn
nmewn's picture

Public sector austerity...ie government spending less, leads to private sector unemployment?

In what fields...NSA, CIA, FBI, IMF, WHO, WTF?

Mon, 06/10/2013 - 22:41 | Link to Comment ISEEIT
ISEEIT's picture

Thanks for playing troll. They really don't coach you kids any better than this?

What's it pay?

Mon, 06/10/2013 - 20:15 | Link to Comment malek
malek's picture

"Regressive"

Oversimplification bullshit. It is linear and only turns regressive if you earn more than $113,700 individual income.

Mon, 06/10/2013 - 20:23 | Link to Comment pemdas
pemdas's picture

SS is not regressive, it is in fact very progressive. The bottom 80% have a net negative tax rate, only the top 20% is paying their way. See this from American Enterprise Institute:

http://www.aei-ideas.org/2010/04/does-paul-krugman-know-what-progressivi...

Mon, 06/10/2013 - 20:26 | Link to Comment Hedgetard55
Hedgetard55's picture

+55. Stockman clearly does not know what regressive means. And, since 113K is the limit, it is not even regressive above that, it is nothing as no money is collected above there, and benefits are calculated based upon what has been collected.

Mon, 06/10/2013 - 20:33 | Link to Comment fijisailor
fijisailor's picture

OK.  I've paid into the damn thing for 30 years so what's next?  It's a rotten system so just deny me any of it in retirement or better yet just let inflation make it worthless.

Mon, 06/10/2013 - 20:35 | Link to Comment PubliusTacitus
PubliusTacitus's picture

The redistributive aspect of Socialist Security is the most insidious component of the failed program.

 

Socialist Security is the time bomb that will destroy the country, and in many ways already has.  It has cemented, as Mr. Stockman observes above, the bipartisan coalition guaranteed to do nothing about the problem, and expand it to ensure it gets even worse.

 

Our only hope is that Obamacare works so well, and fails so spectacularly (it easily could), that it starts killing off baby boomers at 1.5 – 2x the current rate, and dropping life expectancy significantly.  That is our only hope.

 

Mon, 06/10/2013 - 20:45 | Link to Comment nmewn
nmewn's picture

Putting ones faith in a government program to kill off people who are a lot tougher & wiser than it or you, probably isn't the best strategy.

Just sayin ;-)

Mon, 06/10/2013 - 21:25 | Link to Comment PubliusTacitus
PubliusTacitus's picture

Au contraire, if there is one organizational force on the planet capable of mass murder (in the name of compassion, naturally), it is government, especially when it is convinced beyond all doubt that it is doing right and compassionate things, with the power of life and death granted to it by a clueless electorate and a criminal legislative body.

 

But you are correct in placing hope in such a fate – it isn’t likely to happen in that fashion.

Mon, 06/10/2013 - 21:41 | Link to Comment nmewn
nmewn's picture

I thought I understood your meaning...but wasn't sure.

When I was young, I always listened to the old guys. My peers thought it strange that I would hang out in the next door neighbors garage (the old WWII vet) in failing health but with a mind as sharp as a tack.

He taught me how to run a still...and how to make one, among other things...one doesn't get to be old being a dumbass ;-)

Mon, 06/10/2013 - 22:01 | Link to Comment PubliusTacitus
PubliusTacitus's picture

Unfortunately, that seems to be changing.

 

The boomer generation is full of stupid people, and they will likely top out at the max life expectancy for the US Empire.  They are an enormous resource drain, and will suck what's left of the productive and wealth-generating capacity out of this country via SS and Medicare/Medicaid.

 

It's all downhill from there, and possibly quickly (faster than Britain or Japan).

Mon, 06/10/2013 - 21:09 | Link to Comment Accounting101
Accounting101's picture

Good. I have you down as renouncing your Social Security and Medicare benefits. If you happen to ever cash one of those SS checks or hand a Medicare subscriber card to a doctor, you will be a gigantic hypocrite and a fraud.

