Solving Socialist Security (Saturbray)

ok...then we agree .... well that was my point about posting the historic material regarding Ida Mae Fuller.

I am still curious about the Bismarkian system vs ours.

Non-defense spending must be cut.

Non-defense and defense spending are not the major drivers of our debt. The entitlement/welfare programs are the problem fueled by the retirement of the baby boomer cohort. 10,000 people are retiring every day and will continue to do so for the next 20 years. By 2030 one in five residents of this country will be 65 or older--twice what is now. And by 2030 there will be just 2 workers for every retiree down from the current 3.3 and the 16 workers for every retiree in 1950.

The OASDI trust funds were supposed to be separate; separate contributions (check your paystub) and separate payments from Federal spending

They still are held separately. The SS Trust Fund has operated the same way since SS started.

That is why Congress is trying to “combine” everything and get rid of the idea that they are a separate benefits plan - to avoid having to REDEEM Treasury bonds held by the fund and not simultaneously sell OASDI more bonds (rolling over the debt). Redeeming without rollover is the start of actually using the $2.5 trillion in Treasury bonds the OASDI trust fund “invested” in to actually pay out benefits. Congress HATES the idea of having to pay out the $2.5 trillion it borrowed from AMERICAN SENIOR CITIZENS over the course of their working lives.

They are being redeemed now since SS went into the red in 2010 and Medicare Part A in 2008.

SS and MC are benefits plans, not government spending.

Not true. By law, 75% of Medicare Parts B and D (SMI) are funded by the General Fund.

It depends on when you retire. SS is a Ponzi scheme. Those at the bottom of the pyramid, i.e., younger workers, are the ones who get screwed while those of us at the top get back far more than we payed into the system.

Why Social Security is a Ponzi Scheme

I don’t expect to get the amount I and my employer paid in. I’ll be dead before that.

Median benefit $30,000 per year

Times

7 years

Equals

$210,000

Yes Gaffer, it is likely you will have gotten everything back in seven years. And don’t start talking about interest, because the money was never invested.

I had enough good fortune and foresight to arrange my finances so that I won’t need Social Security when I turn 67. I plan on funding prepaid life insurance (which pays dividends and can be borrowed against tax free) for my grandchildren using my SS benefits as a way of helping them avoid reliance on SS in their golden years and giving them at least some benefit out of all the taxes they will be paying to support our generation.

No, it is not. But it doesn’t bother me financially because I also had a separate retirement planned that compensates for the bad SS deal.

I have both a federal pension and SS. At age 69 I have already received ten times what I contributed to my federal pension or five times more than both my contribution and the government’s. I receive a minimal SS pension and have already received about 5 times my contribution. Between the two, I get about 120K a year and both are linked to COLA. As much as I enjoy the benefits, I know that this is unsustainable for the country.

Non-defense and defense spending are not the major drivers of our debt.

This is what government employees, contractors, politicians, the media, etc., say to justify not cutting the hundreds of billions that go to them and programs that they like.

The OASDI trust funds were supposed to be separate; separate contributions (check your paystub) and separate payments from Federal spending

They still are held separately. The SS Trust Fund has operated the same way since SS started.

So they're held separately ? I completely agree in the technical sense. But then let's look at 2 pie charts. One for these "separate" programs, and one for everything else. The mere fact that the gubmint and other concerned institutions have now lumped all into one pie chart is the beginning of mind games that teenagers play to justify things. Obviously, it's presented as one pie chart so voila - it looks like more than half of our "spending problem" is SS/Med.

Funny, I never saw pie charts like this until a few years ago. The argument was never made this way as long as the OASDI trust funds had annual surpluses. As the tipping point approached, gubmint started the vulcan mind-meld mental games to convince people that they had to make do with smaller SS checks and they had to work longer before starting to collect.

How many times do we see this argument being made ? It's constant. Every time I turn on the TV. It's the biggest PR campaign in history.

Don't mind the Federal bureaucracy. Don't mind transfer payments to able-bodied young people scamming the system and voting for Democrats. See the debt piling up each year ? It's your fault, working, taxpaying American. You just better get used to the idea that your SS check will buy any one of these 3 (you pick): medicine, food or property taxes/rent.

