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Guest Post: The Generational Injustice Of Social (in)Security

Tyler Durden's picture


Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Forcing young workers to pay into a Ponzi Scheme is generational injustice on a vast scale.

Why should young workers pay into a retirement system that will give them nothing, a system that will dissolve in insolvency long before they're old enough to retire? This is a question that Max Keiser posed in our conversation on Peak Retirement, and I think it deserves an answer.

I think the core issue here is the generational injustice of pay as you go social programs, which boil down to unsustainable Ponzi schemes. As I noted yesterday in The Problem with Pay-As-You-Go Social Programs (November 5, 2013), all pay as you go programs funded by payroll taxes--Social Security and Medicare in the U.S.--are only sustainable if the number of workers rises faster than the number of beneficiaries, because it takes multiple full-time workers' payroll taxes to fund each beneficiary.

As I showed yesterday, it takes about ten low-wage (and hence low-payroll tax) workers to fund one retiree. At this rate, Social Security's 57 million beneficiaries (on its way to 70+ million as the Baby Boom retires en masse) would need 500 million workers paying into the system for it to be sustainable.

It takes only a few high earners (those making $85,000 or more annually) to fund one retiree, but there are too few high earners to support the system (13 million workers earn $85,000 or more, while beneficiaries will soon top 60 million).

While the number of beneficiaries will soar for the next decade as 60+ million Baby Boomers retire, the number of full-time jobs has stagnated, as this chart shows:

If the system doesn't change, the young workers currently paying payroll taxes to fund their elders' retirements will get little to nothing out of the system. This is ordained by two trends: demographics and the end of (paid) work. Global Reality: Surplus of Labor, Scarcity of Paid Work (May 7, 2012).

A huge cohort of retirees requires an even larger cohort of workers to support its retirement in pay as you go systems. This is what renders Social Security a Ponzi Scheme: a Ponzi Scheme only works as long as the number of new marks is substantial enough to pay the promised riches. Once the number of marks declines below a threshold, the Ponzi Scheme implodes.

The soon-to-be 70 million beneficiaries of Social Security would need roughly 210 million full-time workers earning decent money to sustainably fund their benefits. The U.S. economy is short about 100 million full-time jobs, and given the end of work realities I have often covered here (just type end of work into the custom search box on the main blog page), the number of full-time jobs with decent pay may well decline sharply, even in "good times," i.e. periods of expansion.

We can expect widespread destruction of paid work as technology creatively destroys one sector after another.

Why should young workers pay into a retirement system that cannot possibly offer them any benefit? The conventional answer is a lie: "Social Security is essentially eternal and will be here forever."

The other conventional answer is pure self-serving, self-justification by retirees: "We wuz promised." Well guess what, Boomers (I am 59 and a Boomer), things change in pay as you go systems. When the number of full-time workers falls to 2-to-1 or less and the number of retirees drawing benefits skyrockets, the system is no longer sustainable, regardless of what was promised by feckless politicos and their toadies.

The Social Security system could be made sustainable, but it would take radical reform. The constituencies that would oppose these reforms are among the most political powerful in the nation, so there is no chance these would ever be aired, much less approved:

1. Eliminate Social Security benefits for double and triple-dippers, i.e. those drawing pensions from other private or government sources. Re-engineer Social Security into a system for those with no other retirement benefits or pensions.

2. Tax all income, not just earned income. Lower the total Social Security tax from 12.4% to 10% but apply it equally to all income. Why should someone earning $1,000,000 pay less a percentage than someone earning $10,000? Why should I pay nothing on $100,000 I skimmed in a stock trade? Lower the tax but tax all income. Simple, fair, no loopholes.

3. Ditch the bogus Trust Fund of lies and set up a real Trust Fund that is outside the Federal Budget and Congressional avarice. Any surplus (i.e. when taxes collected exceed benefits paid in that year) would go into a true Trust Fund that uses the cash to buy Treasuries, other government bonds and AAA corporate bonds. This fund would thus help keep interest rates low, and the interest generated by the bonds would be real, not borrowed.

Congress would not be allowed to appropriate the Trust Fund for any purpose (bridges to nowhere, discretionary wars, etc.). It would be managed by trustees elected by the citizenry.

With a true Trust Fund, young workers would actually have some hope that the fund would still have real assets to liquidate to fund their retirement.

Radical transformation is necessary if Social Security is to become something other than a massive wealth transfer scheme from the young to the elderly.

Forcing young workers to pay into a Ponzi Scheme is generational injustice on a vast scale. Self-serving justifications of the status quo by those benefiting from this transfer of wealth should be outed for what they are: justifications of exploitation, avarice and injustice.


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Wed, 11/06/2013 - 14:04 | 4127619 youngman
youngman's picture

The young folk have to pay for the social security of old folks..also their health care....nice job....and who do they vote for...the politicians that think this is a good idea...goes to show how bad our schools are

Wed, 11/06/2013 - 14:14 | 4127671 semperfi
semperfi's picture

our schools are for the most part indoctrination camps

Wed, 11/06/2013 - 14:27 | 4127731 Joe Davola
Joe Davola's picture

Simple, fair, no loopholes.

Oh yeah, that'll happen.

Wed, 11/06/2013 - 14:30 | 4127748 flacon
flacon's picture

My older brother has a degree from THE accredited Ivy Leage University, and a pH Dee from another accredited Ivy Leage University. He is incapable of understanding that Social Security is a ponzi scheme. He is also incapable of understanding our monetary system. 


I think that he has a set of beliefs that would leave him a hollow man, gutted and empty if he was to admit to the truth. For him it's better to belive a lie that he enjoys than to believe the truth that crushes his divine visions of the annointed.

Wed, 11/06/2013 - 14:47 | 4127823 therevolutionwas
therevolutionwas's picture

I hear you.  I have inlaws, very intelligent, but you can see them mentally shut down when you try to give them a differnt opinion.

Wed, 11/06/2013 - 15:46 | 4128033 Freddie
Freddie's picture

Tooth Fairy Syndrome.  I think most libs suffer from it.  They are conditioned like Pavalov's dogs from TV, Hollywood, NY Times, academia and their slimy friends and colleagues.

