Nearly a million filed for disability during the recession who otherwise wouldn’t have, study finds

Via Marketwatch

William H. Macy portrays a character falsely claiming disability on “Shameless.”

Nearly 1 million people filed for disability benefits they ordinarily wouldn’t have due to the recession, a new study finds.

Another 400,000 filed earlier for disability than trends would have suggested, the study finds.

The study puts into numbers what economists had long suspected, that during the Great Recession the ranks of those who claimed disability were artificially high.

Of those that filed that otherwise would not have, some 41.8% were awarded benefits, or more than 400,000 new beneficiaries to the Social Security Disability Insurance program.

Continue reading “Nearly a million filed for disability during the recession who otherwise wouldn’t have, study finds”

Social Security Issues Final Rules Removing Beneficiaries’ Gun Rights

Via The New American

Social Security Issues Final Rules Removing Beneficiaries’ Gun Rights

The Social Security Administration (SSA) announced on December 19 that it had “finalized” its rules regarding who will have their names added to the National Instant Criminal Background Check System (NICS). This was after the proposed rules published in April received more than 90,000 responses, mostly negative, from the public. The National Rifle Association (NRA) opposed the proposed rules for numerous reasons and urged its members to protest them.

The new rules now allow the SSA to add to the NICS anyone over 18 but under retirement age who is diagnosed with a “mental disorder” and receives benefits through a “representative payee.” Open to question, as pointed out by The New American in June, is just how “mental disorder” is to be determined, as well as how the agency can override the right to due process protected by the Fourth Amendment and infringe upon the “right to keep and bear arms” protected by the Second Amendment.

Continue reading “Social Security Issues Final Rules Removing Beneficiaries’ Gun Rights”

FOURTH TURNING – SOCIAL & CULTURAL DISTRESS DIVIDING THE NATION

I wrote the first three parts of this article back in September and planned to finish it in early October, but life intervened and truthfully I don’t think I was ready to confront how bad things will likely get as this Fourth Turning moves into the violent, chaotic war stage just over the horizon. The developments in the Middle East, Europe, U.S., China and across the globe in the last months have confirmed my belief war drums are beating louder, global war beckons, and much bloodshed will be the result. Fourth Turnings proceed at their own pace within the 20 to 25 year crisis framework, but there is one guarantee – they never de-intensify as they progress. Just as Winter gets colder, stormier and more bitter as you proceed from December through February, Fourth Turnings get nastier, grimmer, more perilous, with our way of life hanging in the balance.

In Part 1 of this article I discussed the catalyst spark which ignited this Fourth Turning and the seemingly delayed regeneracy. In Part 2 I pondered possible Grey Champion prophet generation leaders who could arise during the regeneracy. In Part 3 I focused on the economic channel of distress which is likely to be the primary driving force in the next phase of this Crisis. In Part 4 I will assess the social and cultural channels of distress dividing the nation, Part 5 the technological, ecological, political, military channels of distress likely to burst forth with the molten ingredients of this Fourth Turning, and finally in Part 6 our rendezvous with destiny, with potential climaxes to this Winter of our discontent.

The road ahead will be distressful for everyone living in the U.S., as we experience the horrors of war, economic collapse, civil chaos, political upheaval, and the tearing of society’s social fabric. The pain and suffering being experienced across the globe today will not bypass the people of the United States. Winter has arrived and lethal storms are gathering in the distance. Don’t think you can escape. You can prepare, but this Crisis will reshape our society for better or worse, and you cannot sidestep the consequences or cruel environment we must survive.

Continue reading “FOURTH TURNING – SOCIAL & CULTURAL DISTRESS DIVIDING THE NATION”

THE MOST DEVIOUS LIARS IN THE ROOM

There were a few different stories coming out over the last few days that reveal the true nature of government and the apparatchiks who use disinformation, devious machinations, fraudulent accounting, and taxpayer money to cover up their criminality, lies, and the true state of the American economy. The use of government accounting tricks to obscure the truth about our dire financial straits is designed to keep the masses sedated and confused.

A few weeks ago, to great fanfare from the fawning faux journalists who never question any Washington D.C. propaganda, they announced the lowest annual deficit of Obama’s reign of error.

For the fiscal year that ended Sept. 30 the shortfall was $439 billion, a decrease of 9%, or $44 billion, from last year. The deficit is the smallest of Barack Obama’s presidency and the lowest since 2007 in both dollar terms and as a percentage of gross domestic product.

Jack Lew, the Treasury Secretary, and Obama were ecstatic as they boasted about this tremendous accomplishment. I find it disgusting that our leaders hail a $439 billion deficit as a feather in their cap, when until the mid-2000’s the country had never had an annual deficit above $300 billion. After 183 years as a country, the entire national debt was only $427 billion in 1972. Now our beloved leaders cheer annual deficits above that figure. What a warped, deformed, dysfunctional nation we’ve become.

Continue reading “THE MOST DEVIOUS LIARS IN THE ROOM”

The 2015 Untrustworthies Report——Why Social Security Could Be Bankrupt In 12 Years

The so-called “trustees” of the social security system issued their annual report last week and the stenographers of the financial press dutifully reported that the day of reckoning when the trust funds run dry has been put off another year—-until 2034.

So take a breath and kick the can. That’s five Presidential elections away!

Except that is not what the report really says. On a cash basis, the OASDI (retirement and disability) funds spent $859 billion during 2014 but took in only $786 billion in taxes, thereby generating $73 billion in red ink.  And by the trustees’ own reckoning, the OASDI funds will spew a cumulative cash deficit of $1.6 trillion during the 12-years covering 2015-2026.

So measured by the only thing that matters—-hard cash income and outgo—-the social security system has already gone bust. What’s more, even under the White House’s rosy scenario budget forecasts, general fund outlays will exceed general revenues ex-payroll taxes by $8 trillion over the next twelve years.

Needless to say, this means there will be no general fund surplus to pay the OASDI shortfall. Uncle Sam will finance the entire $1.6 trillion cash deficit by adding to the public debt. That is, Washington plans to make social security ends meet by burying unborn taxpayers even deeper in national debt in order to fund unaffordable entitlements for the current generation of retirees.

The question thus recurs. How did the untrustworthies led by Treasury Secretary Jacob Lew, who signed the 2015 report, manage to turn today’s river of red ink into another 20 years of respite for our cowardly beltway politicians?

They did it, in a word, by redeeming phony assets; booking phony interest income on those non-existent assets; and projecting implausible GDP growth and phantom payroll tax revenues.

And that’s only the half of it!

Continue reading “The 2015 Untrustworthies Report——Why Social Security Could Be Bankrupt In 12 Years”

New Obama Initiative To Ban Guns For Some Social Security Recipients, Veterans, And Disabled

Submitted by Brandon Turbeville via ActivistPost.com,

Whenever one thinks the Obama administration’s war on the Second Amendment couldn’t get any more insane, Barack Obama prances onto the stage to prove everyone wrong yet again.

This time, it is not merely a carefully planned and orchestrated jig on the graves of mass shooting victims or pathetic whining about “gun crime” and the amount of time he must give regarding the issue. It is a push to ban a large number of Social Security benefits recipients from owning guns.

That’s correct. When the Obama administration can’t get its way by attacking gun owners head on, it merely turns to extorting the elderly and disabled whom it holds hostage via their need to receive Social Security benefits – benefits I might add, that are owed to them.

Thus, the Obama administration is pushing to prohibit Social Security benefit recipients from owning firearms if they “lack the mental capacity to manage their own affairs,” a move which the Los Angeles Times reports would affect millions of people whose disability payments – for one reason or another – are handled by other people.

Continue reading “New Obama Initiative To Ban Guns For Some Social Security Recipients, Veterans, And Disabled”

NO SPEAKA DA ENGLISH – YOU’RE DISABLED

I wonder if speaking ebonics qualifies you for SSDI.

Hat tip Boston Bob

Via Washington Free Beacon

Feds Consider Puerto Ricans Disabled Because They Speak Spanish

The Social Security Administration (SSA) approved disability benefits for hundreds of Puerto Ricans because they do not speak English, despite the fact that Puerto Rico is a predominantly Spanish-speaking territory.

According to a new audit by the Office of Inspector General (OIG), the agency is misapplying rules that are intended to provide financial assistance to individuals who are illiterate or cannot speak English in the United States. Under the rules, Puerto Ricans are allowed to receive disability benefits for their inability to speak English as well.

“We found the Agency did not make exceptions regarding the English-language grid rules for claimants who reside in Puerto Rico, even though Spanish is the predominant language spoken in the local economy,” the OIG said.

The audit said a person applying for disability in Puerto Rico who cannot speak English “may increase his/her likelihood of receiving disability benefits.”

The agency does not currently have a system in place to keep track of the number of beneficiaries who receive disability insurance for not being able to speak English.

However, the OIG was able to identify 218 cases between 2011 and 2013 where Puerto Ricans were awarded disability due to “an inability to communicate in English.” Furthermore, 4 percent of disability hearings in Puerto Rico involved looking at the individual’s ability to speak, read, write, and understand English.

Continue reading “NO SPEAKA DA ENGLISH – YOU’RE DISABLED”

Disabled Recovery: Since Aug 2010, More People Have Gone On Disability Than Were Added To Labor Force

Guest Post by Anthony Sanders

The Economist blasted the following headline in February: “At last, a proper recovery.”

So, is it their considered opinion that an economy that adds more people to disability than to the labor force is having “a proper recovery?”

To be more specific, since August 2010, the US economy had added 2.96 million  to the Civilian Labor Force. But at the same time, 3.2 million were NOT in the labor force due to a disability.

disabledrec

Another troubling fact is — continued jobless claims have come down by 2.1 million since August 2010. But not in labor force with a disability rose by 3.2 million.

Continue reading “Disabled Recovery: Since Aug 2010, More People Have Gone On Disability Than Were Added To Labor Force”

SSDI FUND DEPLETED IN TWO YEARS

Everyone knows the Social Security Disability program is racked with fraud and abuse. Shyster lawyers and Obama’s minions have a program made in heaven. Just fake a back injury or eat yourself to 300 pounds of hoveround level diabetes and you’re in baby. 