Government old-age benefit programs are an inducement to not save and not invest adequately, so they are a cruel lie.

But since the government made these promises, it should pay every one of it's promises before it pays 1 penny to a young, able-bodied person who should be - working, saving and investing for their own retirement.

They are being redeemed now since SS went into the red in 2010 and Medicare Part A in 2008.

Yes, that's why Congress is so focused on "fixing" them by cutting outlays. If they do that, they can stop redeeming. They can go back to spending every dollar of tax revenue and borrowing, according to your charts, $1.3 trillion and spending that as well. The exact amount that gets transferred to fund the shortfall - Congress thinks, cr@p, I could have spent that in MY district or on MY solyndra, etc.

The fact is Congress has gotten the taxpayer way in over their head financially. Congress critters have always been told by their smarter, older peers that the economy eventually picks up and grows so borrowing is acceptable.

The showdown between those who receive money from the government is obviously what is looming in the not-too-distant future, unless the economy takes off so much that we miraculously have $3 to $4 trillion in tax revenue floating in every year. If not, the "Greek zone" is what we're flirting with.

SS and MC are benefits plans, not government spending.

Not true. By law, 75% of Medicare Parts B and D (SMI) are funded by the General Fund.

I'm not talking about funding, but the purpose of the spending. What is the purpose of MC if not a benefit to MC recipients ? Otherwise it would just be a payment to the healthcare industry for no purpose.

IMHO.

I am self employed and work 10-12 hours a day as a lumber wholesaler and dream maker. Calling someone a journalist is hitting below the belt.

Pray for America

This is what government employees, contractors, politicians, the media, etc., say to justify not cutting the hundreds of billions that go to them and programs that they like.

It also happens to be a fact. When you eliminate defense and entitlement/welfare spending (that are on automatic pilot), and debt servicing costs so called discretionary spending used to run the rest of the government is only 17% of the budget. Entitlements are the fastest growing part of the budget.

So they're held separately ? I completely agree in the technical sense. But then let's look at 2 pie charts. One for these "separate" programs, and one for everything else. The mere fact that the gubmint and other concerned institutions have now lumped all into one pie chart is the beginning of mind games that teenagers play to justify things. Obviously, it's presented as one pie chart so voila - it looks like more than half of our "spending problem" is SS/Med. The Social Security Trust Fund was created in 1939 as part of the Amendments enacted in that year. From its inception, the Trust Fund has always worked the same way. The Social Security Trust Fund has never been "put into the general fund of the government." Funny, I never saw pie charts like this until a few years ago. The argument was never made this way as long as the OASDI trust funds had annual surpluses. As the tipping point approached, gubmint started the vulcan mind-meld mental games to convince people that they had to make do with smaller SS checks and they had to work longer before starting to collect.

SS went into the red in the early 1980s, which prompted the Faustian bargain that Reagan made with Tip O'Neill in 1983 that increased the retirement age for full benefits from 65 to 67, and levied taxes on SS earnings. It also forced all new federal hires into SS. The fact is that SS is actuarily unsustainable. It is a Ponzi scheme.

Government old-age benefit programs are an inducement to not save and not invest adequately, so they are a cruel lie.

SS was never meant to be a full retirement system although one-third of the current recipients have SS as their only income. I don't view them as a lie. If people are too dumb to save and prepare themselves for retirement, the responsibility falls upon them not the government. The problem is that the very people who did not save believe that the government should provide them with a comfortable retirement. And the Dems agree with them.

Yes, that's why Congress is so focused on "fixing" them by cutting outlays. If they do that, they can stop redeeming. They can go back to spending every dollar of tax revenue and borrowing,

You really can't cut outlays because there are 10,000 people retiring every day for the next 20 years. By 2030 one in 5 will be 65 or older--twice what it is now. Right now, the objective is to change the cost trajectory so it stops going up so fast and eventually will head back down once the baby boomers go through the system. Obamacare wants to control costs thru the IPAB, Ryan wants to do it thru premium support and competition with the patient having the funding and making the decisions. There will also be some means testing in terms of how much support the government will provide.