Wed, 11/06/2013 - 16:32 | 4128210 InTheLandOfTheBlind
InTheLandOfTheBlind's picture

not unique to libs... kinda prerequisite for the human existence

Wed, 11/06/2013 - 19:40 | 4128825 FredFlintstone
FredFlintstone's picture

My father is very intelligent and very conservative, but clings to the vision of technology solving our energy problems and the hope of unlimited growth for our economy. He joked that all he cares about is that his Corvette will have enough fuel for the remainder of his life. He does care about the future of his children and grandchildren, but has no answers and cannot admit that perhaps his generation may have had it wrong.



Wed, 11/06/2013 - 15:35 | 4128003 Withdrawn Sanction
Withdrawn Sanction's picture

CHS is wrong to think you can make the SS system "fair" (whether by simplicity, loophole elimination, or magic).  It is a transfer mechanism, nothing else. It takes by force from one set of people, and (after a skim) gives to another set of people.  In short, it robs Peter to pay Paul.  Such a system will always be unfair because it is based on robbery.  That is also why it will implode.

Thu, 11/07/2013 - 03:41 | 4129971 macbone
macbone's picture

You are aware that the people who are "robbing" you have paid into the
system all of their fucking working life, aren't you?
This site is interesting but at least half of the comments
Are batshit crazy. "Obamacare" is straight up intergen robbery. Social
Security is a fixable mess though lord knows the gang of thieves in
Washington today are clearly beneath the task.

Wed, 11/06/2013 - 15:10 | 4127893 savedbyfreethought
savedbyfreethought's picture

Owners (property owners/ business owners) don't send their children to school because they know it's a waste of time, instead they tend to keep their children near them so they can learn  how to do business in the real world, only cluesless slaves send their children to schools where the teachers will work them until they are fit to service the owners. 

That's why schools are and always will be indocrination camps. After all slaves are by defintion not owners of their children but no matter what they will always put their children through the same sort of subjugation they themselves went through because in their mind they think it's the only way to succeed financially but in fact it's very rare for sucessful people to come from such background.

Wed, 11/06/2013 - 14:16 | 4127676 Sean7k
Sean7k's picture

How can anybody be so stupid as to even consider this argument? Do you think old people didn't pay into SS when they were young? In money that had more value then then the crappola you contribute now? Was it the old people that declared SS a tax? No, try Supreme Court. How about ACA, is this not a ponzi scheme as well? 

Attempting to create generational warfare is pure zionist bullshit. Unless you are one of their paid bloggers, how can you be so moronic?

Wed, 11/06/2013 - 14:24 | 4127716 Carl Popper
Carl Popper's picture

It is clear there are generational winners and losers with SS.

Why should only those ten or more years from retirement have to take all the benefit cuts?

If there is generational warfare then it is clear my generation and beyond are not winning.

Wed, 11/06/2013 - 14:31 | 4127754 Sean7k
Sean7k's picture

Why is it clear? Because of governmetal projections of benefits? You believe what the State tells you? Blame the people, not the system of rule that brought this monster into being? Not willing to say that Fascist Delano Roosevelt was a zionist patsy? 

How does anyone "win" in a debt enslavement society? You want to complain about THIS injustice? Thus allowing media peopagandists to rule your thoughts and motivations? Do you enjoy being a fool? 

Your complaint is with the creator- government. Want to end injustice? End government.

Wed, 11/06/2013 - 14:59 | 4127882 Professorlocknload
Professorlocknload's picture

"Want to end injustice? End government."

 Classic! Comment to end all others. ++

Wed, 11/06/2013 - 15:20 | 4127952 SpykerSpeed
SpykerSpeed's picture

"You believe what the State tells you?"

No, I believe what economics shows me.  And it's showing me a bunch of old people who are skimming money off the backs of millions of young workers.

Social Security, Medicare, and Medicaid must all be ended.  And they will be.  Young people will shrug and get paid in cash & Bitcoin.

Wed, 11/06/2013 - 15:35 | 4127999 Sean7k
Sean7k's picture

Economics shows you that people didn't pay into the fund? Really? It shows that wages that have been stagnant since the late 1970's, where these generations made more money, in greater numbers are living off of you? I always felt Keynes was the penultimate scam, but you must have discovered another, unless it is just your feeble mind has been polluted with  a substandard education?

Wed, 11/06/2013 - 16:05 | 4128112 Withdrawn Sanction
Withdrawn Sanction's picture

In 1940, Ida May Fuller of Ludlow VT, became the first person to receive a SS check.  She paid in $24.75 to the system.  Over her (long) retirement lifetime, she pulled out over $22,000 from the system.  The current generation of retirees will not be as "lucky" as dear old Ida.

Wed, 11/06/2013 - 16:12 | 4128143 Sean7k
Sean7k's picture

Which has what to do with this argument? Cherry pick data much?

Wed, 11/06/2013 - 17:48 | 4128447 Jean Valjean
Jean Valjean's picture


What difference does it make that people "paid into the 'fund'".  Are you one of those that thinks there is a 'fund' somewhere?

The above comment is correct.  Young people will shrug and form a different system (black market) for their labor.

Wed, 11/06/2013 - 18:03 | 4128478 Sean7k
Sean7k's picture

One, SS is a contract and if I have to honor the contract to pay taxes, the government has to honor the contract to pay SS. Otherwise, we throw out the entire government (which is fine with me). Two, my argument is with generational warfare or can you not read? Division is a typical Statist tool to keep the people from looking at the real problem and it is being employed here. Three, if you can read alittle, you will see I have stated SS is paid from general revenues. Four, the above comment is not correct, if it refers to a future action that has not been demonstrated. Five, if you want to comment, please do so intelligently.

Wed, 11/06/2013 - 22:43 | 4129495 StychoKiller
StychoKiller's picture

"What do you give government that's taken everything?"

"Dreams Come Due:  Government and Economics as if Freedom Mattered," by
John Galt, ISBN:  0-671-61159-3, Simon & Schuster, 1986

"Intelligent" people have known about the Pyramid scheme known as Social Security for quite a while...

Thu, 11/07/2013 - 01:04 | 4129807 malek
malek's picture

One the government makes the rules so it can allow itself to not honor the contract.

Two your "generational warfare" is just a beautified version of "We wuz promised."

Wed, 11/06/2013 - 17:39 | 4128420 Col_Sanders
Col_Sanders's picture

The people are the government - funny thing about a representative republic.