Mon, 06/10/2013 - 21:17 | Link to Comment nmewn
nmewn's picture

"I have you down as renouncing your Social Security and Medicare benefits."

In the real world, its called repossession. In a statists world, its called slavery to the system.

Which world do you live in?

Mon, 06/10/2013 - 21:42 | Link to Comment Accounting101
Accounting101's picture

I'm reading rhetorical bullshit. Your plan please.

Mon, 06/10/2013 - 22:05 | Link to Comment nmewn
nmewn's picture

Let me guess, you live in a world where "millions of old people" have no family.

Your plan is more of the same old socialist plan, raping the kids & grandkids...great plan.

Mon, 06/10/2013 - 22:16 | Link to Comment Accounting101
Accounting101's picture

Oh, everybody moves in with their kids? Come on man. Publius types this kind of garbage. I expect more from you.

Mon, 06/10/2013 - 22:25 | Link to Comment nmewn
nmewn's picture

I thought I could expect more from you than this hysteria..."millions"?..really?

You're approaching eugenic overload on this one, you work in a nursing home or what?

Mon, 06/10/2013 - 21:28 | Link to Comment PubliusTacitus
PubliusTacitus's picture

I do renounce them – I have no hope of ever receiving them, so we are planning accordingly as though it won’t exist, because it won’t.  We should not be penalized for doing this, though we will be.

 

I am on record on this and many other blogs completely in favor of Gen X and younger forfeiting what we have paid into the system in favor of a self-run system.

 

The choice is not all-or-none; there is a concept called economic freedom. 

 

That will never happen until the baby boomers die.

Mon, 06/10/2013 - 21:40 | Link to Comment Accounting101
Accounting101's picture

So when you eventually receive those SS checks you will return them to sender? Right? Again, what is the plan for keeping millions of senior citizens eating and alive? No bullshit, just a plan.

Mon, 06/10/2013 - 21:49 | Link to Comment PubliusTacitus
PubliusTacitus's picture

Sure, but won’t have to – they won’t exist (there’s a good chance this country won’t exist, or we won’t exist in it).

 

The plan is get younger generations off Socialist security, forfeit their contributions to date, sunset that system as boomers die, and allow everyone else to save for themselves.

 

That’s the fucking plan, asshat.

 

Again, as I say below,the last organization/body that should be “saving” for your retirement is fucking government.  There is absolutely no factual or historical reason to place any faith in the competence of a body which – especially lately – shows less than zero competence.

Mon, 06/10/2013 - 22:04 | Link to Comment Accounting101
Accounting101's picture

Save in what? The stock market- the biggest of all Ponzi schemes? Rocks found in the ground? Obviously you haven't thought about this for longer than two seconds.

You will whore up to the trough when the time comes. It's the only way you will survive. If the meantime, you go on pretending to be a little capitalist. Tool.

Mon, 06/10/2013 - 22:25 | Link to Comment wisehiney
wisehiney's picture

You're thinking the Ponzi stock market fails, and yet your beloved social security survives. The people here are more prepared to survive than at any other site you troll at. Your fear of fending for yourself is evident. Do not to project it on your betters. I can tell that you have not even earned the right to have an opinion. STFU. 

Tue, 06/11/2013 - 06:06 | Link to Comment Accounting101
Accounting101's picture

You will be whoring up as well. Those SS checks won't come fast enough for you.

Tue, 06/11/2013 - 12:38 | Link to Comment PubliusTacitus
PubliusTacitus's picture

No, piece of shit statists like you haven’t thought about this at all, since you enacted a program designed to fail.

 

You are very scared of people like us, willing to step outside the horseshit state retirement fraud.

 

We are well diversified, owning not just shiny rocks, but land, some paper, and a significant amount of brass & lead.  That’s our insurance policy.

 

Your retirement Ponzi is dead, fuckbag.

Mon, 06/10/2013 - 21:54 | Link to Comment nmewn
nmewn's picture

"So when you eventually receive those SS checks you will return them to sender?"