The fact is Congress has gotten the taxpayer way in over their head financially. Congress critters have always been told by their smarter, older peers that the economy eventually picks up and grows so borrowing is acceptable.

LOL. I blame the voters. The politicians give the voters exactly what they want. You get the government you deserve. Voters will vote out of office people who tell them the truth. We have a dumbed down electorate that is ill-informed and unengaged.

The showdown between those who receive money from the government is obviously what is looming in the not-too-distant future, unless the economy takes off so much that we miraculously have $3 to $4 trillion in tax revenue floating in every year. If not, the "Greek zone" is what we're flirting with.

$3 or $4 trillion won't be enough to sustain the current programs with the same benefits. They will consume every federal dollar. They must be reformed to reduce future liability. By 2030 there will be 2 workers for every retiree. You won't be able to tax enough to cover the costs. And with a $16 trillion national debt and growing, the debt servicing costs will continue to rise. The interest rates have been held to an artificially low rate by the Fed. If they return to historic rates, we will be looking at debt servicing costs approaching a trillion dollars a year. And then we will be Greece.

I'm not talking about funding, but the purpose of the spending. What is the purpose of MC if not a benefit to MC recipients ? Otherwise it would just be a payment to the healthcare industry for no purpose.

I don't understand your point.

Great posts and thread. Thanks for the information, kabar.

The greatest fraud ever FORCED on “free” people. It is built on the backs of DEAD Americans. Scheming socialists. Plunder and death...socialism 2.0.

“Socialism Is Legal Plunder” - Bastiat 1801-1850

http://www.usdebtclock.org/

DEFUND their collectives.
DISMANTLE their schemes.
DEPOPULATE them from the body politic.

“Progressive” plunderers and tyrannical totalitarians have placed many mandates on our existence, our time of life, our labor. We, our children and grandchildren, have become debt slaves to those organizations of sophisticated socialists.

live - “free” - republic

“—That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.”

DEFUND, DISMANTLE, DEPOPULATE.

Ok, you said "you really can't cut outlays" then went on to describe 2 plans that are purported to "control costs"; nowhere do you mention increasing the money paid into the fund.

Bottom line, you're saying what SS and MC pays out needs to be reduced.

I'm simply saying that SS is already too small to live on - I mean really, how low would the government like to go ? I can make it actuarily very profitable easily: just make the retirement age 95. Or perhaps make the maximum monthly retirement benefit $100.

How about this: What is SS / MC ? A pile of Treasury paper asserting a claim on future tax revenue of a profligate government, and a system that withholds from every employee's paycheck and pays out benefits to retirees.

If we stopped paying ALL SS / MC payments, completely ended the programs, but left the withholding in place, the first year would produce a bit of a surplus based on current total Federal Revenue; perhaps $100 billion or so, give or take.

Guess what Congress would do then. Spend even more (issue more bonds) and rack up another trillion in annual deficit. Why would they borrow ? Because they can. And they want to keep sloshing money around to garner votes; that's the easy way to stay elected.

At this point, it's just a "clash of consituencies". Which groups will win out with > 50% of Congressional votes. HHS, FTC, HUD, Welfare, Transportation, Senior Citizens, green energy, whatever.

What's really rich is that Congress would undoubtedly have the gall to keep the withholding line on everyone's paycheck labeled SS/ MC ! Because the mass media would not do a PR campaign to gin up political opposition - no one in positions of power would care either way. Just tell everyone it's for runout costs or something.

As far as a "dumb" electorate and people who are too "dumb" to save, there is a subtle difference between blaming them and not. There is a difference between individual responsibility and societal responsibility. And nothing makes it more clear than mass marketing, i.e., the ability to sway the opinions of "the masses". This is done by leaders of society; even going back to pre-printing press times, the monarch had the machinery of government and leaders in society to spread a story. Also, those who were in powerful positions in society, if they thought it best to oppose the monarch, could try their hand at swaying public opinion with their own stories spread with their own story-spreading machinery, i.e., leaders in towns, other nobles, etc.

Of course, in our day, such machinery is more powerful than ever in history, and, as always, supports contending viewpoints in all the various types of media. The education establishment engraines things into people's minds that remain firmer than ever 70 years later. Government and big business push all sorts of ideas which are designed to separate the unsuspecting from their money.