So my complaint is with the people - the "Boomers" and those who came before them who "created" this beast, and continued to feed it over the years.

And sorry, but stupidity isn't an excuse when any fifth grader should have been able to do the math and figure out it wasn't sustainable.

Wed, 11/06/2013 - 17:49 | 4128450 Jean Valjean
Jean Valjean's picture

I am a people.  And I am not the government.  In fact, I feel unrepresented, even when I vote.

Wed, 11/06/2013 - 18:18 | 4128511 Sean7k
Sean7k's picture

Please give an example where people are the government. There is a difference in saying something and actuality. The Constitution was designed to limit democratic influence- this is why only one part of one branch was democratic. This was the intention of the framers, see "An Economic Inerpretation of the Constitution of the Unted States" by Beard.

Blamng the people, when the ruling elite are the only ones with the influence to determine government, is just imbecilic.

Finally, socialism and fascism are never about sustainability, they are about control.

Wed, 11/06/2013 - 14:28 | 4127738 ATM
ATM's picture

It didn't become a tax because a court said so. It has always been a tax and the benefits have all only been a promise. How can anyone suggest otherwise? 


ACA is one more scam of promised benefits, forced payments and an empty bag when it is done.

Wed, 11/06/2013 - 14:43 | 4127775 Sean7k
Sean7k's picture

No, the court made it tax. Before, it had been sold as a contribution into accounts for each ndividual. The SCOTUS determination made it a tax paid from general revenue, placing it behind debt payments in priority. It also removed any personal claim. 

See, Fleming v Nestor

Wed, 11/06/2013 - 14:46 | 4127816 MachoMan
MachoMan's picture

The SCOTUS demanded that SS be a tax (thereby creating law) or simply interpreted the law as stating such...

Wed, 11/06/2013 - 15:25 | 4127972 InTheLandOfTheBlind
InTheLandOfTheBlind's picture

being sold as not a tax and being not a tax are two distinct things... if i were you, i would ponder on that distinction and do some self reflecting of why you were too stupid to realize it before the scotus decided to tell you.....  sorry for the hostility but you are kinda being a dick

Wed, 11/06/2013 - 15:41 | 4128020 Sean7k
Sean7k's picture

Why? Because the SCOTUS decided to make the law what they wanted to? Like in so many other decisions before and after? Perhaps you should contemplate the workings of totalitarian government? Try reading the "Rape of Justice" by Mullins.

I'm being a dick? Fuck you, you miserable piece of zionist scrotum. If you lack the ability to translate propaganda pieces like this one, then you need to be shocked.


Wed, 11/06/2013 - 16:21 | 4128148 InTheLandOfTheBlind
InTheLandOfTheBlind's picture

why? - because it would be good for your mental health... you might want to take your blood pressure medicine and i think your insulin is low.. and to allow you to troll some more - what the hell do you mean by translate proganda and being shocked?  nothing shocking about any of this... i am smart enough to realize that most anti-zionist are as much shills as the zionists they claim to argue against...  i am sick of you anti-tribal tribalists... hypocrites is the nicest thing anybody can say about your type...  

Wed, 11/06/2013 - 16:25 | 4128187 Sean7k
Sean7k's picture

Why is it good for my mental health? I should contain my frustration and let it eat at me? I should welcome your insults or other's stupidity? Why would I have medicine? Medicine is usually for morons that lack any real medical education or dietary restraint. Insulin is a function of diet, how would you know my diet? 

If you can't defend your argument, making an appeal through empathy is just...typical propaganda bullshit and sad. 





Wed, 11/06/2013 - 16:38 | 4128218 InTheLandOfTheBlind
InTheLandOfTheBlind's picture

judging by your tone and language, it already is eating you... but go ahead and rail against those that never stood against you... i am sure that helps... seriously man, if you are let me get under you skin for what little i have said, i would suggest a hobby...  and what was my argument other than you being a dick, which you keep proving over and over again... other than that all i said it was on you for believing that the aca wasn't tax before scotus told you... that is all... keep railing against those windmills...  those aca death squads wouldn't even need to worry about you.  and my counselling fee can be paid in bitcoins or silver....  no paper please

Wed, 11/06/2013 - 18:19 | 4128393 Sean7k
Sean7k's picture

You might want to read for comprehension, my reference to SCOTUS was concerning SS. Typical of the youngsters, can't read. You must be king...

Wed, 11/06/2013 - 17:10 | 4128353 HoleInTheDonut
HoleInTheDonut's picture

Why would I have medicine? Medicine is usually for morons that lack any real medical education or dietary restraint.

Why would you be disappointed to hear SS is a ponzi scheme?  Believing in SS is usually for morons that lack any financial education or personal finance discipline.

Wed, 11/06/2013 - 18:22 | 4128526 Sean7k
Sean7k's picture

How is that quote relevant to your comment? Where did I express disappointment? Do you read what you type? Or just let your brain hemmorage on the keyboard? Because Headbanger has an exclusive on that.

Wed, 11/06/2013 - 16:13 | 4128142 monad
monad's picture

ACA is the data collection for technofeudal slavery. From cradle to grave if you're not quota the State tells you you're being shipped to Adak but instead they harvest your organs and mulch. If your profile deviates from your assigned station, you get reassigned to Adak. You may have to fuck your doctor regularly so they don't designate you unfit. When you exceed the universal standard age of usefulness, you are assigned to the wonderful, free "retirement village".

Wed, 11/06/2013 - 18:11 | 4128494 CrashisOptimistic
CrashisOptimistic's picture

FYI, ZH, the item never discussed about Social Security is how profoundly racist it is.

Minorities are now a majority of the workforce.  They pay the most into Soc Sec, which funds present retirees, who are overwhelmingly white.


Black folks simply do not have the same life expectancy.  I didn't make those rules.  It's simply true.  They won't collect.  They pay in and they don't collect.

THIS . . . is the ugliest part of SS.