Well there are consequences to every action. The SSDI fund will be depleted in 2016. That’s two years folks. I can hear the shrills from liberals, Pelosi, and the dykes on MSNBC. How could we cut the benefits of the disabled? Only evil Republicans could possibly allow it to happen. The script is already written. The feckless politicians will save the day by using funds from the SS fund to pay full benefits to the Free Shit Disabled Army.

Therefore, the depletion date of the SS fund will not be 2033 as detailed by the Trustees in the report below. The fund will deplete on or around 2028.

Guess what year I’m eligible for SS benefits?

That’s right – 2028.

No biggie. The American Empire of Debt will have collapsed before that date and none of these reports will matter anymore. That which cannot be sustained will not be sustained.

A SUMMARY OF THE 2014 ANNUAL REPORTS

Social Security and Medicare Boards of Trustees

A MESSAGE TO THE PUBLIC:

Each year the Trustees of the Social Security and Medicare trust funds report on the current and projected financial status of the two programs. This message summarizes the 2014 Annual Reports.

Neither Medicare nor Social Security can sustain projected long-run program costs in full under currently scheduled financing, and legislative changes are necessary to avoid disruptive consequences for beneficiaries and taxpayers. If lawmakers take action sooner rather than later, more options and more time will be available to phase in changes so that the public has adequate time to prepare. Earlier action will also help elected officials minimize adverse impacts on vulnerable populations, including lower-income workers and people already dependent on program benefits.

Social Security and Medicare together accounted for 41 percent of Federal expenditures in fiscal year 2013. The general revenue transfers into SMI and interest payments made to the trust funds are resulting in mounting pressure on the unified budget, as will the eventual decline in the level of total reserves held by the Social Security and HI Trust Funds. Both programs will experience cost growth substantially in excess of GDP growth through the mid-2030s due to rapid population aging caused by the large baby-boom generation entering retirement and lower-birth-rate generations entering employment and, in the case of Medicare, to growth in expenditures per beneficiary exceeding growth in per capita GDP. In later years, projected costs expressed as a share of GDP trend up slowly for Medicare and are relatively flat for Social Security, reflecting slower growth in per-beneficiary health care costs and very gradual population aging caused by increasing longevity.

Social Security

Social Security’s Disability Insurance (DI) program satisfies neither the Trustees’ long-range test of close actuarial balance nor their short-range test of financial adequacy and faces the most immediate financing shortfall of any of the separate trust funds. DI Trust Fund reserves expressed as a percent of annual cost (the trust fund ratio) declined to 62 percent at the beginning of 2014, and the Trustees project trust fund depletion late in 2016, the same year projected in the last Trustees Report. DI costs have exceeded non-interest income since 2005 and the trust fund ratio has declined in every year since peaking in 2003. While legislation is needed to address all of Social Security’s financial imbalances, the need has become most urgent with respect to the program’s disability insurance component. Lawmakers need to act soon to avoid automatic reductions in payments to DI beneficiaries in late 2016.

To summarize overall Social Security finances, the Trustees have traditionally emphasized the financial status of the theoretical combined trust funds for DI and for Old Age and Survivors Insurance (OASI). The combined trust funds, and expenditures that can be financed in the context of the combined trust funds, are theoretical constructs because there is no legal authority to finance one program’s expenditures with the other program’s taxes or reserves. Social Security’s total expenditures have exceeded non-interest income of its combined trust funds since 2010 and the Trustees estimate that Social Security cost will exceed non-interest income throughout the 75-year projection period. The Trustees project that this annual cash-flow deficit will average about $77 billion between 2014 and 2018 before rising steeply as income growth slows to its sustainable trend rate after the economic recovery is complete while the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers. Redemption of trust fund asset reserves from the General Fund of the Treasury will provide the resources needed to offset Social Security’s annual aggregate cash-flow deficits. Since the cash-flow deficit will be less than interest earnings through 2019, reserves of the combined trust funds will continue to grow but not by enough to prevent the ratio of reserves to one year’s projected cost (the combined trust fund ratio) from declining. (This ratio peaked in 2008, declined through 2013, and is expected to decline steadily in future years.) After 2019, Treasury will redeem trust fund asset reserves to the extent that program cost exceeds tax revenue and interest earnings until depletion of combined trust fund reserves in 2033, the same year projected in last year’s Trustees Report. Thereafter, tax income would be sufficient to pay about three-quarters of scheduled benefits through the end of the projection period in 2088.

Under current projections, the annual cost of Social Security benefits expressed as a share of workers’ taxable earnings will grow rapidly from 11.3 percent in 2007, the last pre-recession year, to roughly 17.1 percent in 2037, and will then decline slightly before slowly increasing after 2050. Costs display a slightly different pattern when expressed as a share of GDP. Program costs equaled 4.1 percent of GDP in 2007, and the Trustees project these costs will increase to 6.2 percent of GDP for 2037, then decline to about 6.0 percent of GDP by 2050, and thereafter rise slowly reaching 6.1 percent by 2088.

The projected 75-year actuarial deficit for the combined Old-Age and Survivors Insurance and Disability Insurance (OASDI) Trust Funds is 2.88 percent of taxable payroll, up from 2.72 percent projected in last year’s report. This deficit amounts to 22 percent of program non-interest income or 17 percent of program cost. A 0.06 percentage point increase in the OASDI actuarial deficit would have been expected if nothing had changed other than the one-year extension of the valuation period to 2088. The effects of recently enacted legislation, updated demographic and economic data, and improved methodologies on net worsened the actuarial deficit by 0.10 percent of taxable payroll.

While the theoretical combined OASDI Trust Fund fails the long-range test of close actuarial balance, it does satisfy the test for short-range (10-year) financial adequacy. The Trustees project that the combined trust fund asset reserves at he beginning of each year will exceed that year’s projected cost through 2027.

Medicare

The Trustees project that the Medicare Hospital Insurance (HI) Trust Fund will be the next to face depletion after the DI Trust Fund. The projected date of HI Trust Fund depletion is 2030, four years later than projected in last year’s report. At that time dedicated revenues will be sufficient to pay 85 percent of HI costs. The Trustees project that the share of HI cost that can be financed with HI dedicated revenues will decline slowly to 75 percent in 2047, and will then stay about flat. HI non-interest income less HI expenditures is projected to be negative this year (as it has been in every year since 2008), and then turn positive for six years (2015-2020) before turning negative again in 2021.

The projected HI Trust Fund’s long-term actuarial imbalance is smaller than that of the combined Social Security trust funds under the assumptions employed in this report. The estimated 75-year actuarial deficit in the HI Trust Fund is 0.87 percent of taxable payroll, down from 1.11 percent projected in last year’s report. The HI fund again fails the test of short-range financial adequacy, as its trust fund ratio is already below 100 percent and is expected to decline continuously until reserve depletion in 2030. The fund also continues to fail the long-range test of close actuarial balance. The HI 75-year actuarial imbalance amounts to 23 percent of tax receipts or 19 percent of program cost.

The improvement in the outlook for HI long-term finances is principally due to lower-than-expected spending in 2013 for most HI service categories, which reduced the base period expenditure level about 1.5 percent and contributed to the Trustees’ decision to reduce projected near-term spending growth trends. Taken together, these changes lowered the actuarial deficit by about 0.29 percent of taxable payroll. Other changes resulted in an increase in the actuarial deficit of 0.05 percent.

Unlike in past years, the Medicare Part B cost projection featured in this report and summarized below (the “projected baseline”) assumes that reductions in Medicare payment rates for physician services called for by the Sustainable Growth Rate (SGR) formula will be overridden in the future as they have been from January 2003 through March 2015. Specifically, the projected baseline assumes that physician payment rates will remain at their current levels through the end of 2015, and will then rise at the same rate currently slated for the 10-year period ending March 31, 2015 (0.6 percent annually) through 2023. Relative to the current-law projection featured in the 2013 report, this change in the conceptual basis for the baseline projection raises the growth rate of projected Part B costs by about 0.3 percentage points on average over the next 75 years. While legislation overriding physician fee reductions has in recent years included provisions offsetting the 10-year cost of the overrides, the division of those offsets between Medicare savings and savings in other parts of the budget has varied. Because it is difficult to anticipate the extent to which policy makers will finance future overrides with other Medicare savings, the Medicare projected baseline does not include any offsets. This projection represents neither a legislative prediction nor a policy recommendation by the Trustees.

The Trustees project that Part B of Supplementary Medical Insurance (SMI), which pays doctors’ bills and other outpatient expenses, and Part D of SMI, which provides access to prescription drug coverage, will remain adequately financed into the indefinite future because current law automatically provides financing each year to meet the next year’s expected costs. However, the aging population and rising health care costs cause SMI projected costs to grow steadily from 1.9 percent of GDP in 2013 to approximately 3.3 percent of GDP in 2035, and then more slowly to 4.5 percent of GDP by 2088. General revenues will finance roughly three-quarters of these costs, and premiums paid by beneficiaries almost all of the remaining quarter. SMI also receives a small amount of financing from special payments by States and from fees on manufacturers and importers of brand-name prescription drugs.

The Trustees project that total Medicare costs (including both HI and SMI expenditures) will grow from approximately 3.5 percent of GDP in 2013 to 5.3 percent of GDP by 2035 and will increase gradually thereafter to about 6.9 percent of GDP by 2088.

In recent years U.S. national health expenditure (NHE) growth has slowed relative to historical patterns. There is uncertainty regarding the extent to which this slowdown in the rate of cost growth reflects one-time effects of the recent economic downturn and other non-persistent factors or structural changes in the health care sector that may produce additional cost savings in the years ahead. The Trustees are hopeful that U.S. health care practices are in the process of becoming more efficient as providers anticipate a future in which the rapid cost growth rates of previous decades, in both the public and private sectors, do not return. Indeed, the Trustees have revised down their projections for near-term Medicare expenditure growth in response to the recent favorable experience. In addition, the methodology for projecting Medicare finances had already assumed a substantial long-term reduction in per capita health expenditure growth rates relative to historical experience, to which the Affordable Care Act’s cost-reduction provisions would add substantial further savings. Notwithstanding recent favorable developments, both the projected baseline and current law projections indicate that Medicare still faces a substantial financial shortfall that will need to be addressed with further legislation. Such legislation should be enacted sooner rather than later to minimize the impact on beneficiaries, providers, and taxpayers.