The smoking debate is a classic case: years ago cigarettes were pushed in such a complex and powerful way that people themselves took cigarette smoking to be "their own". While we can fault the individual smoker - what if this concerted PR campaign never happened ? The cigarette marketer takes credit for boosting sales; they readily acknowledge that they had a hand in convincing millions of people to smoke.

Now, scarcely a few decades later, the PR campaign is the exact opposite. Millions of people are losing out on the pleasure of a good smoke, abandoning cigarettes, due to the efforts of the marketer.

Marketing works.

The King, the President, Congress, CEO's - all leaders of society, can lay out a vision, a plan, an idea, and get the thing put into motion with the means at their disposal. Kennedy said "man on the moon" and bingo, everyone gets behind him. Leaders in the American colonies started the American Revolution and a new nation. From the FDR libary at Marist:

"As Governor of New York State FDR enacted a law to provide old-age pensions and was ready to extend it nationally. By Executive Order, Roosevelt created the Committee on Economic Security and their recommendations provided the basis for Congress' 1935 Social Security Act."

If the "big idea" turns out to be a winner in the long run - give the leader(s) who initiated it the credit they deserve.

But if it turns out to be unworkable in the long run - do we blame all the people who... were forced by their government at the time to participate in the idea ? Every world leader who brings calamity on his nation blames the citizenry for his mistakes.

Why did everyone vote in FDR ? Hey, wait a minute. All of my grandparents voted AGAINST FDR. Everyone at the time was talking about SS; old folks started receiving benefits. My parents heard about it from the time they were small children. Look at the checks those old people get - you'll have one too. I guess as 10-year olds they should have resisted having these thoughts ingrained into their minds because it's a ponzi scheme. All the politicians, coworkers, family, newspapers, old people reliably getting their SS checks for all those decades, that "greatest generation" should have been more suspect of all those influences and assumed that they would get little or nothing out of SS. And many of them did. But, as is always the case with marketing, you don't get 100% response, but you will always get some response. There were some people who always had the idea, subconsciously if nothing else, that they had SS as a fallback, just in case. They could subsist on SS if they had to.

The sin of these types of programs is that they always induce some portion of the population to not save and invest. And leaders that know that are wrong for instituting what they know to be a bad program in order to pander for votes. And those leaders that don't know that should because they have the responsibility to as leaders.

Both bear responsibility, the government and the non-savers. The non-savers will pay a dear price for being misled into relying on the government. The government, however, can not avoid it's own share of the blame by pretending that it had nothing to do with the program, any more than Bernie Madoff can place all the blame on his investors for being so stupid. We don't absolve Bernie and blame only his investors; and we must remember that SS withholdings are confiscated by the government, while Bernie's investors made a choice to invest with his firm.

IMHO.

You nailed it Gault! We need to free ourselves from the overseers of the ruling class.

Pray for America

If you have managed your money in the past and have a solid nest egg then it is time to get off the program and enjoy the fruits of your labor and tell them to keep their Ponzi scheme.

Managing that with SS also withdrawn from your paycheck all those years is a bit of an accomplishment, actually. I've managed it, although it wasn't always easy. Now two years away from retirement.

What I hear here is that I should be "selfless" and heroic and call that bad debt bad for the benefit of my successors, so they won't be screwed the same way. OK, fine. I'll be able to afford to do that...

IF my successors will keep their greasy fingers away from the money I have managed to save, in terms of taxation, increasing demands for school levies, benefits for THEIR children, and a general attitude on the part of the government that they elected that my 401K is convertible to government bonds for - wait for it - for the sake of my successors. I'm not starving in the prospect that later generations will think me a swell guy, because they won't.

That isn't speculation, it's a fact. You read repeatedly on the mind-numbingly regular boomer-bashing threads that *I* voted for this Ponzi scheme. And you know, I've never missed an election in forty-odd years but I don't recall ever making any such vote. That isn't how it worked.

So I'll offer a deal with my boomer-bashing FR compatriots - I'll forgo any demands on money I really did contribute if you'll keep *your* Democratic administration's hands off the savings I've managed to accumulate. And if you don't like me tagging you with responsibility for electing this travesty of a confiscatory administration, don't accuse me of voting for the SS scam. Deal?