Wed, 11/06/2013 - 15:25 | 4127970 rubiconsolutions
rubiconsolutions's picture

@Sean7k - Sometimes a cigar is just a cigar. Social Security is in fact a Ponzi scheme with all the attributes thereof. When you "contribute" to Social Security by way of FICA taxes where does that money go? To the general fund and current recipients (read Helvering v. Davis and Flemming v. Nestor). And when you are old enough to collect it where will that money come from? From those paying FICA taxes at the time. So in fact it is generational theft. And by the way, you don't contribute a dime to Social Security. Nobody does. It is stolen from you by way of immoral direct taxation. Right now the unfunded liabilities of Social Security is $16.7 Trillion. Medicare is underfunded roughly $87.7 Trillion and Medicare Part D (the relatively new prescription drug program) is underfunded $22.1 Trillion. How is that not generational theft? Someone is going to pay the bill and it will be the next generations that do so either by increased taxation or forfeiture of the money that was stolen from them through currency debasement and reduced benefits.

Wed, 11/06/2013 - 15:55 | 4128072 Sean7k
Sean7k's picture

Social Security now goes to the general fund, however, it used to go to the SSA to be invested (treasuries) and earn interest. This money was used by Congress(thus the promissory notes for this debt), which depleted the fund. The court rulings allowed the State to sidestep this inconveniet problem. 

The money to pay for SS will come from the general fund, that is funded by current tax revenues, because that is how government repays debts to itself. I don't contribute because it is stolen? Then I guess I don't pay any taxes. What a moron.

Underfunded numbers are just that, underfunded numbers. As long as Congress prioritizes SS over miltary spending, SS will get funded. This has nothing to do with generational theft, IT HAS TO DO WITH STATE THEFT. Same as GM underfunding a pension plan and dumping it on the taxpayers.

The problem is you are supporting a divisive piece of propaganda that misdirects the blame from the State to arbitrary citizen groupings. All government is a ponzi scheme, but it depends on a populace that is divided and ignorant. This article reinforces that meme. IF you can't see that, then you probably will be comfortable when Clinton gives you a cigar.

Wed, 11/06/2013 - 20:02 | 4128935 rubiconsolutions
rubiconsolutions's picture

@Sean7k - "The problem is you are supporting a divisive piece of propaganda that misdirects the blame from the State to arbitrary citizen groupings." So individual citizen groups bear no responsibility what so ever? It's all the states fault? The state has no more power than the citizens allows it to have. And people in this country across the board have given government almost unbridled power by continuing to elect then reelect the same people over and over again. Ida May Fuller bore no responsibility at all for robbing her children and grand children when she, er, contributed $24.75 to the system and drew $22,288.82 in lifetime benefits?

And yeah, you don't contribute. To contribute implies doing something of your own volition and willingly. You contribute to your church. You contribute to a charity. You DON'T contribute when you pay taxes. At least if you're a normal person. You do so because a group of people with a monopoly over the use of force tells you to pay them or else you risk losing everything you've worked for, perhaps be imprisoned. It isn't a contribution when a gun is being held to your head. 

Finally, you said - "it used to go to the SSA to be invested (treasuries) and earn interest." You have got to be kidding. And where does this so called interest come from? The creation of more debt that's where. Government can't create interest except through stealing it from you and I. Government creates nothing.

Wed, 11/06/2013 - 23:01 | 4129547 StychoKiller
StychoKiller's picture

[quote] The court rulings allowed the State to sidestep this inconveniet problem.  [/quote]

Apparently, you don't understand how the Court System works.

The Supreme Court examined the facts and the Law(s), then explained them, they DID NOT

give the State anything new.

Give a look-see to these:

Saving Social Security, Part 1:
Part 2:
Part 3:
Part 4:
Part 5:

Thu, 11/07/2013 - 01:07 | 4129812 malek
malek's picture

 it used to go to the SSA to be invested (treasuries) and earn interest

When the federal budget is constantly running a deficit, your stated belief turns into a pure bookkeeping fiction.

Wed, 11/06/2013 - 16:38 | 4128236 DOT
DOT's picture

I don't think you need a qualifier in front of "theft". The money is stolen after those to be robbed are numbed by propoganda. The money is then turned over to political allies and used to consolidate and increase the power of the elites. Taxes is taxes and the sheeple don't have a say in how they are spent.

Generational conflict is a result of government planning.

Wed, 11/06/2013 - 14:24 | 4127714 RSloane
RSloane's picture

One of the insidious elements of Obamacare is the wholly made up projected revenue streams from young people who they thought would immediately sign up for Obamacare. They were not expecting so many to say....."yeah go ahead and fine me".

Wed, 11/06/2013 - 14:31 | 4127760 NewAmericaNow
NewAmericaNow's picture

Many have been fooled to believe they must participate in Social Security. That is entirely untrue. It is voluntary and you can opt out at any time.

Wed, 11/06/2013 - 14:56 | 4127867 moonman
moonman's picture

Thanks Harry Reid

Wed, 11/06/2013 - 15:20 | 4127954 Freddie
Freddie's picture

Most of those young people voted for Hope & Change so let em eat cake.  I'm gettin mine.

The young better pay and the seniors & baby boomers better go visit Obama's death panels. 

These oldsters need to become Soylent Green.

"Soylent Green - it's people!" "Some of them even went to Woodstock!"  "Damn you!"  "Damn you all to hell!"

Wed, 11/06/2013 - 14:05 | 4127620 ParkAveFlasher
ParkAveFlasher's picture

These kids today, waiting around for their parents to die so that they would have a hope of owning a home that could be paid back in a reasonable length of time (like, instantly).  What's wrong with them?

Wed, 11/06/2013 - 14:04 | 4127623 outamyeffinway
outamyeffinway's picture

The reason I pay into it is I have no damn choice.

Wed, 11/06/2013 - 14:09 | 4127641 HoofHearted
HoofHearted's picture

Unless you find a way to go Galt. Or if you do a lot of barter. Or...get creative. We can starve the beast if we try hard enough.

I'm 39. I've been paying into the system for tweny years now, and I know I'll never see a dime from this. If they'd let me opt out and promise I'd never take anything from Social Security, I'd do it now. Beyond the 10% I put away now, I could put another 6.2% at least and 12.4% if my employer would give me that portion. I'd do okay on my own....

Wed, 11/06/2013 - 14:13 | 4127667 semperfi
semperfi's picture

If I was 18 and knew what I know now at 51 I would refuse to be a tax donkey.  I would starve the beast.  I would structure my life accordingly. 

Wed, 11/06/2013 - 16:04 | 4128107 twh99
twh99's picture

I agree with you. 


I have said the same thing for many years.  Unforutnately I am almost 50 and my offer will be coming off the table soon.