Conclusion

Lawmakers should address the financial challenges facing Social Security and Medicare as soon as possible. Taking action sooner rather than later will leave more options and more time available to phase in changes so that the public has adequate time to prepare.

By the Trustees:

Jacob J. Lew,
Secretary of the Treasury,
and Managing Trustee
of the Trust Funds.

Sylvia M. Burwell,
Secretary of Health
and Human Services,
and Trustee.

Charles P. Blahous III,
Trustee.
Thomas E. Perez,
Secretary of Labor,
and Trustee.
Carolyn W. Colvin,
Acting Commissioner of
Social Security,
and Trustee.

Robert D. Reischauer,
Trustee.

A SUMMARY OF THE 2014 ANNUAL SOCIAL SECURITY
AND MEDICARE TRUST FUND REPORTS

The most immediate financing challenge facing any of the trust funds is the projected depletion of the Social Security Disability Insurance (DI) Trust Fund in late 2016. For Social Security as a whole as well as Medicare, projected long-range costs are not sustainable with currently scheduled financing and will require legislative action to avoid disruptive consequences for beneficiaries and taxpayers. If lawmakers act sooner rather than later, they can consider a wider array of options and more time will be available to phase in the changes, giving the public adequate time to prepare. Earlier action would also provide more opportunity to ameliorate any adverse impacts on vulnerable populations, including lower-income workers and people already significantly dependent on program benefits.

What Are the Trust Funds? Congress established trust funds managed by the Secretary of the Treasury to account for Social Security and Medicare income and disbursements. The Treasury credits Social Security and Medicare taxes, premiums, and other income to the funds. There are four separate trust funds. For Social Security, the Old-Age and Survivors Insurance (OASI) Trust Fund pays retirement and survivors benefits and the DI Trust Fund pays disability benefits. (OASDI is the designation for the two trust funds when they are considered on a theoretical combined basis.) For Medicare, the Hospital Insurance (HI) Trust Fund pays for inpatient hospital and related care. The Supplementary Medical Insurance (SMI) Trust Fund comprises two separate accounts: Part B, which pays for physician and outpatient services, and Part D, which covers the prescription drug benefit. In 2013, 47.0 million people received OASI benefits, 11.0 million received DI benefits, and 52.3 million were covered under Medicare.

The only disbursements permitted from the funds are benefit payments and administrative costs. Federal law requires that all excess funds be invested in interest-bearing securities backed by the full faith and credit of the United States. The Department of the Treasury currently invests all program revenues in special non-marketable securities of the U.S. Government which earn a market rate of interest. The balances in the trust funds, which represent the accumulated value, including interest, of all prior program annual surpluses and deficits, provide automatic authority to pay benefits.

What Were the Trust Fund Results in 2013? A summary of trust fund operations is shown in the following table. The OASI and SMI Trust Funds showed a net increase in asset reserves in 2013; reserves in the DI and HI Trust Funds declined.

Table 1. Trust Fund Operations
(in billions)
OASI DI HI SMI
Reserves (end of 2012) $2,609.7 $122.7 $220.4 $67.2
Income during 2013 743.8 111.2 251.1 324.6
Cost during 2013 679.5 143.4 266.2 316.7
    Net change in Reserves 64.3 -32.2 -15.0 7.9
Reserves (end of 2013) 2,674.0 90.4 205.4 75.1

Note: Totals do not necessarily equal the sum of rounded components.
The following table shows payments, by category, from each trust fund in 2013.

Table 2. Program Cost
(in billions)
Category (in billions) OASI DI HI SMI
Benefit payments $672.1 $140.1 $261.9 $313.1
Railroad Retirement financial interchange 3.9 0.6
Administrative expenses 3.4 2.8 4.3 3.7
Total 679.5 143.4 266.2 316.7

Note: Totals do not necessarily equal the sum of rounded components.
Trust fund income, by source, in 2013 is shown below.

Table 3. Program Income
(in billions)
Source (in billions) OASI DI HI SMI
Payroll taxes $620.8 $105.4 $220.8
Taxes on OASDI benefits 20.7 0.4 14.3
Beneficiary premiums 3.4 $73.3
Transfers from States 8.8
General Fund reimbursements 4.2 0.7 0.9 4.3
General revenues $232.5
Interest earnings 98.1 4.7 9.3 2.4
Other 2.4 3.7
Total 743.8 111.2 251.1 324.6

Note: Totals do not necessarily equal the sum of rounded components.

In 2013, Social Security’s cost continued to exceed the combined program’s tax income and also continued to exceed its non-interest income, a situation that the Trustees project to continue throughout the long-range period (2014-88) and beyond. The 2013 deficit of tax income (Table 3, first two lines) relative to cost was $76 billion.

In 2013, the HI fund used $9 billion of interest income (Table 3) and $15 billion of asset reserves (Table 1) to finance expenditures beyond those that could have been made solely on the basis of tax and premium income. For SMI, transfers from the General Fund of the Treasury, which are set prospectively based on projected costs, represent the largest source of income. Part B spending was lower than anticipated in 2013 resulting in an $8 billion increase in account asset reserves (Table 1).

What is the Outlook for Future Social Security and Medicare Costs in Relation to GDP? One instructive way to view the projected costs of Social Security and Medicare is to compare the costs of scheduled benefits and administrative costs for the programs with the gross domestic product (GDP), the most frequently used measure of the total output of the U.S. economy (Chart A). Under the intermediate assumptions employed in the reports and throughout this Summary, costs for the programs increase substantially through 2035 when measured this way because: (1) the number of beneficiaries rises rapidly as the baby-boom generation retires; and (2) the lower birth rates that have persisted since the baby boom cause slower growth of the labor force and GDP. Social Security’s projected annual cost increases to about 6.2 percent of GDP by 2035, declines to 6.0 percent by 2050, and remains between 6.0 and 6.1 percent of GDP through 2088. Under the projected baseline,, 1 Medicare cost rises to 5.4 percent of GDP by 2035, largely due to the rapid growth in the number of beneficiaries, and then to 6.9 percent in 2088, with growth in health care cost per beneficiary becoming the larger factor later in the valuation period.

In 2013, the combined cost of the Social Security and Medicare programs equaled 8.4 percent of GDP. The Trustees project an increase to 11.5 percent of GDP in 2035 and 13.0 percent of GDP by 2088. Although Medicare cost (3.5 percent of GDP) was smaller than Social Security cost (4.9 percent of GDP) in 2013, the gap closes gradually until 2052, when Medicare is projected to be the more costly program. During the final decade of the long-range projection period, Medicare is about 12 percent more costly than Social Security.

 

Chart A—Social Security and Medicare Cost as a Percentage of GDP
click on graph for underlying data

 

The projected costs for OASDI and HI depicted in Chart A and elsewhere in this document reflect the full cost of scheduled current-law benefits without regard to whether the trust funds will have sufficient resources to meet these obligations. Current law precludes payment of any benefits beyond the amount that can be financed by the trust funds, that is, from annual income and trust fund reserves. In years after trust fund depletion, the amount of benefits that would be payable is lower than shown, as described later in this summary, because benefit cost exceeds annual income. In addition, the projected costs assume realization of the full estimated savings of the Affordable Care Act. As described in the Medicare Trustees Report, the projections for HI and SMI Part B depend significantly on the sustained effectiveness of various current-law cost-saving measures—in particular, the lower increases in Medicare payment rates to most categories of health care providers—and assume that SGR physician payment reductions scheduled under current law will be overridden.

What is the Outlook for Future Social Security and Medicare HI Costs and Income in Relation to Taxable Earnings? Since the primary source of income for OASDI and HI is the payroll tax, it is informative to express the programs’ incomes and costs as percentages of taxable payroll—that is, of the base of worker earnings taxed to support each program (Chart B). Both the OASDI and HI annual cost rates rise over the long run from their 2013 levels (13.97 and 3.55 percent). Projected Social Security cost grows to 17.14 percent of taxable payroll by 2037, declines to 16.89 percent in 2050, and then rises gradually to 18.19 percent in 2088. The projected Medicare HI cost rate rises to 5.11 percent of taxable payroll in 2050, and thereafter increases to 5.56 percent in 2088. HI taxable payroll is almost 25 percent larger than that of OASDI because the HI payroll tax is imposed on all earnings while OASDI taxes apply only to earnings up to an annual maximum ($117,000 in 2014).

The OASDI income rate—which includes scheduled payroll taxes at the current 12.4 percent level, taxes on benefits, and any other transfers of revenues to the trust funds excepting interest payments—was 12.77 percent in 2013 and increases slowly over time, reaching 13.29 percent in 2088. Annual income from the taxation of OASDI benefits will increase radually relative to taxable payroll as a greater proportion of Social Security benefits is subject to taxation in future years, but will continue to be a relatively small component of program income.

 

Chart B—OASDI and HI Income and Cost as a Percentage of Taxable Payroll
click on graph for underlying data

 

The HI income rate—which includes payroll taxes and taxes on OASDI benefits, but excludes interest payments—rises gradually from 3.28 percent in 2013 to 4.29 percent in 2088 due to the Affordable Care Act’s increase in payroll tax rates for high earners that began in 2013. Individual tax return filers with earnings above $200,000, and joint return filers with earnings above $250,000, pay an additional 0.9 percent tax on earnings above these earnings thresholds. An increasing fraction of all earnings will be subject to the higher tax rate over time because the thresholds are not indexed.

How Will Cost Growth in the Different Parts of Medicare Change the Sources of Program Financing? As Medicare cost grows over time, general revenue and beneficiary premiums will play an increasing role in financing the program. Chart C shows scheduled cost and non-interest revenue sources under the projected baseline for HI and SMI combined as a percentage of GDP. The total cost line is the same as displayed in Chart A and shows Medicare cost rising to 6.9 percent of GDP by 2088.