He's being ripped off either way, the dollar taken in the past (in taxation, to go against those SS checks today) is worth less now isn't it?...1970's vs 2014.

What you're actually saying is he doesn't have the right to take whats legally his (what was confiscated from him) at less than par value! He's taking a haircut and you have problem with that?

All paper fiat declines in value, thats why prices for goods & services in paper fiat go up...surely you know this by now being a ZH member.

Mon, 06/10/2013 - 22:05 | Link to Comment Accounting101
Accounting101's picture

So what is the alternative? People's lives depend on it.

Mon, 06/10/2013 - 22:27 | Link to Comment nmewn
nmewn's picture

I'm thinking the ones who profit from the system are the ones whose lives depend on it.

Tue, 06/11/2013 - 01:42 | Link to Comment StychoKiller
StychoKiller's picture

There's this 4-letter word:  WORK, perhaps you've heard of it.

Tue, 06/11/2013 - 06:15 | Link to Comment Accounting101
Accounting101's picture

For Christ's sake! Work until 70, 75 or 85 years of age? Move in with the kids? That's what you idiots have come up with through the night? What about medical care? How is that going to be paid for? Think longer than two seconds please.

All you little fake capitalists are real pleased with yourselves as you sit in one big circle jerk. When the time comes, every single one of you will be there collecting Social Security and Medicare. Every single one of you will be the very thing you shake your fists at in righteous indignation. You all will be government whores.

Tue, 06/11/2013 - 08:58 | Link to Comment espirit
espirit's picture

Die with the disease you're born with.  No taking chlolesterol meds so you can have that bacon-burger and fries.  Limp? Wrist it.

People used to work until they died, and since I'm a boomer I'll do the same but at a slower pace.

Mon, 06/10/2013 - 22:56 | Link to Comment ISEEIT
ISEEIT's picture

"no bullshit, just a plan"?

Well let's begin with accepting that what we are fed today is bullshit. It is bullshit. I'm seriously tired of leftist soiling their panties/tighty whities over the assertion of SS being solvent and not a problem.

Bitch..It is a problem.

Fantasy fest is plenty of fun. Fantasy fest is also a time to just let some steam blow off and enjoy yourself.

It doesn't make a real life you moron.

Pretend isn't an option (for long) in this real world.

Tue, 06/11/2013 - 06:18 | Link to Comment Accounting101
Accounting101's picture

You mean like pretending you will not use SS and Medicare upon retirement? Is that the kind of pretend you are talking about?

Tue, 06/11/2013 - 15:49 | Link to Comment fche
fche's picture

"what is the plan for keeping millions of senior citizens eating and alive"

If they allowed themselves to become totally dependent on the state to eat and stay alive, they deserve pity, not their childrens' livelihoods.

Mon, 06/10/2013 - 20:37 | Link to Comment nmewn
nmewn's picture

Some boiler plate demagoguery from FDR...

"But they are guilty of more than deceit.

When they imply that the reserves thus created against both these policies will be stolen by some future Congress, diverted to some wholly foreign purpose, they attack the integrity and honor of American Government itself. Those who suggest that, are already aliens to the spirit of American democracy. Let them emigrate and try their lot under some foreign flag in which they have more confidence."

http://millercenter.org/president/speeches/detail/3307

Well, it was stolen afterall, wasn't it?

Mon, 06/10/2013 - 20:59 | Link to Comment Hedgetard55
Hedgetard55's picture

Ouch.

Yea, he was a despot, and yet is revered by the left.

Mon, 06/10/2013 - 21:31 | Link to Comment PubliusTacitus
PubliusTacitus's picture

FDR was a scumbag statist of the highest order, as were many of his openly socialist advisors.

 

Not only did he build the ticking Socialist Security time bomb, he prolonged the depression for a decade.

Mon, 06/10/2013 - 23:01 | Link to Comment ISEEIT
ISEEIT's picture

FDR was a 'gameboy'. Just a lucky 'nigga' who got placed into history at just the right time and place.

Fuck all you Leftist. Your shit makes people die.