Wed, 11/06/2013 - 14:17 | 4127682 semperfi
semperfi's picture

yes you do - its just that a radical change would temporarily upset your current level of comfort, not something people are willing to do

Wed, 11/06/2013 - 15:05 | 4127894 forwardho
forwardho's picture

You don't pay into it.

It is taken from you.


Wed, 11/06/2013 - 17:37 | 4128414 DosZap
DosZap's picture

Well, is this news?, it's been this way for 60+ years.

Wed, 11/06/2013 - 23:10 | 4129570 StychoKiller
StychoKiller's picture

Do some research on the UCC (Uniform Commercial Code), there may ways out of these Unconsitutional taxes...

Wed, 11/06/2013 - 14:10 | 4127651 McMolotov
McMolotov's picture

Ida Mae Fuller, the first Social Security recipient, paid $44 in Social Security taxes and ended up collecting $20,993 in benefits.

Unsustainable (and immoral) from the beginning.

Wed, 11/06/2013 - 15:23 | 4127963 Freddie
Freddie's picture

Set up by a collectivist Democrat named FDR who devalued the dollar, stole the public's gold and got us into a World War. 

Wed, 11/06/2013 - 14:11 | 4127654 Wicked Old People
Wicked Old People's picture

All those born after 1957 merely exist as meals for those born before this time. When this dynamic stops, everything will change.

Wed, 11/06/2013 - 14:39 | 4127794 ozzzo
ozzzo's picture

Are you sure it isn't 1965?

Wed, 11/06/2013 - 14:59 | 4127877 Running On Bing...
Running On Bingo Fuel's picture

You are correct Sir.

Wed, 11/06/2013 - 16:10 | 4128134 JungleCat
JungleCat's picture

Born in 1964, so I am well fucked. Not by beautiful women, but by SS. At least I have known about my status for 10+ years, and this is why I have not put any money into anything labeled "IRA". Cuz you know they are gonna call you a selfish scheming fatcat for having that IRA and punish ya for having it.

Wed, 11/06/2013 - 14:16 | 4127677 Hedgetard55
Hedgetard55's picture

The intergenerational Ponzi of all Ponzis. But Bruce Krasting thinks it is fixable.  :~)

Wed, 11/06/2013 - 14:55 | 4127863 Hal n back
Hal n back's picture

it ultimately is fixable--its the fix thats the problem. actually its the govt design of social security and medicare which is the problem and since govt does not study history we are doomed to repeat it with ACA. a work in progress.


Wed, 11/06/2013 - 15:23 | 4127959 Being Free
Being Free's picture

Of course it's fixable.  Just get HHS to set up a website that people must use to sign-up for benefits.  Problem solved!

Wed, 11/06/2013 - 14:19 | 4127684 Carl Popper
Carl Popper's picture

As the oldest gen Xer I saw what happened to defined benefit plans. When i used to have real jobs I was always a couple years too late to qualify for them. I would correct the above comment to say that everyone born after 1960 will be net losers in this ponzi.

Wed, 11/06/2013 - 14:32 | 4127735 smartstrike
smartstrike's picture

It's for our children right? When was the time you did anything for children Have you ever written anything on behalf of children other than this right-wing think tank drivel.

Stealing money from people who paid into the system is criminal: a crime that enabled Reagan and Bush to lower taxes on the rich. It's time to raise taxes on the rich and repay money stolen from the Social Security.

How many times are you going to rehash the same feeble minded bullshit. If you want to talk about Ponzi schemes, saving for retirement is a Ponzi scheme, an impossibility for all, yet you never mention this, why! Is it because you know its a con game but you prefer to parrot the self-sufficiency trap promoted by the bankers.

Look you shill, when you cut SS, the money will  just go towards higher interest payments to the bankers, rich and entitled--there is not going to be any decrease in  cash payouts by the government; but the money is going to go to the few instead of the many.

Wed, 11/06/2013 - 14:50 | 4127837 shovelhead
shovelhead's picture

It's Bushs fault.

Always reliable.

Nothing about Clinton's much heralded 'Surplus'. Guess where it came from.

Yes, I know you didn't.

Wed, 11/06/2013 - 14:31 | 4127752 ozzzo
ozzzo's picture

New trust fund, just like the old trust fund. How about if we wake up and realize that representative government is a scam. The "representatives" will always steal the resources. The whole purpose of the RG scheme is to concentrate control of resources so that they can be stolen.

Wed, 11/06/2013 - 14:46 | 4127768 Wicked Old People
Wicked Old People's picture

Hi Carl Popper; I was born in 1960 and you are right 1960 is the year that social security gets pushed back so you can't get it until your 65 years old while our slightly older friends will be drawing soon enough. However, the real generation who no one has STILL advertised to (genX) probably began a couple of years earlier around 1957. I'm not vain enough to think I'm the first guy.

Wed, 11/06/2013 - 14:46 | 4127817 edifice
edifice's picture

I think the accepted Gen X birth years are:  1961-1981.  Basically, if you turned 18 ("adult") before Y2K, you're Gen X.  Millennials are born after 1981.  It's such an amorphous topic, though, that it's hard to define.

Wed, 11/06/2013 - 15:28 | 4127980 Freddie
Freddie's picture

These Gen X and Millenials just need to delay taking Soc Security until they are a bit older like 78 or 79.  They will still live to be 90.  Problem solved.

Sadly, the illegals will probably loot it first.   I am not sure what the problem is.  As long as I  get mine!

Wed, 11/06/2013 - 18:50 | 4128620 scrappy
scrappy's picture

XR62 Year of the Tiger, also born in the month of the Tiger.

SS Sucks.


Wed, 11/06/2013 - 14:36 | 4127781 nottfar
nottfar's picture

Take all Federal employees off their plush retirement and health benefits and put them on social security and medicare. Put the funds from government retirement and healthcare into the above mentioned programs to help repay some of the money they stole; fixed

Wed, 11/06/2013 - 15:46 | 4128036 SmallerGovNow2
SmallerGovNow2's picture

Fed retirement is anything but "plush"...

1% per year served.  So if you work 35 years you get 35%.  so if you were making 85k per year you get less than 30k per year in retirement.  you call that "plush"???  WTF...