Nice rant but have no idea what you are talking about? I will guarantee you one thing, those who want to be offended will be.

Perhaps you should my posting again. I had the courtesy to read yours, after all.

Let's try again. You are perfectly free to ask me to break the cycle by depending only on my savings, which you did here.

Now is the time for the Baby Boomers to solve this problem for both their parents and future generations and truly become the selfless generation.

And

The most effective method would be to voluntarily not take the benefits and decide to work the rest of your life and leave your benefits unclaimed...

Ayn Rand had a term for those insisting that other people be altruistic, and it wasn't a polite one. Nevertheless, I'm willing to go along because as you pointed out, the numbers really don't give us much choice. That would be here:

When we are borrowing from our children 40% of the nearly 4 Trillion dollars in the budget and we have a program that uses 35% of it we can never be serious about balancing it.

I quite concur. Nevertheless, this really needs a second look:

Men who work well into their sixties and seventies have more reward and are in generally better health than those who are retired and lead a sedentary life. They are also more financially secure since they are in the primes of their earnings career. This is the time they can become entrepreneurs which can make them more financially successful so they can leave more to their dependents and family they have left behind.

Work is good for me, got it, unless of course it kills me, which it could. I'm not actually in the "prime" of my earnings career because other, younger people are being hired into the same job and paid more. That's a fact of life when you're 60. Now, I really love this one - it's simple, really, I just become an entrepreneur and get rich. Why didn't I think of that? There is, of course, the matter of venture capital and I have just decreased my future income prospects by eschewing SS, but no matter, it's easy! Well, no. Here's a hard fact of economic life: most entrepreneurs go broke.

I think it boils down to this, and pardon me if I didn't express it clearly: asking other people to make a sacrifice for the benefit of others should not be treated this cavalierly. My point is that those others don't seem to be particularly eager to make any sacrifices for me. That's fine, and I can accept the fact that my loss is probably going to be less than asking my successors to contribute 40, 50, 60% of their salaries to prolong the game. But they have to play their part by acknowledging that this is a sacrifice and not making it any more difficult than it already will be. That means not building another Ponzi scheme of ever-increasing entitlements. I'll be a lot happier about the whole thing if I see that happen, but it isn't, and I'm not.

And, as you see, I can't even get the first sentence right. Nevertheless, THIS is what I'm talking about - extending child-care benefits to age 26 under 0bamacare. Guess who's going to pay for that one? You and me. For me, it will be on declining salary, declining energy, declining life. Understand why that makes me angry. Best to you.

Of course I understand which is why I posted it in the first place. This is the biggest sacred cow in America and unless we gore it nothing else is touchable either.

You replace it with personal savings accounts or some other free market solution.

Bottom line, you're saying what SS and MC pays out needs to be reduced.

The bottomline is that you have two options or a combination of them. Reduce benefits and raise revenues.

I'm simply saying that SS is already too small to live on - I mean really, how low would the government like to go ? I can make it actuarily very profitable easily: just make the retirement age 95. Or perhaps make the maximum monthly retirement benefit $100.

SS is not meant to live on. The question is how much are people willing to pay to get higher benefits?

If we stopped paying ALL SS / MC payments, completely ended the programs, but left the withholding in place, the first year would produce a bit of a surplus based on current total Federal Revenue; perhaps $100 billion or so, give or take.

Check out my pie charts in post #22. The revenue raised by the payroll tax in FY2010 was $865 billion. The amount of SS expenditures was $707 billion. According to the Trustees Report Medicare expenditures are about $550 billion. So we spend $1.2 trillion and take in $865 billion.

Both bear responsibility, the government and the non-savers. The non-savers will pay a dear price for being misled into relying on the government. The government, however, can not avoid it's own share of the blame by pretending that it had nothing to do with the program, any more than Bernie Madoff can place all the blame on his investors for being so stupid.

The government is us, We the People. We elect and pay for the government. We are responsible, not the so-called leaders who we vote in office over and over again. It is our job to hold them accountable. Have a good day.