It really does.

Mon, 06/10/2013 - 20:53 | Link to Comment Accounting101
Accounting101's picture

So I assume all of you will forgo your SS benefits and Medicare. I'm sure you don't want to be part of the scam. I wait for your response with bated breath.

If not SS and Medicare, then what? How are you going to keep millions of senior citizens from starving to death because that is what's at stake? This is not some fucking game. The middle and lower classes can't afford 8-10% of their income going to a retirement wage and health care fund, and even that wouldn't be enough savings. Please, no 401 bullshit. Talk about a giant Ponzi scam. So what is the plan???

Wall Street loves when the tools do the dirty work.

Mon, 06/10/2013 - 21:03 | Link to Comment A Lunatic
A Lunatic's picture

You are correct it is not a game. Millions of senior citizens will be starving to death. Try not to be one of them. You are your own responsibility.

Mon, 06/10/2013 - 21:36 | Link to Comment Accounting101
Accounting101's picture

I also have you down as a "No" to collecting your SS and Medicare benefits.

Mon, 06/10/2013 - 23:19 | Link to Comment A Lunatic
A Lunatic's picture

I have you down as an ignorant Statist tool.

Mon, 06/10/2013 - 21:07 | Link to Comment wisehiney
wisehiney's picture

Naw, just cut em back enough to discourage all the crotch droppings or litters or whatever you want to call all of the little deadbeat freeloaders they lay up at the shack and create.

Mon, 06/10/2013 - 21:13 | Link to Comment Accounting101
Accounting101's picture

Stay away from the fucking keyboard if you can't string together a coherent sentence. Loser.

Mon, 06/10/2013 - 21:25 | Link to Comment wisehiney
wisehiney's picture

Stay away from the fucking calculator if you can't do math. Big Winner.

Mon, 06/10/2013 - 21:31 | Link to Comment Accounting101
Accounting101's picture

What's the fucking plan???

Mon, 06/10/2013 - 21:44 | Link to Comment PubliusTacitus
PubliusTacitus's picture

The plan is get younger generations off Socialist security, forfeit their contributions to date, sunset that system as boomers die, and allow everyone else to save for themselves.

 

That’s the fucking plan, asshat.

 

The last organization/body that should be “saving” for your retirement is fucking government.  There is absolutely no factual or historical reason to place any faith in the competence of a body which – especially lately – shows less than zero competence.

Mon, 06/10/2013 - 23:03 | Link to Comment ISEEIT
ISEEIT's picture

Go ask Sargent Schultz doofus.

Mon, 06/10/2013 - 21:34 | Link to Comment PubliusTacitus
PubliusTacitus's picture

Millions of seniors aren’t going to starve, asshole.

 

Younger generations will do most of the starving, and likely armed conflict, due to their ignorance.  And yours.

 

Fuck you & your bullshit entitlements.

 

Get your fucking hands out of my & my kids bank accounts, pig.

Tue, 06/11/2013 - 00:43 | Link to Comment Demonoid
Demonoid's picture

"The middle and lower classes can't afford 8-10% of their income going to a retirement wage and health care fund..."

BS

They sure as hell could if they didn't pay net 16% of wages that's currently deducted for SS.

The employer-paid half of that is a joke, too. Like any other business cost, it's simply passed along - in this case, as lower wages.

 

Mon, 06/10/2013 - 20:57 | Link to Comment WTFUD
WTFUD's picture

Testifying to CONgress on sub-prime mortgage Ponzi

" we waz caught out finkin' house prices would keep on increasing"
JAMIE DIMON

and he is the top paid exec. ceo/chairman at the largest TBTF
WHAT chance for USSA with this criminal at the helm?

The post states a 5% growth year on year for the economy to meet SS payments.

Why does everyone in the USSA accept the Harvard/ Elite revolving door of Ponzi?

Mon, 06/10/2013 - 21:22 | Link to Comment ChanceIs
ChanceIs's picture

Why does everyone in the USSA accept the Harvard/ Elite revolving door of Ponzi?

