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Congress Proposes A Chilling Resolution On Social Security
Submitted by Simon Black via SovereignMan.com,
On August 14, 1935, President Franklin Roosevelt arrived at his desk to sign the Social Security Act into law.
It had been a contentious legislative process, something like the Obamacare of its day.
Fiscally conservative politicians derided the program for its obvious long-term costs, the massive bureaucracy that it would create, and the huge tax increase that it represented on workers.
But Roosevelt was able to find support, and the law was passed.
And just before signing it, he proudly proclaimed that the law would go down in history “as a protection to future administrations of the Government against the necessity of going deeply into debt to furnish relief to the needy.”
Needless to say, that didn’t happen. Quite the opposite, actually.
Just like most western governments, the US government has gone deeply into debt to fund its social insurance programs.
Officially, the US government is now $18.5 trillion in debt, and Social Security is the biggest financial sinkhole in America.
Social Security’s various trust funds currently hold about $2.7 trillion in total assets; yet the government itself estimates the program’s liabilities to exceed $40 trillion.
And Social Security’s second biggest trust fund, the Disability Insurance fund, will be fully depleted in a matter of weeks.
The trustees who manage these massive funds on behalf of the current and future retirees of America are clearly concerned.
In the 2015 report of the Social Security and Medicare Board of Trustees they state very plainly:
“Social Security as a whole as well as Medicare cannot sustain projected long-run program costs…”, and that the government should be “giving the public adequate time to prepare.”
Wow.
Now, we always hear politicians say that ‘Social Security is going to be just fine’. So this Board of Trustees must be a bunch of wackos. Who are these guys anyhow?
The Treasury Secretary of the United States of America, as it turns out. Along with the Secretary of Health and Human Services. The Secretary of Labor. Etc.
These are the folks who sign their name to the report saying that Social Security is going bust, and that Congress needs to give people time to prepare.
And prepare they should.
The US Government Accountability Office recently released a report showing that tens of millions of Americans haven’t saved a penny for retirement; and roughly half of Baby Boomers have zero retirement savings.
This means that there’s an overwhelming number of Americans pinning all of their retirement hopes on Social Security.
Bad idea. In a recently proposed resolution, H. Res 488, Congress states point blank that Social Security “was never intended by Congress to be the sole source of retirement income for families.”
Apparently they got the message from the Social Security Trustees and they want to start preparing people for the inevitable truth.
This is no longer some wild conspiracy theory.
The Treasury Secretary is saying it. Congress is saying it. The numbers are screaming it: Social Security is going to fail.
Ultimately this is a just another chapter in the same story– that government cannot be relied on to provide or produce, only to squander and fail.
Sure, their intentions may be noble. But this level of serial incompetence can no longer be trusted, nor should we be foolish enough to believe that some new candidate can fix it.
If you’re in your fifties and beyond, you’re probably going to be OK and at least get 10-15 years of benefits.
If you’re in your 40s and below, you have to be 100% prepared to fend for yourself.
Fortunately you have time to recover. Time to build. And time to learn.
Financial literacy is absolutely critical here, which includes the ability to both generate income and manage money, two things that aren’t taught in the government controlled education system.
You might also consider some lifestyle adjustments, which may include moving abroad where your money can go much, much further.
Ultimately, learning to rely on yourself is no easy task, but it is an incredible opportunity to become more free.
And in doing so, one day you will no longer panic about the decisions being made by incompetent bureaucrats, because you will be the one in control of your own fate.
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http://fee.org/freeman/the-coming-financial-collapse-of-social-security/ Read all about it. Serious facts about the SS system that probably not many know, or want to know but should.
This item is long on ad-hominem attacks and vague scare warnings, but short on facts and figures. During the Johnson administration, the government had to find a way to conceal its budget deficits which were the result of its attempting to pursue the "great society" and the Vietnam war at the same time. The "solution" it found was to combine social security contributions with all the other federal revenues into a "unified budget." By so doing, it made it difficult to distinguish the condition of the social security trust fund from the general fund of the government. At the time, social security contributions produced a surplus against its disbursements, which served to conceal the growing deficit in the general fund. Later, in the 80's, SS contributions were increased, thereby ensuring the solvency of the SS Trust Fund, and at the same time continuing to conceal the deficits in the general fund. Like any other insurance plan, the SS system needed to make adjustments based on its experience of seventy years. The SS retirement program is basically an insurance policy against the risk of living longer than expected. It is an open-ended annuity. Since life expectancy has increased substantially from the 1930's to the 2010's, it has become necessary to raise the retirement age and make other small adjustments to offset. This is normal and to be expected.
There is NO Social Security trust fund.
There is no Social Security trust fund .It does not exist. https://www.law.cornell.edu/uscode/text/31/1321
RMolineaux,
You are incorrect. The contributions have been deposited into the General Fund since the program's inception in 1935.
Read it for yourself in section 201 of The Social Security Act of 1935.
You can find it here:
https://www.ssa.gov/history/35act.html
You will note that contributions were to be sent to the General Fund for 'Investment', and that the Treasury need only deposit the currently due portion annually.
This was Amended in 1937 as a result of the Helvering v. Davis decision.
The 'Investments' in question are US Treasuries.
The money was always to be spent immediately on receipt and replaced by newly issued interest-bearing debt.
It was a necessity without which the currency would have collapsed, as too little credit was being created to sustain the monetary base, and make up for its natural deflationary tendencies.
This is also why the populace's gold was seized. There was not enough Gold at prevailing prices to backstop the amount of currency the Fed had printed 1914-1935. At the same time, because of Gold Clauses in many payment contracts, a revaluation of the fiat Dollar vs. Gold would not have made the Dollar solvent.
Furthermore, new and more extreme measures have been taken approximately every 20 years since the inception of the Federal Reserve to force continued credit growth such that there will be enough currency in the present to rollover the debts of the past for the purpose of issuing still more currency.
So, no, the *change* you cite and attribute to President Johnson in the 1960's was no change, didn't occur in the 1960s.
It was part of the original Social Security Act.
I suggest that you re-read your own citation: Title II, Section 201.(a) which establishes the "Federal old-age benefits reserve account." This account - to be managed under "sound actuarial principles" accumulated the contributions of participants, and was later given the name of the Social Security Trust Fund. Also, if you read the budgetary history of the Johnson administration, you will find an incongruous bugetary surplus in one of the years of his tenure. This was the first year in which SS contributions were combined with general revenues in the new "unified budget."
I was talking with a relative.
Their food costs have risen from $15-20/month to $50-$75 a month (yes, per month) in the period from 1999 to 2015.
They are old, do not eat much. Same things, chicken, produce, no processed foods.
In that time COLA increases have averaged 1.21% per year, o.70% per year if you exclude a 3.60 outlier.
What is happening is the FED and USTreasury are monetising the debt, now. It's not for the future, it's been happening since 2008 at least.
It's real, it's here, and you need to count on it.
This will mean that your OASDI payment check will be nearly worthless, in fewer than 20 years from now.
Thus OASDI, Social Security, will still be there, and you may even retain "your promised benefit amount" but that $2500 a month check won't even pay the rent on a one room studio junior bachelor apartment in a small city in the cheap part of town.
My analysis does not even take into account any banning of physical cash to push NIRP to the limit and thus push all asset classes, and RRE, ever higher.
Anyone who will claim OASDI later than 5 years from now needs to run the maths to see how little their check will buy at that time.
COLA 1.21% pa
Actual Infation 5% - 10% pa
Open Excel and run the numbers.
Apparently your relative forgot to tell you that he receives a cost of living adjustment in his benefits in payment each year when there is a measurabe increase in the cost of living.