Wed, 11/06/2013 - 17:53 | 4128460 A. Magnus
A. Magnus's picture

That 30K in retirement is more than I make working at a full time job. Fuck yourself and your welfare state bullshit. ANY money you make because people are being robbed at gunpoint to provide you with a salary is fucking plush, you spoon-fed little statist cunstsuck...

Wed, 11/06/2013 - 17:59 | 4128469 Retronomicon
Retronomicon's picture

Sounds pretty plush compared to 0% per year working in the private sector.

Wed, 11/06/2013 - 16:23 | 4128176 newworldorder
newworldorder's picture

RE: notfar

Dont know if you left the "sarc" comment off on purpose BUT,

Under our current political system, there will always be another group of "new open border immigrants," in another 10 years to legalize. At this rate, we can plan for a new 10 million influx every 10 years. They will commander any $$ saved as a result of your suggestions.

Wed, 11/06/2013 - 14:39 | 4127786 Wicked Old People
Wicked Old People's picture

How weird is it that other older people are called by the dignified terms Senior Citizens and Booming Babies while those younger have a big X across their generational faces. That's fucked up.

Wed, 11/06/2013 - 14:53 | 4127855 shovelhead
shovelhead's picture

Because Zorro already had Z.

Wed, 11/06/2013 - 14:41 | 4127796 sangell
sangell's picture

How about not allowing women to collect SS until 4.5 years later than men to account for their longer lifespans?

Wed, 11/06/2013 - 15:24 | 4127968 SpykerSpeed
SpykerSpeed's picture

This is such a wonderfully troll idea... I love it!

Wed, 11/06/2013 - 16:45 | 4128269 DOT
DOT's picture

This proposal has merit!

Sort of an equalizer for the maternity coverage males are forced to carry under the PPACA.

Wed, 11/06/2013 - 14:53 | 4127854 Bob Sacamano
Bob Sacamano's picture

"Why should someone earning $1,000,000 pay less a percentage than someone earning $10,000?"

Because the way the system was designed is that everyone "contributes" relatively equal amounts and gets out relatively equal benefits.  

I understand everyone now wants to turn it into welfare for the elderly (= means tested benefits).

Wed, 11/06/2013 - 15:04 | 4127895 Hal n back
Hal n back's picture

almost retired I paid the max into the system every year.

42 years plus some early teen years earnings.


I calculated what I and employer paid in assiging a 4% earnigns rate for the 42 years--today I get back 2.5% of my "principal" account and when I die that becoems a part of the soc security trust--fair--nope--


HAd I kept the money I'd be better off


Medicare--I pay into the syetm not just base fee but higher becasue I make more money. The guy who came to us 11 years ago works and gets the same payout benefit for medicare that I have after paying in 42 years--and at a higher dollar amount thant the guy, probably who just woreked 11 years--is that fair--


we cannot continue basing everyting on what people are capable of paying. to balance the deficit-we woudl have to triple or even more the tax that high earneirs pay--whcih woudl put them above 100% federal tax--then yiu have state income and sales and property  tax, medicare extra, social sec tax for making too much, utility taxes--


waych for some nut in congress propose just that--ther ear eplenty of nuts there.


my younger wife--her individual  policy was cancelled--premium up 92% but we do get to keep same doctors and hospitals. as this spreads and people understand they are paying 5,000 or more premium which is like a tax, the resentment for govt and lower income folks  wiill expand.


The young an dhealthy wil cointinue to vote democratic cause they like the idea of only having to buy insurance after the fact.


Margaret Thacker was right.





Wed, 11/06/2013 - 15:09 | 4127913 lasvegaspersona
lasvegaspersona's picture

....because boomers paid for their parents social security in the same system...

Boomers were not asking for increased benefits they were asking for lower taxes. Politicians saw that higher benefits could be paid out (and votes obtained) by borrowing. 

To claim boomers were asking for this is to say that boomers (as young people) were planning far ahead looking towards their own retirement...ha ha ha one seems to be that fatsighted...

Wed, 11/06/2013 - 15:25 | 4127975 SpykerSpeed
SpykerSpeed's picture

Boomers continually voted for the greedy Dem/Rep politicians again and again, and they worshiped Ronald Reagan who jacked up the national debt massively.

The boomers will get what they deserve.  Give it a couple years.

Wed, 11/06/2013 - 16:52 | 4128293 DOT
DOT's picture

Everyone gets "what they deserve" according to our political mind bent. When the PTB see an opportunity to create a new victim class: Whoops, there it is.

Are the youngsters paying attention? 

All your life you have been lied to by those that seek to control you. Did you think the (SS) laws were written to protect you?

Wed, 11/06/2013 - 15:28 | 4127981 newworldorder
newworldorder's picture

Some observations that need to be made.

-  Boomers and their older  generations fully bought into SS or were forced to believe in the ponzi promises that were made to them. They funded SS since they entered the workfoce in the late 1960's. This is a fact.

-  Starting with LBJ and every other D/R administration, the "SS trust fund" was looted to pay for social services for the disadvantaged, as well as for expenses of Federal Government General Obligations. The IOU's in the trust fund are nothing more than promisses to pay as you go.

-  As a country, we have gutted our Industrial base with all manner of Trade agreements, lost millions of high paying jobs, while creating millions of low paying/part time jobs.

-  Accepted open border policies that flooded our country with low skill, low income, low education illigals that do jobs that "some Americans wont do." And by the way, we increased payments to those Americans that wont do certain work, by providing almost an endless minimal safety net.

-  The Titans of Industry, the Democratic Party, Labor Uniions as well as Minority Organizations are fully committed to legalizing 11 to 15 milliom "open border immigrants." This will further reduce employment opportunities for both US born monorities and nom minorities alike.  Remember that under Current Affirmative Action Laws, once granted "right to work authorizations" similar to the DREAM ACT group, ALL path to citizenship "immigrants" will move to the head of the hiring line - in many cases ahead of current US born minorities as well as most US born non minorities.

-  The fact that black political leaders are allowing this to happen to their black minority community, is a testament to their complicity in the coming economic collapse within their community.

-  All politicians and some Americans know what is going on. The rest will find out when the checks stop coming or are so inflated that the SS check will be almost worthless.

Wed, 11/06/2013 - 18:52 | 4128630 scrappy
scrappy's picture

Well said sir.