Because FDR went to Harvard.  Per Wiki:  

An average student academically, he was a member of the Alpha Delta Phi fraternity and also editor-in-chief of The Harvard Crimson daily newspaper. Roosevelt later declared, "I took economics courses in college for four years, and everything I was taught was wrong."

Well maybe if you had studied, you arrogant douchebag!!!!  Was Adam Smith wrong?  Was Frederic Bastiat wrong?  Was Walter Bagheot wrong?  Just who taught you that burning crops would bring the US out of the Depression?  Please tell me that they taught Bastiat at Harvard and you slept through the broken windows lecture.

Much has been written about the Harvard, Wall Street, Washington circle jerk.  I can't recall the name of the movie - it discussed the '07-'09 crash starting in Iceland.  Towards the end the producer (also from Harvard) went after Columbia business school dean, Glen Hubbard for perpetuating the circle jerk.  Hubbard got quite infamously incensed. Romney would have made Hubbard Treasury Secretary.  There is no difference between the Dems and Pubs.  Don't forget that.

Max Keiser has been ripping George Osborne a new one for reinitiating the US, no money down, subprime housing finance scheme in the UK.  Unbelievable.  All we need to do is get consumer confidence and demand back up...........

http://www.youtube.com/watch?feature=player_embedded&v=VvxRewVsumY

See also:

Help to Buy 'bubble' could push house prices up by 30pc


The Government’s "reckless" Help to Buy scheme risks creating a new housing bubble and could push the average UK house price to £300,000 by the end of 2015, a leading economic think-tank has warned.

 

http://www.telegraph.co.uk/finance/personalfinance/houseprices/10039583/...

“Help to Buy is a reckless scheme that uses public money to incentivise the banks to lend precisely to those individuals who, absent the scheme, would not and should not be offered credit," said Andrew Brigden, a senior economist at Fathom.

"Had we been asked to design a policy that would guarantee maximum damage to the UK’s long-term growth prospects and its fragile credit rating, this would be it.”

Tue, 06/11/2013 - 01:47 | Link to Comment StychoKiller
StychoKiller's picture

The movie you're thinking of is "Inside Job."

Mon, 06/10/2013 - 20:58 | Link to Comment ChanceIs
ChanceIs's picture

FDR was a craven, subhuman leech.

Where is the discussion of morality in any of this?  This gets back to the story of the aunt and the grasshopper.

What I really wants to know is why life was so horrible before Social Security.  Didn't we have the roaring '20s?  Were things so bad then?  Where were all of the tears and whining about old people in the 1910s.  Wasn't life much better under the huge industrial boom of the Robber Barons era in the 1880s than say in the 1830s?

How did we get by before Social Security.  Numbers, regressivity etc be damned.  Where was the need for this nonsense?

Life is a beach and then you die. 

BTW:  Mother expalined Social Security to me for the first time circa 1966 was I was about nine yeas old.  She finished, and I said, 'Mother.  That is a Ponzi scheme.'  Hey.  If a nine year old could figure it out......  And please don't associate me with Texas governor Rick ('I can't remember which cabinet level department I will nuke') Perry.

PS:  I hope that Perry succeeds in getting all the gun manufacturers to move to Texas.  I have nothing against the guy because he is stoooooopid.  Well he is probably a friend of W's.  Hold that against him.

Mon, 06/10/2013 - 21:27 | Link to Comment Mr. Hudson
Mr. Hudson's picture

Before SS people lived to be 50. If they lived to be too old to work they were thrown in a poor house if their kids wouldn't take care of them. Then they started living longer and the hippies didn't want to take care of their old parents because they were too busy doing drugs and screwing chicks who didn't shave their armpits so Johnson gave the old people Medicare and rest homes to live in.