 

Chart C—Medicare Cost and Non-Interest Income by Source as a Percentage of GDP
click on graph for underlying data

 

Projected revenue from payroll taxes and taxes on OASDI benefits credited to the HI Trust Fund increases from 1.4 percent of GDP in 2014 to 1.8 percent in 2088 under the projected baseline, while projected general revenue transfers to the SMI Trust Fund increase from 1.4 percent of GDP in 2014 to 3.3 percent in 2088, and beneficiary premiums increase from 0.5 to 1.2 percent of GDP. The share of total non-interest Medicare income from taxes falls substantially (from 41 percent to 28 percent) while general revenue transfers rises (from 43 to 52 percent), as does the share of premiums (from 14 percent to 18 percent). The distribution of financing changes in part because in Parts B and D—the Medicare components that are financed largely from general revenues—costs increase at a faster rate than Part A cost under the Trustees’ projections. By 2088, the projected HI deficit represents 0.5 percent of GDP and there is no provision under current law to finance that shortfall through general revenue transfers or any other revenue source.

The Medicare Modernization Act (2003) requires that the Board of Trustees determine each year whether the annual difference between program cost and dedicated revenues (the bottom four layers of Chart C) under current law exceeds 45 percent of total Medicare cost in any of the first seven fiscal years of the 75-year projection period, in which case the annual Trustees Report must include a determination of “excess general revenue Medicare funding.” The Trustees made that determination every year from 2006 through 2013, but because the difference between program cost and dedicated revenues is not expected to exceed the 45 percent threshold during fiscal years 2014-20, there is no such determination in this year’s report.

What are the Budgetary Implications of Rising Social Security and Medicare Costs? Concern about the long-range financial outlook for Medicare and Social Security often focuses on the depletion dates for the HI and OASDI trust funds—the times when the projected trust fund balances under current law will be insufficient to pay the full amounts of scheduled benefits. A more immediate issue is the effect the programs have on the unified Federal budget prior to depletion of the trust funds.

Chart D shows the excess of scheduled costs over dedicated tax and premium income for the OASDI, HI, and SMI trust funds expressed as percentages of GDP. Each of these trust funds’ operations will contribute increasing amounts to Federal unified budget deficits in future years. General revenues pay for roughly 75 percent of all SMI costs. Until 2030, interest earnings and asset redemptions, financed from general revenues, will cover the shortfall of HI tax and premium revenues relative to expenditures. In addition, general revenues must cover similar payments as a result of growing OASDI deficits through 2033.2

In 2014, the projected difference between Social Security’s expenditures and dedicated tax income is $80 billion. For HI, the projected difference between expenditures and dedicated tax and premium income is $25 billion. 3 The projected general revenue demands of SMI are $248 billion. Thus, the total General Fund requirements for Social Security and Medicare in 2014 are $352 billion, or 2.0 percent of GDP. Redemption of trust fund bonds, interest paid on those bonds, and transfers from the General Fund provide no new net income to the Treasury, which must finance these payments through some combination of increased taxation, reductions in other government spending, or additional borrowing from the public.

 

Chart D—Projected SMI General Revenue Funding
plus OASDI and HI Tax Shorfalls
[Percentage of GDP]
click on graph for underlying data

 

Chart D shows that the difference between cost and revenue (expressed as a percentage of GDP) from dedicated payroll taxes, income taxation of benefits, and premiums will grow rapidly through the 2030s as the babyboom generation reaches retirement age, under the assumption that scheduled benefits will be paid even in the absence of an increase in dedicated tax revenues. 4 This imbalance would result in vastly increasing pressure on the unified Federal budget, with such financing requirements equaling 4.4 percent of GDP by 2040.

What Is the Outlook for Short-Term Trust Fund Adequacy? The reports measure the short-range adequacy of the OASI, DI, and HI Trust Funds by comparing fund asset reserves at the start of a year to projected costs for the ensuing year (the “trust fund ratio”). A trust fund ratio of 100 percent or more—that is, asset reserves at least equal to projected cost for the year—is a good indicator of a fund’s short-range adequacy. That level of projected reserves for any year suggests that even if cost exceeds income, the trust fund reserves, combined with annual tax revenues, would be sufficient to pay full benefits for several years.

By this measure, the OASI Trust Fund is financially adequate throughout the 2014-23 period, but the DI Trust Fund fails the short-range test because its trust fund ratio was 62 percent at the beginning of 2014, with projected depletion of all reserves in late 2016.

The HI Trust Fund also does not meet the short-range test of financial adequacy; its trust fund ratio was 76 percent at the beginning of 2014 based on the year’s anticipated expenditures, and the projected ratio does not rise to 100 percent within five years. Projected HI Trust Fund asset reserves become fully depleted in 2030. Chart E shows the trust fund ratios through 2040 under the intermediate assumptions.

 

Chart E—OASI, DI, and HI Trust Fund Ratios
[Asset reserves as a percentage of annual cost]
click on graph for underlying data

 

The Trustees apply a less stringent annual “contingency reserve” test to SMI Part B asset reserves because (i) the financing for that account is set each year to meet expected costs, and (ii) the overwhelming portion of the financing for that account consists of general revenue contributions and beneficiary premiums, which were 73 percent and 25 percent of total Part B income in calendar year 2013. Part D premiums paid by enrollees and the amounts apportioned from the General Fund of the Treasury are determined each year. Moreover, flexible appropriation authority typically established by lawmakers for Part D allows additional General Fund financing if costs are higher than anticipated, limiting the need for a contingency reserve in that account.

What Are Key Dates in OASI, DI, and HI Financing? The 2014 reports project that the DI, OASI, and HI Trust Funds will all be depleted within the next 25 years. The following table shows key dates for the respective trust funds as well as for the hypothetical combined OASDI trust funds.5

 

KEY DATES FOR THE TRUST FUNDS
OASI DI OASDIa HI
Year of peak trust fund ratiob 2011 2003 2008 2003
First year outgo exceeds income excluding interestc 2010 2005 2010 2021
First year outgo exceeds income including interestc 2022 2009 2020 2023
Year trust funds are depleted 2034 2016 2033 2030

 

a Column entries represent key dates for the hypothetical combined OASI and DI funds.
b Dates pertain to the post-2000 period.
c Dates indicate the first year that a condition is projected to occur and to persist annually thereafter through 2088.

DI Trust Fund asset reserves, which have been declining since 2008, are projected to be fully depleted in 2016, as reported last year. Payment of full DI benefits beyond 2016, when tax income would cover only 81 percent of scheduled benefits, will require legislation to address the financial imbalance. Lawmakers may consider responding to the impending DI Trust Fund reserve depletion, as they did in 1994, solely by reallocating the payroll tax rate between OASI and DI. Such a response might serve to delay DI reforms and much needed financial corrections for OASDI as a whole. However, enactment of a more permanent solution could include a tax reallocation in the short run.

The OASI Trust Fund, when considered separately, has a projected reserve depletion date of 2034, one year earlier than in last year’s report.

The theoretical combined OASDI trust funds have a projected depletion date of 2033, unchanged from last year’s report. After the depletion of reserves, continuing tax income would be sufficient to pay 77 percent of scheduled benefits in 2033 and 72 percent in 2088.

The OASDI reserves are projected to grow in 2014 because anticipated interest earnings ($99 billion in 2014) still substantially exceed the non-interest income deficit. This year’s report indicates that annual OASDI income, including payments of interest to the trust funds from the General Fund, will exceed annual cost every year until 2020, increasing the nominal value of combined OASDI trust fund asset reserves. The trust fund ratio (the ratio of projected reserves to annual cost) will continue to decline gradually (Chart E), as it has since 2008, despite this nominal balance increase. Beginning in 2020, net redemptions of trust fund asset reserves with General Fund payments will be required until projected depletion of these reserves in 2033.

The projected HI Trust Fund depletion date is 2030, four years later than reported last year. Under current law, scheduled HI tax and premium income would be sufficient to pay 85 percent of estimated HI cost in 2030 and 77 percent by 2088.

This report anticipates that in 2014 the HI Trust Fund’s non-interest income deficit ($22 billion) will exceed projected interest earnings ($8 billion), requiring the use of $14 billion in asset reserves. Non-interest income is projected to exceed cost for 2015 through 2020 as the economic recovery continues, followed by increasing annual shortfalls of non-interest income through the remainder of the long-range projection period.

What is the Long-Range Actuarial Balance of the OASI, DI, and HI Trust Funds? Another way to view the outlook for payroll tax-financed trust funds (OASI, DI, and HI) is to consider their actuarial balances for the 75-year valuation period. The actuarial balance measure includes the trust fund asset reserves at the beginning of the period, an ending fund balance equal to the 76th year’s costs, and projected costs and income during the valuation period, all expressed as a percentage of taxable payroll for the 75-year projection period. Actuarial balance is not an informative concept for the SMI program because Federal law sets premium increases and general revenue transfers at the levels necessary to bring SMI into annual balance.

The actuarial deficit represents the average amount of change in income or cost that is needed throughout the valuation period in order to achieve actuarial balance. The actuarial balance equals zero if cost for the period can be met for the period as a whole and trust fund asset reserves at the end of the period are equal to the following year’s cost. The OASI, DI, and HI Trust Funds all have long-range actuarial deficits under the intermediate assumptions, as shown in the following table.

LONG-RANGE ACTUARIAL DEFICIT OF THE OASI, DI, AND HI TRUST FUNDS
(As a percentage of taxable payroll)
OASI DI OASDI HI
Actuarial deficit 2.55 0.33 2.88 0.87

The Trustees project that the annual deficits for Social Security as a whole, expressed as the difference between the cost rate and income rate for a particular year, will decline from 1.29 percent of taxable payroll in 2014 to 1.06 percent in 2017 before increasing steadily to 3.95 percent in 2037. Annual deficits then decline slightly through 2050 before resuming an upward trajectory and reaching 4.90 percent in 2088 (Chart B). The relatively large annual variations in deficits indicate that a single tax rate increase for all years starting in 2014 sufficient to achieve actuarial balance would result in sizable annual surpluses early in the period followed by increasing deficits in later years. Sustained solvency would require payroll tax rate increases or benefit reductions (or a combination thereof) by the end of the period that are substantially larger than those needed on average for this report’s long-range period (2014-88).