Wed, 11/06/2013 - 15:29 | 4127983 Oreilly
Oreilly's picture

"If the system DOES OR doesn't change, the young workers currently paying payroll taxes to fund their elders' retirements will get little to nothing out of the system."

There, fixed it for you ... you're welcome.

Social Security was originally billed as a lot of things, and its rules were designed for a completely different population demographic than exists today.  Trouble is that so many outside that original demographic have come to depend on it as almost their sole income, and taking it away places more than a few people at risk of outright starvation.  Is the country worried about Grey Panthers rioting?  Probably not.  And since the vote is easily fixed by one trick or another they aren't really in need of their votes anymore, either.  Witness the fact that SS has not risen at rates even close to real inflation for the past several years, and is not likely to do so for the next few.  That used to be sacrilege on the part of politicians, but not any more.  I am of the opinion that radical changes are coming to social security whether planned or not, and while it might be greeted by cheers from some, it will exact a great human cost.

The true problem with the coming changes is they will not be made following any sort of model or thinking as CHS has hinted at.  They will come with hidden ways to enrich those parasites already getting bloated off the system, all the while being trumpetted as fair and beneficial for all.  We'll be left with a different system, but one still fundamentally broken and wrong.  A true change to SS would involve getting rid of it entirely and making people plan their own damn retirement years.  The feeble old or infirm may expect some mercy from the population (key word is may, as decades of single parent families and children growing up not caring about their elders hasn't endeared the older generation to the younger ones), but the rest should work for their daily bread.

I understand that the bully boys and angry youth that stalk this blog want to burn the system down and hang all those responsible ... or something to that effect.  Couldn't care less whether revenge is enacted or not.  I just want to continue to lead the life I feel best to lead, and don't want complete strangers singling me out as their meal ticket.


Wed, 11/06/2013 - 15:35 | 4128000 wagthetails
wagthetails's picture

we have known about this issues for 30 years.  the only way to fix it was to realize that the boomers faced a unique situation, and they should have paid an additional premium that would have gone back to themselves (forced saving).  but they did nothing.  and the system will run dry.  I think most younger people have already accepted that they will pay but receive nothining...but i believe the greediest generation will eventually drive an increase in FICA rates (but not exactly until the majority of boomers are out of the workforce). then our kids will finally pull the plug on the boomers. 

but the again, the kids remain keep inflating their deferred taxes! 



Wed, 11/06/2013 - 16:09 | 4128123 Sean7k
Sean7k's picture

We have known about these issues since 1938 and before. You cannot fix socialist government because it is the enemy of liberty. This is what it is designed to do: transfer wealth from a majority to a minority. ALL GOVERNMENTS do this, because when a person decides to rule another, they are tyrants and all tyrants are the same.

The boomers were not the congressman or presidents that created this problem, but they did continue it. Why? Well, if all generations have the same overlords, they do the same things- enrich those overlords and support slavery. Pull the plug on government and all generations will benefit in the long run.

Wed, 11/06/2013 - 15:36 | 4128006 tony1787
tony1787's picture

The SS problem is why (I believe) there is the huge push for amnesty for illegl aliens by BOTH parties. It explains why many conservatives are for amnesty besides the constitutional loathing liberals/progressives. More workers!! More taxes!! Problem solved.

Wed, 11/06/2013 - 15:48 | 4128041 NOTaREALmerican
NOTaREALmerican's picture

Re:  More workers!! More taxes!! Problem solved.

Ponsi scams only works if you've got a continous supply of new marks.   Beside,  more workers lowers wages,  I'm pretty sure the Red Team has always supported lower wages for their Big-Corp donors.  The Blue Team loves more workers because they'll most likely vote Blue Team (which they wouldn't IF the Red Team had any brains.  Immigrants hate "those people" as much as the white-trash does, but the Red Team is too stupid to figure this out).  

Wed, 11/06/2013 - 19:04 | 4128680 Bazza McKenzie
Bazza McKenzie's picture

That might be what the brain dead are thinking.  But they are not going to get more workers.  They are going to get more welfare dependents.  So the total welfare cost will go up with little gain on the income side.

Thu, 11/07/2013 - 17:36 | 4132542 tony1787
tony1787's picture

But the Fed can send printed money to the treasury for all those new welfare recipients ...SSI doesn't get money from anything but taxation has it's own balance sheet. Analysts look to see if SS can support itself and it cannot. More workers will make it look like SS is recovering because the extra welfare recipients aren't part of the equation (for SS analysts).

Wed, 11/06/2013 - 15:40 | 4128019 GubbermintWorker
GubbermintWorker's picture

Shit, medicare is a whole lot bigger problem than is SS>

Wed, 11/06/2013 - 16:13 | 4128145 newworldorder
newworldorder's picture

No so much a worry for medicare. There is some premium payments monthly, and premiums can be increased.

Midicaid however, is fully free program to those that receive it. Look at the number of new enrollments as a result of the ACA. They are signing up more medicaid people than ACA people.

Wed, 11/06/2013 - 15:42 | 4128022 assembler
assembler's picture

Even though it is grossly unfair to those who have paid social security tax and then went on to pay into another retirement program, your first suggested "fix" has already been implemented in the social security ammendment called the "Windfall Elimination Provision" of 1983.

As a teacher who was first an engineer, I will receive nothing for those years I paid in to social security. That is a matter of law, regardless if the system collapses or not. If the rest of your ideas have as much research as this one, then I think we should look elsewhere for guidence.

Wed, 11/06/2013 - 15:43 | 4128026 NOTaREALmerican
NOTaREALmerican's picture

Get your goddamn commie libertarian hands off my government medicare,  I'm ENTITLED to the government program.  Why don't you go and find some real socialism some place.  I never got no government hand-out, I worked for that government program!!

Wed, 11/06/2013 - 16:04 | 4128109 ThirdCoastSurfer
ThirdCoastSurfer's picture

Clearly wages are almost always the largest component of any industry and this applies to healthcare especially. 

What I'd like to know is, relative to other professions, and besides barriers to entry and other non-competative tactics, what justifies the salary of say: a pharmasist at $120,000+ as a base? Is it really as difficult a responsibility as a police captain at $100,000K? 