Mon, 06/10/2013 - 20:59 | Link to Comment tony bonn
tony bonn's picture

wall street plutocrats invented big government to produce big borrowing, big interest, and complete takeover of the government.....wall street - the rockefeller nazis - love big deficits because it lines their pockets with more money and accelerates the transfer of wealth from the poor to the rich. the fucktarded liberal loves it because it represents job security and impoverishment of america....the welfare queen loves it because it is a way out of work.

the poor must be helped - a requirement which the plutocrat ignores except when the outcome is slavery.

Mon, 06/10/2013 - 21:04 | Link to Comment Stuck on Zero
Stuck on Zero's picture

Under the new immigration plan we will bring in 12 million people who will go on Social Security immediately.

 

Mon, 06/10/2013 - 21:18 | Link to Comment Kreditanstalt
Kreditanstalt's picture

"...the so-called trust funds reserves—$3 trillion of fictional treasury bonds accumulated in earlier decades—are mere promises to use the general taxing powers of the US government to make good on the rising tide of benefits."

 

Good way to look at it.  Payouts backed by nothing more than government's "monopoly on violence within a given territory".

Pay up (labor for us!) or we steal your property, jail or kill you.

Mon, 06/10/2013 - 21:31 | Link to Comment Mr. Hudson
Mr. Hudson's picture

FDR pretended to be crippled so he wouldn't have to have sex with Eleanor.

Mon, 06/10/2013 - 21:50 | Link to Comment ChanceIs
ChanceIs's picture

If he wasn't crippled before he cheated on Eleanor, he would have been afterwards.  Eleanor was smart.  She took her revenge.

Hillary used to run around the White House pretending to "channel" Eleanor.  Must have been during MonicaGate.  Gag.  Nixon used to talk to the portraits near the end.

Mon, 06/10/2013 - 21:50 | Link to Comment rubiconsolutions
rubiconsolutions's picture

The fact that none of us can opt out of Social Security trumps everything else. I'm 58 and would be happy to sign a document indemnifying others from supporting me in the future if I could opt out right now and take what has been stolen from me by way of FICA "contributions".

And on David Stockman, where the hell was he when he was in a position to do something about all this? He's like any other government hack that sucks on the public teat but then feels free to badmouth it after they retire.

 

Mon, 06/10/2013 - 23:02 | Link to Comment samsara
samsara's picture

Well,  If you worked for the Rail Road (like the NYC...)  they have their OWN pension. And they don't pay into Soc Sec.

 

 

Mon, 06/10/2013 - 23:06 | Link to Comment ISEEIT
ISEEIT's picture

Ever hear of maturity?

Learning?

changing?

Growing?

 

Mon, 06/10/2013 - 21:54 | Link to Comment Umh
Umh's picture

Politicians are well known for creating problems that appear after they leave office.

Mon, 06/10/2013 - 23:08 | Link to Comment ISEEIT
ISEEIT's picture

And even better known for creating 'problems' as a justification for being in office.

Tue, 06/11/2013 - 00:38 | Link to Comment BidnessMan
BidnessMan's picture

The issue is getting re-elected is all that matters to a politician. Giving away lots of money to lots of people attracts votes.

"We all know what has to be done. We just don't know how to get re-elected if we do it."

Mon, 06/10/2013 - 22:20 | Link to Comment omi
omi's picture

I was interested in researching some overview about how to go about computing mortgage prepaymnets, and I found this Yale course videos posted online interesting. Later I went and checked previous videos. Have a look at videos number 12 and 13.

http://www.youtube.com/watch?v=ecqWJ_7ERCI&list=PL6D3D85513B662773

In those videos, they go through a model calculation of utilities with and without social security. In any case, only the first generation wins. Every subsequent generation is worse off.

 

Mon, 06/10/2013 - 23:00 | Link to Comment LongBallsShortBrains
LongBallsShortBrains's picture

" the heavy taxation needed to fund the scheme has been made politically feasible by the mythology that participants are paying a “premium” for an “earned” annuity, not a tax. Consequently, payroll tax financing is deeply regressive because all participants pay a uniform rate regardless of income."

" At the same time, the prosperous classes have gotten a big slice of these transfer payments, and now claim they have earned them—when affluent citizens should have no proper claim on the public purse at all."