The Trustees project that the HI cost rate will exceed the income rate in 2014 by 0.11 percent of taxable payroll, followed by a period of small tax-income surpluses in 2015 through 2021. Deficits subsequently re-emerge to grow rapidly with the aging of the baby boom population through about 2045, when the annual deficit reaches 1.23 percent of taxable payroll. After 2050, the annual deficits level off through 2088 at approximately 1.30 percent of taxable payroll.

The financial outlooks for both OASDI and HI depend on a number of demographic and economic assumptions. Nevertheless, the actuarial deficit in each of these programs is large enough that averting trust fund depletion under current-law financing is extremely unlikely. An analysis that allows plausible random variations around the intermediate assumptions employed in the report indicates that OASDI trust fund depletion is highly probable by mid-century.

How Has the Financial Outlook for Social Security and Medicare Changed Since Last Year? Under the intermediate assumptions, the combined OASDI trust funds have a projected 75-year actuarial deficit equal to 2.88 percent of taxable payroll, 0.16 percentage point larger than last year’s estimate. The anticipated depletion date for the theoretical combined asset reserves remains 2033. The actuarial deficit increased by about 0.06 percent of payroll due to advancing the valuation date by one year and including the year 2088. The remaining increase in the deficit is due primarily to changes in methods, assumptions, and starting values.

Medicare’s HI Trust Fund has a long-range actuarial deficit equal to 0.87 percent of taxable payroll under the intermediate assumptions, 0.24 percentage point smaller than reported last year. This improvement is primarily due to lower projected spending for most HI service categories—especially for inpatient hospitals—that reflects lower-than-expected spending in the projection base year (2013) and other recent data, lower utilization assumptions for inpatient hospitals, and lower case mix assumptions for skilled nursing facilities and home health agencies. The projected date of depletion of the HI Trust Fund is now 2030, four years later than reported last year.

How Are Social Security and Medicare Financed? For OASDI and HI, the major source of financing is payroll taxes on earnings paid by employees and their employers. Self-employed workers pay the equivalent of the combined employer and employee tax rates. During 2013, an estimated 163 million people had earnings covered by Social Security and paid payroll taxes; for Medicare the corresponding figure was 167 million. Current law establishes payroll tax rates for OASDI, which apply to earnings up to an annual maximum ($117,000 in 2014) that ordinarily increases with the growth in the nationwide average wage. In contrast to OASDI, covered workers pay HI taxes on total earnings. The scheduled payroll tax rates (in percent) for 2014 are:

OASI DI OASDI HI Total
Employees 5.30 0.90 6.20 1.45 7.65
Employers 5.30 0.90 6.20 1.45 7.65
Combined total 10.60 1.80 12.40 2.90 15.30

The Affordable Care Act applies an additional HI tax equal to 0.9 percent of earnings over $200,000 for individual tax return filers, and on earnings over $250,000 for joint return filers.

Payments from the General Fund currently finance about 75 percent of SMI Part B and Part D costs, with most of the remaining costs covered by monthly premiums charged to enrollees or in the case of low-income beneficiaries, paid on their behalf by Medicaid for Part B and Medicare for Part D. Part B and Part D premium amounts are determined by methods defined in law and increase as the estimated costs of those programs rise.

In 2014, the Part B standard monthly premium is $104.90. There are also income-related premium surcharges for Part B beneficiaries whose modified adjusted gross income exceeds a specified threshold. In 2014 through 2019, the threshold is $85,000 for individual tax return filers and $170,000 for joint return filers. Income-related premiums range from $146.90 to $335.70 per month in 2014.

In 2014, the Part D “base monthly premium” is $32.42. Actual premium amounts charged to Part D beneficiaries depend on the specific plan they have selected and average around $31 for standard coverage. Part D enrollees with incomes exceeding the thresholds established for Part B must pay income-related monthly adjustment amounts in addition to their normal plan premium. For 2014, the adjustments range from $12.10 to $69.30 per month. Part D also receives payments from States that partially compensate for the Federal assumption of Medicaid responsibilities for prescription drug costs for individuals eligible for both Medicare and Medicaid. In 2014, State payments will cover about 10 percent of Part D costs.

Who Are the Trustees? There are six Trustees, four of whom serve by virtue of their positions in the Federal Government: the Secretary of the Treasury, the Secretary of Labor, the Secretary of Health and Human Services, and the Commissioner of Social Security. The other two Trustees are public representatives appointed by the President and confirmed by the Senate: Charles P. Blahous III, Research Fellow at the Hoover Institution and Senior Research Fellow at the Mercatus Center, and Robert D. Reischauer, President Emeritus and Distinguished Fellow of the Urban Institute.


1 Recent Medicare Trustees Reports featured current-law projected costs which incorporated scheduled reductions in physician payment rates under the sustainable growth rate (SGR) formula. The reports noted that those reductions were unlikely to occur and warned readers that, therefore, projected costs for Part B were probably understated. This year’s report (and this Summary) gives primary emphasis to the projected baseline, in which it is assumed that SGR reductions are overridden by Congress, as has occurred in every year since 2003.
2 As noted earlier in this summary, if trust fund depletion actually occurred as projected for HI in 2030 and for OASDI in 2033, each program could pay benefits thereafter only up to the amount of continuing dedicated revenues. Chart D, by contrast, compares dedicated sources of tax and premium income with the full cost of paying scheduled benefits under each program. In practice, lawmakers have never allowed the asset reserves of the Social Security or Medicare HI trust funds to become depleted.
3 This difference is projected on a cash rather than the incurred expenditures basis applied elsewhere in the long-range projections, except where explicitly noted otherwise.
4 As previously noted, this scenario would require a change in law to allow for the timely payment of all scheduled benefits upon trust fund depletion.
5 HI results in this section of the Summary are on a cash rather than the incurred expenditures basis.

A MESSAGE FROM THE PUBLIC TRUSTEES

For the past several years, the annual Trustees Reports have warned lawmakers and the public of the financing shortfalls facing the Social Security and Medicare programs, emphasizing that continued delay in legislating corrective measures is likely to make the challenge ever more difficult to resolve and result in undesirable consequences. Notwithstanding the enactment of the Affordable Care Act (ACA) in 2010 and the recent slowdown in the growth of national health expenditure (NHE) and Medicare spending, further legislative changes will be required to ensure Medicare’s financial sustainability. While Social Security has not been the object of significant financing reforms since 1983, its need for additional measures has been recognized for over two decades. Now, in the middle of the second decade of the 21st century, the adverse consequences of delaying necessary corrections in both programs are beginning to be realized. The most immediate financing threat facing either program is the impending depletion of Social Security Disability Insurance (DI) Trust Fund reserves in late 2016. This is the closest that any of the separate trust funds has come to depletion in over two decades. The major component of the solution to the last reserve depletion crisis, enacted in 1994, was to reallocate payroll taxes from the Old-Age and Survivors Insurance (OASI) Trust Fund to the DI Trust Fund. This response reflected the fact that, at that time, the DI Trust Fund faced both a more immediate and relatively larger shortfall than did the OASI Trust Fund.

The present situation is very different from that of 1994. While there are administrative issues and policy concerns unique to DI, the DI fund’s currently projected depletion is, to a great extent, related to financing pressures that afflict both the OASI and DI Trust Funds. Of the two funds, OASI faces the larger long-term imbalance between income and obligations. The earlier depletion date of the DI Trust Fund’s reserves largely reflects the fact that the baby boomers have been aging through the years of high disability incidence before reaching the ages at which they are eligible for OASI benefits. As baby boomers receiving DI benefits reach Social Security’s full retirement age, the costs of their benefits shift from DI to OASI, increasing costs for the latter trust fund. The DI Trust Fund’s impending reserve depletion signals that the time has arrived for reforms that strengthen the financing outlooks for OASI and DI alike.

The urgency of addressing the financial challenges facing both programs is underscored by the fact that the financing shortfall in the theoretical combined Social Security trust funds has now grown to a size substantially greater, even relative to today’s larger economy, than the shortfall corrected in the landmark bipartisan Social Security amendments of 1983. Those reforms, which included a six-month delay in cost-of-living adjustments, exposing benefits to income taxation for the first time, requiring new Federal employees to join the system and pay payroll taxes, raising the age of eligibility for full retirement benefits, accelerating a previously scheduled payroll tax increase, and other measures, were intensely controversial and difficult to enact. It is sobering to consider that financing corrections today would require more significant measures than those. Furthermore, the longer corrective action is put off, the more severe the measures will have to be and the fewer the cohorts who can be asked shoulder a portion of the burden. Unless Social Security’s historical financing structure is to be altered to finance some or all of the program from the Federal government’s General Fund on a permanent basis, and thereby weaken the historical tie between individual contributions and benefits, legislators must act to eliminate this financing shortfall. This task becomes progressively more difficult, and therefore less assured of success, with each passing year.

Long before the reserves of the OASI and HI Trust Funds are depleted, the finances of Social Security and Medicare will be challenging because of the growing pressure these programs exert on the Federal budget. This is a central concern from the standpoint of program financing because the reserves of each of the various trust funds are invested wholly in U.S. Treasury securities. Monitoring interactions between the trust funds and the General Fund is one of our core duties. When lawmakers created the public trustee positions in 1983 pursuant to a recommendation of the Greenspan Commission, that commission made its recommendation to create public trustees in the “investment procedures” section of its report, rather than in those sections pertaining to actuarial balance. While the Greenspan Commission presented different opinions on the issue of whether Social Security should be included within the unified Federal budget, members of the commission agreed that it was important that Social Security’s impact on the budget be laid out in a transparent fashion. The minority advocated for Social Security’s “impact thereon to be seen more clearly” while the majority’s arguments included making clear “the effect and presence of any payments from the General Fund of the Treasury to the Social Security program.” Indeed, our public trustee positions exist in large part because of lawmakers’ concern that the economic and fiscal implications of the trust funds’ buildup and drawdown be fully understood and properly managed. One of the first actions taken by the program’s original two public trustees in 1985, the year of their first report, was to direct a study of these implications in response to the concerns.