We've probably all seen the TV sitcom "Scrubs",  and if you don't think that show is a fairly accurate representation of interns, then you lead a charmed life. Many experienced nurses know just as much as physicians. Many "pill-poppers" know about as much about the narcotic section of the Physician's Desk Reference as a pharmasist. Medical schools, almost across the board, are nothing more than expensive barriers to entry and yet you can get a degree in India that is accepted just as if it was from the US except for the stigma -which is just another form of bullying meant to belittle people from practicing medicine, not "best and brightest professialism".  Being able to memorize all 206 bones of the human body may be a good way to induce a high drop out rate from first year med school, but if 90% of physician's can not recite them even 3 years later, is "education" the real intent?

Clearly tort reform is also needed as attorneys routinely take 45% of the verdict amounts leaving them and the injured victum at roughly equal "consideration", which is ridiculous. If you've ever seen an attorney buy a Lexus and some cocaine on the back of a settlement for a paraplegic with a lifetime of medical expenses, then this too has to change. 

But will it? Of course not, so it's true when they say that you'll reap what you sew, just don't expect it all at once.  

Wed, 11/06/2013 - 16:19 | 4128163 justsayin2u
justsayin2u's picture

Charles - that thinking is old school bro.  The treasury sells bonds to benjie who credits the treasury and then the problem is solved.  Then we "pay" benjie the interest on the treasuries and he immediatley credits it right back to us.  Thimple - no interest financing for around 5 trillion should get us over the hump - or at least until the goobermint collapses.

Wed, 11/06/2013 - 16:21 | 4128167 Seal
Seal's picture

Bruce Krasting has the best idea to slowly disable the whole Ponzi known as SS by allowing people to opt out.

Wed, 11/06/2013 - 16:26 | 4128190 roadhazard
roadhazard's picture

They'll make a web site for that.

Wed, 11/06/2013 - 16:23 | 4128178 roadhazard
roadhazard's picture

I paid for your grand ma and grand paw or mom and dad and never bitched.  Now it's a world of whiners. 

Wed, 11/06/2013 - 16:43 | 4128252 Peter Pan
Peter Pan's picture

The Social Security system might have still withstood demographic headwinds had contributions not been confiscated by government for pointless expenditures and had Bernanke not destroyed interest rates.

Had those contributions been poured into income generating ventures and infrastructure, the present day result might have been avoided.

Wed, 11/06/2013 - 16:55 | 4128302 DOT
DOT's picture

I will not miss the social security I ain't got.

Even the name creeps me out.

Wed, 11/06/2013 - 17:01 | 4128323 chistletoe
chistletoe's picture

In addition to the social security deduction, the kids are facing 15% fed, state and local taxes, 15% medical insurance, and a huge bill for their student loan.  Yesterday, Tyler ran an article declaiming the youth of today who live in their parents cellars and refuse to get a job or to form a household and buy a house.  Now do you begin to understand why ???????

Wed, 11/06/2013 - 17:29 | 4128399 Papasmurf
Papasmurf's picture

If you eliminated the federal reserve and replaced it with gold & silver currency, folks could plan for their retirement.  Politicians would have to tax to support their spending, thus a negative feedback system would resolve the problem within two election cycles.

Wed, 11/06/2013 - 19:10 | 4128690 monad
monad's picture


Wed, 11/06/2013 - 19:13 | 4128712 RMolineaux
RMolineaux's picture

If there is generational injustice in the Social Security retirement system it is because wages have stagnated for the last five years while SS retirement benefits continue to be adjusted upwards according to the consumer price index.  This means that working people are receiving less protection than retirees.  It will not be long before the younger people realize this and shape their politics accordingly.  A wiser policy of adjustment of benefits in payment will take this phenomenon into account and devise an index that will provide for the lower of the movement of wages or CPI.  As a current recipient I see the necessity for this even though it will require a small sacrifice on my part.

Wed, 11/06/2013 - 19:32 | 4128745 RMolineaux
RMolineaux's picture

For reasons unknown to me, my earlier comment on this article has disappeared.  In it I pointed out that the SS system is not a ponzi scheme but rather a successful insurance program that has been in continuous operation for 70 years, with only one major adjustment.  The Social Security Trust Fund is alive and well.  While current disbursements exceed contributions, the fund has over a trillion dollars in special US government bonds, and its solvency can be assured by a few small adjustments.

Wed, 11/06/2013 - 20:53 | 4129147 SKY85hawk
SKY85hawk's picture

Very few people know that FICA stands for Federal Insurance Contribution Act.

The system would be much better if it was run according to GAAP.

Imagine what the Trillion dollars would be worth had all contributions been invested in Interest bearing stuff?

A trillion dollars in debt at zero % would be called FRAUD in the real world!  

Wed, 11/06/2013 - 20:07 | 4128968 BitingTruth
BitingTruth's picture

Here we go again..."generation" blaming.  Remember, geniuses, SS was created in 1935.  It was purposely set with very low contribution rates to "get it started" and not impact the economy significantly.  Why does everyone assume that "economists" or administrations have this wonderful, philanthropic prescience that "considers" the future past theirs?  You all want benefit "you".  Capitalism, like SS, is a game of musical chairs.  One, or two, (or now 100) chairs are purposely "removed" (profit) so that someone else takes the hit.  "Growth" is a illusory lie built upon defining "what" gets counted as "economic".  If we accounted for our Baby Boom mother's labor, their mother's labor, "self-serve" transitions, automation, computers, and now should all see clearly that Capitalism has never generated "growth"...just a steady (now accelerated) grab by the rich and a bust for the masses...who accept it with "quiet desperation" they all anonymously die daily.  "The American dream"?  Time to wake up.

Thu, 11/07/2013 - 00:58 | 4129799 malek
malek's picture

 Lower the total Social Security tax to 10% but apply it equally to all income.

Yup, and suddenly the top tax rate is 39.6% + 10% = about half of your income. Hurray, the rich will pay all the promised bennies! Not, mathematically impossible.

Any surplus would go into a true Trust Fund that uses the cash to buy Treasuries, other government bonds and AAA corporate bonds.

Absolutely <double facepalm>.
If you have a demographic bulge or decline this cannot work - there is no place to invest all those monies and expect a true return on them all!!!
This is equally true for Trust Funds as much as for "401k"s or whatever.
So as no one can or wants to stock up on food for 30 years, the only way is for the future retirees to plan ahead for continously lowering their cost of living so they can cope with the inevitable decline of their pensions in true purchasing power.

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