When you sell it (social security) as an insurance product, don't be surprised when people want that for which they have paid. It wouldn't have been swallowed if it's true commie results (intentional) had not been purposely obscured. Those who wanted it passed knew this, hence the deception.

Mon, 06/10/2013 - 23:32 | Link to Comment Hail Spode
Hail Spode's picture

Stick it Stockman.   The problem with SS isn't that it is not means tested.   The problem (for starters) is that it is unconstitutional and that politicians stole everything in the "trust" fund.     Now that outlays exceed inflows it is time to dip into that "trust" fund which isn't there.   So instead of delivering what is supposed to be in the "trust" fund to people who have been paying in all their lives, the neocons want to means test it.   That way, instead of blowing it on the people it was meant to go to ( who have been paying in all their lives monies specifically allotted to SS) the money will be spent on defense contractors so that they can give more weapons to Al-Queada, blow bridges up and rebuild them, and station U.S. troops in every mudhole on the planet.

It is all about the neocons who spent all the money from the trust fund trying to look for some out so that politicially they can get away with avoiding cuts to their budgets in order to make good on the promises.

Tue, 06/11/2013 - 01:45 | Link to Comment 401K of Dooom
401K of Dooom's picture

Hey everybody, here are some fun questions to ask the old codger who screams that his social security payment is his money:

 

1.)  What statute enacted and covers Social Security?

2.)  What is the correct name for Social Security?

3.)  How much compensation are you entitled to receive under Social Security?  This I ask because there does not seem to be a limit to the amount of money that Social Security can give to a single person. 

4.)  What is the current ration of recipients to contributors?  What was this ratio when Social Security was enacted in 1935?

 

 

Tue, 06/11/2013 - 02:25 | Link to Comment Escapeclaws
Escapeclaws's picture

Ponzi or not, it's the only thing for most retirees between them and the wolf at the door.

Tue, 06/11/2013 - 07:16 | Link to Comment AnAnonymous
AnAnonymous's picture

The payroll tax has become an anti-jobs monster, but under the banner of a universal entitlement organized labor tenaciously defends what should be its nemesis.
____________________

Nopey, nopey. The anti jobs monsters are depletion of resources. Work consumes resources. And concentration of wealth. As wealth is concentrated in an area, certain jobs are no longer valued enough to allow living in wealth concentrated areas.

'Americans' at best try to mitigate those effects with their tax policies.
Which amounts to taking a one mile walk once in a week in order to burn all those joules you get by eating ten super meaks a day.

Tue, 06/11/2013 - 07:24 | Link to Comment TheFourthStooge-ing
TheFourthStooge-ing's picture

Dopey, dopey. More fantasy from AnAnonymous. Should anyone be surprised by that?

Chinese citizenism or the art of making no sense.

Tue, 06/11/2013 - 08:25 | Link to Comment Flakmeister
Flakmeister's picture

Ahh, all those Hedgies who would gladly suck Paul Ryan's cock are out in full force for this one, no surprise...

Don't forget to bring your copy of Atlas Shrugged so he can sign it for you....

Tue, 06/11/2013 - 13:32 | Link to Comment Totentänzerlied
Totentänzerlied's picture

You of all people should really know better. This was just another idiotic Ponzi scheme predicated entirely upon the cheapness of energ, or a specific effect of that - rapidly growing populations and rising standards of living/per capita wealth.

Tue, 06/11/2013 - 15:47 | Link to Comment Flakmeister
Flakmeister's picture

There *were* a lot of built in assumptions, but they apply to *every* aspect of the "American Way of Life", not just SS...

BTW, I am not debating the Ponzi nature of SS, only pointing out the intellectually bankrupt failing the realize that those assumptions are very broad and extend beyond SS. Haters gotta hate, I guess....

Tue, 06/11/2013 - 13:28 | Link to Comment Totentänzerlied
Totentänzerlied's picture

... tell me something I don't know?

Do NOT follow this link or you will be banned from the site!