Resources for Social Security and Medicare trust fund interest payments, asset redemptions, and other General Fund payments—most notably those for SMI—must be found in competition with other spending and borrowing within the unified Federal budget, while Federal lawmakers maintain the ability to change the programs’ benefit and tax schedules as warranted by broader fiscal considerations. Accordingly, a thorough assessment of the degree of risk associated with scheduled benefit payments cannot be limited solely to assessing the level of reserves present in the trust funds, but also requires cognizance of the degree of pressure such payments will place on other components of the Federal budget. The rising cost of Medicare has long strained the Federal budget largely because the preponderance of Medicare SMI expenditures is financed from the General Fund. Pressure arising from increasing Social Security expenditures attained a new significance when program costs began to exceed incoming tax revenue in 2010. In 2013, these programs’ costs together required $357 billion (2.1 percent of GDP) from the General Fund.

Whether one regards the Medicare financing challenge to be more or less serious than Social Security’s depends on the perspective taken. Of the two programs, Social Security has the larger actuarial imbalance and the reserves of one of its two trust funds (DI) are in more imminent danger of depletion. On the other hand, Medicare’s long-term cost growth is still projected to exceed Social Security’s, and its operations stand to place greater strain on the Federal budget. As with Social Security, legislative actions of a significant magnitude will be required to place Medicare on a sound financial footing.

Upon the release of last year’s Trustees Report, and in the months afterward, questions arose as to whether a recent slowdown in national health expenditure growth may indicate less urgency in legislating Medicare financing corrections than suggested by our intermediate projections. Unfortunately, this is not the case. The Trustees’ projections have long assumed that over the long term NHE growth will slow relative to historical trends. Overlaying the ACA’s required reductions in Medicare reimbursement rates on top of this projection methodology means that in the later decades of our long-range valuation period (2014-88) we project that per capita spending growth in many categories of Medicare payments will slow markedly relative to per capita GDP growth. Clearly it is to be hoped that NHE growth will continue to slow and that cost-saving mechanisms in current law will prove effective and sustainable. However, even with the assumption of decelerating spending growth Medicare’s financing shortfall, like Social Security’s, remains a reality warranting legislative corrections.

With this, our fourth annual reports as Public Trustees, we are once again pleased to vouch for the integrity of the process by which the Trustees’ projections are developed. We appreciate the dedication and skill of the capable staff that the ex officio Trustees have assigned to help develop these reports and the sophisticated analysis that lies behind the projections. While unanticipated economic and demographic developments and legislative changes will mean that actual results will differ from these projections, we believe the Trustees’ deliberation process is one fully deserving of public confidence.

Charles P. Blahous III,
Trustee.
Robert D. Reischauer,
Trustee.

Continue reading “SSDI FUND DEPLETED IN TWO YEARS”

THE RETAIL DEATH RATTLE

“I was part of that strange race of people aptly described as spending their lives doing things they detest, to make money they don’t want, to buy things they don’t need, to impress people they don’t like.”Emile Gauvreau

If ever a chart provided unequivocal proof the economic recovery storyline is a fraud, the one below is the smoking gun. November and December retail sales account for 20% to 40% of annual retail sales for most retailers. The number of visits to retail stores has plummeted by 50% since 2010. Please note this was during a supposed economic recovery. Also note consumer spending accounts for 70% of GDP. Also note credit card debt outstanding is 7% lower than its level in 2010 and 16% below its peak in 2008. Retailers like J.C. Penney, Best Buy, Sears, Radio Shack and Barnes & Noble continue to report appalling sales and profit results, along with listings of store closings. Even the heavyweights like Wal-Mart and Target continue to report negative comp store sales. How can the government and mainstream media be reporting an economic recovery when the industry that accounts for 70% of GDP is in free fall? The answer is that 99% of America has not had an economic recovery. Only Bernanke’s 1% owner class have benefited from his QE/ZIRP induced stock market levitation.

Source: WSJ

The entire economic recovery storyline is a sham built upon easy money funneled by the Fed to the Too Big To Trust Wall Street banks so they can use their HFT supercomputers to drive the stock market higher, buy up the millions of homes they foreclosed upon to artificially drive up home prices, and generate profits through rigging commodity, currency, and bond markets, while reducing loan loss reserves because they are free to value their toxic assets at anything they please – compliments of the spineless nerds at the FASB. GDP has been artificially propped up by the Federal government through the magic of EBT cards, SSDI for the depressed and downtrodden, never ending extensions of unemployment benefits, billions in student loans to University of Phoenix prodigies, and subprime auto loans to deadbeats from the Government Motors financing arm – Ally Financial (85% owned by you the taxpayer). The country is being kept afloat on an ocean of debt and delusional belief in the power of central bankers to steer this ship through a sea of icebergs just below the surface.

The absolute collapse in retail visitor counts is the warning siren that this country is about to collide with the reality Americans have run out of time, money, jobs, and illusions. The most amazingly delusional aspect to the chart above is retailers continued to add 44 million square feet in 2013 to the almost 15 billion existing square feet of retail space in the U.S. That is approximately 47 square feet of retail space for every person in America. Retail CEOs are not the brightest bulbs in the sale bin, as exhibited by the CEO of Target and his gross malfeasance in protecting his customers’ personal financial information. Of course, the 44 million square feet added in 2013 is down 85% from the annual increases from 2000 through 2008. The exponential growth model, built upon a never ending flow of consumer credit and an endless supply of cheap fuel, has reached its limit of growth. The titans of Wall Street and their puppets in Washington D.C. have wrung every drop of faux wealth from the dying middle class. There are nothing left but withering carcasses and bleached bones.

The impact of this retail death spiral will be vast and far reaching. A few factoids will help you understand the coming calamity:

  • There are approximately 109,500 shopping centers in the United States ranging in size from the small convenience centers to the large super-regional malls.
  • There are in excess of 1 million retail establishments in the United States occupying 15 billion square feet of space and generating over $4.4 trillion of annual sales. This includes 8,700 department stores, 160,000 clothing & accessory stores, and 8,600 game stores.
  • U.S. shopping-center retail sales total more than $2.26 trillion, accounting for over half of all retail sales.
  • The U.S. shopping-center industry directly employed over 12 million people in 2010 and indirectly generated another 5.6 million jobs in support industries. Collectively, the industry accounted for 12.7% of total U.S. employment.
  • Total retail employment in 2012 totaled 14.9 million, lower than the 15.1 million employed in 2002.
  • For every 100 individuals directly employed at a U.S. regional shopping center, an additional 20 to 30 jobs are supported in the community due to multiplier effects.

The collapse in foot traffic to the 109,500 shopping centers that crisscross our suburban sprawl paradise of plenty is irreversible. No amount of marketing propaganda, 50% off sales, or hot new iGadgets is going to spur a dramatic turnaround. Quarter after quarter there will be more announcements of store closings. Macys just announced the closing of 5 stores and firing of 2,500 retail workers. JC Penney just announced the closing of 33 stores and firing of 2,000 retail workers. Announcements are imminent from Sears, Radio Shack and a slew of other retailers who are beginning to see the writing on the wall. The vacancy rate will be rising in strip malls, power malls and regional malls, with the largest growing sector being ghost malls. Before long it will appear that SPACE AVAILABLE is the fastest growing retailer in America.

The reason this death spiral cannot be reversed is simply a matter of arithmetic and demographics. While arrogant hubristic retail CEOs of public big box mega-retailers added 2.7 billion retail square feet to our already over saturated market, real median household income flat lined. The advancement in retail spending was attributable solely to the $1.1 trillion increase (68%) in consumer debt and the trillion dollars of home equity extracted from castles in the sky, that later crashed down to earth. Once the Wall Street created fraud collapsed and the waves of delusion subsided, retailers have been revealed to be swimming naked. Their relentless expansion, based on exponential growth, cannibalized itself, new store construction ground to a halt, sales and profits have declined, and the inevitable closing of thousands of stores has begun. With real median household income 8% lower than it was in 2008, the collapse in retail traffic is a rational reaction by the impoverished 99%. Americans are using their credit cards to pay their real estate taxes, income taxes, and monthly utilities, since their income is lower, and their living expenses rise relentlessly, thanks to Bernanke and his Fed created inflation.

The media mouthpieces for the establishment gloss over the fact average gasoline prices in 2013 were the second highest in history. The highest average price was in 2012 and the 3rd highest average price was in 2011. These prices are 150% higher than prices in the early 2000’s. This might not matter to the likes of Jamie Dimon and Jon Corzine, but for a middle class family with two parents working and making 7.5% less than they made in 2000, it has a dramatic impact on discretionary income. The fact oil prices have risen from $25 per barrel in 2003 to $100 per barrel today has not only impacted gas prices, but utility costs, food costs, and the price of any product that needs to be transported to your local Wally World. The outrageous rise in tuition prices has been aided and abetted by the Federal government and their doling out of loans so diploma mills like the University of Phoenix can bilk clueless dupes into thinking they are on their way to an exciting new career, while leaving them jobless in their parents’ basement with a loan payment for life.

 

The laughable jobs recovery touted by Obama, his sycophantic minions, paid off economist shills, and the discredited corporate legacy media can be viewed appropriately in the following two charts, that reveal the false storyline being peddled to the techno-narcissistic iGadget distracted masses. There are 247 million working age Americans between the ages of 18 and 64. Only 145 million of these people are employed. Of these employed, 19 million are working part-time and 9 million are self- employed. Another 20 million are employed by the government, producing nothing and being sustained by the few remaining producers with their tax dollars. The labor participation rate is the lowest it has been since women entered the workforce in large numbers during the 1980’s. We are back to levels seen during the booming Carter years. Those peddling the drivel about retiring Baby Boomers causing the decline in the labor participation rate are either math challenged or willfully ignorant because they are being paid to be so. Once you turn 65 you are no longer counted in the work force. The percentage of those over 55 in the workforce has risen dramatically to an all-time high, as the Me Generation never saved for retirement or saw their retirement savings obliterated in the Wall Street created 2008 financial implosion.

To understand the absolute idiocy of retail CEOs across the land one must parse the employment data back to 2000. In the year 2000 the working age population of the U.S. was 213 million and 136.9 million of them were working, a record level of 64.4% of the population. There were 70 million working age Americans not in the labor force. Fourteen years later the number of working age Americans is 247 million and only 144.6 million are working. The working age population has risen by 16% and the number of employed has risen by only 5.6%. That’s quite a success story. Of course, even though median household income is 7.5% lower than it was in 2000, the government expects you to believe that 22 million Americans voluntarily left the labor force because they no longer needed a job. While the number of employed grew by 5.6% over fourteen years, the number of people who left the workforce grew by 31.1%. Over this same time frame the mega-retailers that dominate the landscape added almost 3 billion square feet of selling space, a 25% increase. A critical thinking individual might wonder how this could possibly end well for the retail genius CEOs in glistening corporate office towers from coast to coast.

This entire materialistic orgy of consumerism has been sustained solely with debt peddled by the Wall Street banking syndicate. The average American consumer met their Waterloo in 2008. Bernanke’s mission was to save bankers, billionaires and politicians. It was not to save the working middle class. You’ve been sacrificed at the altar of the .1%. The 0% interest rates were for Jamie Dimon and Lloyd Blankfein. Your credit card interest rate remained between 13% and 21%. So, while you struggle to pay bills with your declining real income, the Wall Street bankers are again generating record profits and paying themselves record bonuses. Profits are so good, they can afford to pay tens of billions in fines for their criminal acts, and still be left with billions to divvy up among their non-prosecuted criminal executives.

Bernanke and his financial elite owners have been able to rig the markets to give the appearance of normalcy, but they cannot rig the demographic time bomb that will cause the death and destruction of our illusory retail paradigm. Demographics cannot be manipulated or altered by the government or mass media. The best they can do is ignore or lie about the facts. The life cycle of a human being is utterly predictable, along with their habits across time. Those under 25 years old have very little income, therefore they have very little spending. Once a job is attained and income levels rise, spending rises along with the increased income. As the person enters old age their income declines and spending on stuff declines rapidly. The media may be ignoring the fact that annual expenditures drop by 40% for those over 65 years old from the peak spending years of 45 to 54, but it doesn’t change the fact. They also cannot change the fact that 10,000 Americans will turn 65 every day for the next sixteen years. They also can’t change the fact the average Baby Boomer has less than $50,000 saved for retirement and is up to their grey eye brows in debt.

With over 15% of all 25 to 34 year olds living in their parents’ basement and those under 25 saddled with billions in student loan debt, the traditional increase in income and spending is DOA for the millennial generation. The hardest hit demographic on the job front during the 2008 through 2014 ongoing recession has been the 45 to 54 year olds in their peak earning and spending years. Combine these demographic developments and you’ve got a perfect storm for over-built retailers and their egotistical CEOs.

The media continues to peddle the storyline of on-line sales saving the ancient bricks and mortar retailers. Again, the talking head pundits are willfully ignoring basic math. On-line sales account for 6% of total retail sales. If a dying behemoth like JC Penney announces a 20% decline in same store sales and a 20% increase in on-line sales, their total change is still negative 17.6%. And they are still left with 1,100 decaying stores, 100,000 employees, lease payments, debt payments, maintenance costs, utility costs, inventory costs, and pension costs. Their future is so bright they gotta wear a toe tag.

The decades of mal-investment in retail stores was enabled by Greenspan, Bernanke, and their Federal Reserve brethren. Their easy money policies enabled Americans to live far beyond their true means through credit card debt, auto debt, mortgage debt, and home equity debt. This false illusion of wealth and foolish spending led mega-retailers to ignore facts and spread like locusts across the suburban countryside. The debt fueled orgy has run out of steam. All that is left is the largest mountain of debt in human history, a gutted and debt laden former middle class, and thousands of empty stores in future decaying ghost malls haunting the highways and byways of suburbia.

The implications of this long and winding road to ruin are far reaching. Store closings so far have only been a ripple compared to the tsunami coming to right size the industry for a future of declining spending. Over the next five to ten years, tens of thousands of stores will be shuttered. Companies like JC Penney, Sears and Radio Shack will go bankrupt and become historical footnotes. Considering retail employment is lower today than it was in 2002 before the massive retail expansion, the future will see in excess of 1 million retail workers lose their jobs. Bernanke and the Feds have allowed real estate mall owners to roll over non-performing loans and pretend they are generating enough rental income to cover their loan obligations. As more stores go dark, this little game of extend and pretend will come to an end. Real estate developers will be going belly-up and the banking sector will be taking huge losses again. I’m sure the remaining taxpayers will gladly bailout Wall Street again. The facts are not debatable. They can be ignored by the politicians, Ivy League economists, media talking heads, and the willfully ignorant masses, but they do not cease to exist.

“Facts do not cease to exist because they are ignored.”Aldous Huxley

FREE SH*T ARMIES MARCH ON

The Free Shit Armies are storming the castle. They reproduce faster than we can fight them off. You might even be part of the Free Shit Army. If you are receiving money from any of the programs listed below, you are a private in the Free Shit Army.

CULTURE OF IGNORANCE – PART ONE

“Five percent of the people think;
ten percent of the people think they think;
and the other eighty-five percent would rather die than think.”

– Thomas Edison

The kabuki theater that passes for governance in Washington D.C. reveals the profound level of ignorance shrouding this Empire of Debt in its prolonged death throes. Ignorance of facts; ignorance of math; ignorance of history; ignorance of reality; and ignorance of how ignorant we’ve become as a nation, have set us up for an epic fall. It’s almost as if we relish wallowing in our ignorance like a fat lazy sow in a mud hole. The lords of the manor are able to retain their power, control and huge ill-gotten riches because the government educated serfs are too ignorant to recognize the self-evident contradictions in the propaganda they are inundated with by state controlled media on a daily basis.

 

“Any formal attack on ignorance is bound to fail because the masses are always ready to defend their most precious possession – their ignorance.” Hendrik Willem van Loon

The levels of ignorance are multi-dimensional and diverse, crossing all educational, income, and professional ranks. The stench of ignorance has settled like Chinese toxic smog over our country, as various constituents have chosen comforting ignorance over disconcerting knowledge. The highly educated members, who constitute the ruling class in this country, purposefully ignore facts and truth because the retention and enhancement of their wealth and power are dependent upon them not understanding what they clearly have the knowledge to understand. The underclass wallow in their ignorance as their life choices, absence of concern for marriage or parenting, lack of interest in educating themselves, and hiding behind the cross of victimhood and blaming others for their own failings. Everyone is born ignorant and the path to awareness and knowledge is found in reading books. Rich and poor alike are free to read and educate themselves. The government, union teachers, and a village are not necessary to attain knowledge. It requires hard work and clinging to your willful ignorance to remain stupid.

The youth of the country consume themselves in techno-narcissistic triviality, barely looking up from their iGadgets long enough to make eye contact with other human beings. The toxic combination of government delivered public education, dumbed down socially engineered curriculum, taught by uninspired intellectually average union controlled teachers, to distracted, unmotivated, latchkey kids, has produced a generation of young people ignorant about history, basic mathematical concepts, and the ability or interest to read and write. They have been taught to feel rather than think critically. They have been programmed to believe rather than question and explore. Slogans and memes have replaced knowledge and understanding. They have been lured into inescapable student loan debt serfdom by the very same government that is handing them a $200 trillion entitlement bill and an economy built upon low paying service jobs that don’t require a college education, because the most highly educated members of society realized that outsourcing the higher paying production jobs to slave labor factories in Asia was great for the bottom line, their stock options and bonus pools.

Instead of being outraged and lashing out against this injustice, the medicated, daycare reared youth passively lose themselves in the inconsequentiality and shallowness of social media, reality TV, and the internet, while living in their parents’ basement. They have chosen the ignorance inflicted upon their brains by thousands of hours spent twittering, texting, facebooking, seeking out adorable cat videos on the internet, viewing racist rap singer imbeciles rent out sports stadiums to propose to vacuous big breasted sluts on reality cable TV shows, and sitting zombie-like for days with a controller in hand blowing up cities, killing whores, and murdering policemen using their new PS4 on their 65 inch HDTV, rather than gaining a true understanding of the world by reading Steinbeck, Huxley, and Orwell. Technology has reduced our ability to think and increased our ignorance.

“During my eighty-seven years, I have witnessed a whole succession of technological revolutions. But none of them has done away with the need for character in the individual or the ability to think.” – Bernard M. Baruch

The youth have one thing going for them. They are still young and can awaken from their self-imposed stupor of ignorance. There are over 80 million millenials between the ages of 8 and 30 years old who need to start questioning the paradigm they are inheriting and critically examining the mendacious actions of their elders. The future of the country is in their hands, so I hope they put down those iGadgets and open their eyes before it is too late. We need many more patriots like Edward Snowden and far fewer twerking sluts like Miley Cyrus if we are to overcome the smog of apathy and ignorance blanketing our once sentient nation.

The ignorance of youth can be chalked up to inexperience, lack of wisdom, and immaturity. There is no excuse for the epic level of ignorance displayed by older generations over the last thirty years. Boomers and Generation X have charted the course of this ship of state for decades. Ship of fools is a more fitting description, as they have stimulated the entitlement mentality that has overwhelmed the fiscal resources of the country. Our welfare/warfare empire, built upon a Himalayan mountain of debt, enabled by a central bank owned by Wall Street, and perpetuated by swarms of corrupt bought off spineless politicians, is the ultimate testament to the seemingly limitless level of ignorance engulfing our civilization. The entitlement mindset permeates our culture from the richest to the poorest. Mega-corporations use their undue influence (bribes disguised as campaign contributions) to elect pliable candidates to office, hire lobbyists to write the laws and tax regulations governing their industries, and collude with the bankers and other titans of industry to harvest maximum profits from the increasingly barren fields of a formerly thriving land of milk and honey. By unleashing a torrent of unbridled greed, ransacking the countryside, and burning down the villages, the ruling class has planted the seeds of their own destruction.

When the underclass observes Wall Street bankers committing the crime of the century with no consequences for their actions, they learn a lesson. When billionaire banker/politicians like Jon Corzine can steal $1.2 billion directly from the accounts of farmers and ranchers and continue to live a life of luxury in one of his six mansions, they get the message. Wall Street bankers are allowed to commit fraud, reaping profits of $25 billion, and when they are caught red handed pay a $5 billion fine while admitting no guilt. No connected bankers have gone to jail for crashing the worldwide financial system, but teenage marijuana dealers are incarcerated for ten years in our corporate prison system. The message has been received loud and clear by the unwashed masses. Committing fraud and gaming the system is OK. Only suckers play by the rules anymore. A culture of lawlessness, greed, fraud, deceit, swindles and scams was fashioned by those in power. Reckless disregard for honesty, truthfulness, fair dealing, and treating others as you would like to be treated, has permeated the beliefs and behavior of our society.

The ever increasing number of people in the SNAP program along with abuses committed by retailers and recipients, the skyrocketing number of people faking their way into the SSDI program, billions of taxpayer dollars lost to Medicare fraud, billions more lost paying out earned income tax credit refunds based on non-existent children, public schools falsifying test scores, students cheating on SAT tests, credit card fraud on a grand scale, failure to report income and falsifying tax returns, and a myriad of other dodges and scams are just a reflection of a moral and cultural collapse. The dog eat dog mentality glorified by the media, with such despicable men as Dimon, Greenspan, Corzine, Clinton, Trump, Rubin, Bernanke and Bloomberg honored as pillars of society, has displaced honesty, compassion, humanity, shared sacrifice, and caring about our descendants. Self-interest, self-indulgence, and a narcissistic focus on what is in it for me today has led to an implosion of trust and an attitude of “who cares” about our fellow man, morality, right or wrong, and the fate of future generations. We ignored the warnings of our last President who displayed courageousness and truthfulness when speaking to the American people.

“As we peer into society’s future, we — you and I, and our government — must avoid the impulse to live only for today, plundering for our own ease and convenience the precious resources of tomorrow. We cannot mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage. We want democracy to survive for all generations to come, not to become the insolvent phantom of tomorrow.” Dwight D. Eisenhower

The Me Generation has devolved into the Me Culture. While the masses have been mesmerized by their iGadgets, zombified by the boob tube, programmed to consume by the Madison Avenue propaganda machines, enslaved in chains of debt by the Wall Street plantation owners, and convinced by their fascist government keepers that phantom terrorists are hiding behind every bush, they surrendered their freedoms, liberties and sense of self-responsibility. There will always be evil men seeking to control and manipulate the ignorant and oblivious. A citizenry armed with knowledge, critical thinking skills, and moral integrity would not passively submit to the will of a corporate fascist oligarchy. Well educated, well informed citizens, capable of critical thinking are dangerous to rich men of evil intent. Obedient, universally ignorant, distracted, fearful, morally depraved slaves are what the owners of this country want. As the light of knowledge flickers and dies, we sink into the darkness of ignorance.

 

“No people will tamely surrender their Liberties, nor can any be easily subdued, when knowledge is diffused and virtue is preserved. On the Contrary, when People are universally ignorant, and debauched in their Manners, they will sink under their own weight without the Aid of foreign Invaders.”Samuel Adams

Cult of Ignorance

“There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that “my ignorance is just as good as your knowledge.”Isaac Asimov

  

“While every group has certain economic interests identical with those of all groups, every group has also, as we shall see, interests antagonistic to those of all other groups. While certain public policies would in the long run benefit everybody, other policies would benefit one group only at the expense of all other groups. The group that would benefit by such policies, having such a direct interest in them, will argue for them plausibly and persistently. It will hire the best buyable minds to devote their whole time to presenting its case. And it will finally either convince the general public that its case is sound, or so befuddle it that clear thinking on the subject becomes next to impossible.

In addition to these endless pleadings of self-interest, there is a second main factor that spawns new economic fallacies every day. This is the persistent tendency of man to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary consequences.”Henry Hazlitt

America’s cult of ignorance, combined with the selfish interests of various constituencies, the character weakness of the people elected to office, a lack of understanding or interest in basic mathematical concepts, and inability to comprehend the long term and unintended consequences of every piece of legislation, have brought the country to the brink of fiscal disaster. But still, the vast majority of Americans, including the supposed intellectuals and economic “experts”, are basking in their ignorance, as the stock market reaches a new high, the local GM dealer just gave them a 7 year $40,000 auto loan at 0% on that brand new Cadillac Escalade, Bank of America still hasn’t foreclosed on their McMansion two years after making their last mortgage payment, and they just received three pre-approved credit card notices from Capital One, American Express and Citicorp. As long as Bennie has our back printing $1 trillion new greenbacks per year, nothing can possibly go wrong. Our best and brightest economic minds are always right:

“Stocks have reached what looks like a permanently high plateau.” – Irving Fisher, Professor of Economics, Yale University, 1929

“Many of the new financial products that have been created, with financial derivatives being the most notable, contribute economic value by unbundling risks and shifting them in a highly calibrated manner. Although these instruments cannot reduce the risk inherent in real assets, they can redistribute it in a way that induces more investment in real assets and, hence, engenders higher productivity and standards of living.” – Alan Greenspan – March 6, 2000

“We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.” Ben Bernanke – July 2005

The profound level of ignorance displayed by economists, politicians, business leaders, media personalities, and the average American, regarding the mathematically unsustainable path of our fiscal ship is perplexing to me on so many levels. If the Federal government was a family, the budget ceiling debate would be put into the following terms. Our household earns $28,000 per year, but we spend $38,000 per year and add $10,000 to our credit card balance, which stands at the limit of $170,000. In addition, we owe our neighbors $2 million we don’t have because we promised to pay if they voted for us as Treasurer of our homeowners association. We celebrate our good fortune of getting approved for another credit card with a $30,000 limit by increasing our spending to $39,000 per year. Intellectuals scorn such simplistic analogies by glibly pointing out that the family has a crazy uncle with a printing press in the basement and can pay-off the debt with his freshly printed dollars. And this is where the deliberate and calculated ignorance by the highly educated Ivy Leaguers regarding long term and unintended consequences is revealed. They ignore, manipulate, cover-up and obscure the facts because their wealth, power and influence depend upon them doing so. But ignorance doesn’t change the facts.

“Facts do not cease to exist because they are ignored.” Aldous Huxley

Nothing exposes the ignorance of various factions within our society better than a debate about budgets, spending, and unfunded liabilities. This is where every party, group, special interest, and voting bloc ignore any and all facts that are contrary to their selfish interest. They only see what they want to see. The fallacies, errors, omissions and mistruths of their positions are inconsequential to people who only care about their short-term self-seeking interests. When I question the out of control spending on entitlements and our impossible to honor level of unfunded liabilities, those of a liberal persuasion lash out with accusations of hating the poor, starving children and throwing granny under the bus. Anyone suggesting we should slow our spending is branded a terrorist by the overwhelmingly liberal legacy media.

When I accuse Wall Street bankers of criminal fraud and ongoing manipulation of the financial markets, the CNBC loving apologists for these felons bellow about the market always being right. When I rail about the military industrial complex and our un-Constitutional invasions of other countries, the neo-cons come out in force blathering about the war on terror and imminent threats. When I point out the horrific results of our government run educational system and how mediocre union teachers are bankrupting our states and municipalities with their gold plated health and pension plans, I’m met with howls of outrage about the poor children. The common thread is that facts are ignored because each of their agendas requires ignorance on the part of their team’s fans.

The following chart of truth portrays an unsustainable path. Ignoring the facts will not change them. This isn’t a Republican problem or a Democrat problem. It’s an American problem.

 

“There are men regarded today as brilliant economists, who deprecate saving and recommend squandering on a national scale as the way of economic salvation; and when anyone points to what the consequences of these policies will be in the long run, they reply flippantly, as might the prodigal son of a warning father: “In the long run we are all dead.” And such shallow wisecracks pass as devastating epigrams and the ripest wisdom.” Henry Hazlitt

Henry Hazlitt may have written these words six decades ago, but they aptly describe Paul Krugman and the legions of Keynesian apostles whose bastardized interpretation of Keynes’ theory has led us to this fiscal cliff. How anyone can truly believe that borrowing to consume foreign produced goods versus saving and making job creating capital investments is a rational and sustainable economic policy is the height of ignorance. One look at this chart exposes the political party system as a sham. When it comes to the fiscal train wreck, set in motion thirty years ago, the ignorant media pundits peddle a narrative about politicians failing to compromise as the culprit in this derailment. Nothing could be further from the truth. Compromise is what has gotten us to this point. The Republicans compromised and allowed the Democrats to create a welfare state. The Democrats compromised and allowed the Republicans to create a warfare state. The Federal Reserve compromised their mandate of stable prices and preventing financial calamities by inflating away 95% of the dollar’s purchasing power in 100 years, while creating bubbles every five or so years, like clockwork. There are a myriad of facts related to the chart above that cannot be ignored:

  • It took 192 years for the country to accumulate $1 trillion in debt. It has taken us 30 years to accumulate the next $16 trillion of debt. We now add $1 trillion of debt per year.
  • If the Federal government was required to use GAAP accounting, the annual deficit would amount to $6.7 trillion per year.
  • The fiscal gap of unfunded future liabilities for Social Security, Medicare, Medicaid, and government pensions is $200 trillion.
  • Using realistic growth assumptions adds another $6 trillion of state and local government unfunded pension benefits to the equation.
  • The Federal government has increased their annual spending from $1.8 trillion during Bill Clinton’s last year in office to $3.8 trillion today, a 110% increase. The population has increased by 12% over that same time frame, and real GDP has advanced by 25% since 2000.
  • Defense spending has increased from $358 billion in 2000 to $831 billion today, despite the fact that no country on earth can challenge us militarily.
  • The average Baby Boomer will receive $300,000 more than they contributed to Social Security and Medicare over their lifetime. Over 10,000 Boomers per day will turn 65 for the next 17 years.
  • The Social Security lockbox is filled with IOUs. The funds collected from paychecks over the last 80 years were spent by Congress on wars of choice, bridges to nowhere, and thousands of other vote buying ventures.
  • A normalization of interest rates to long-term averages would double or triple the interest on the national debt and increase our annual deficits by at least 30%.
  • Obamacare and the unintended consequences of Obamacare will add tens of trillions to our national debt. The initial budget projections for Medicare and Medicaid showed only a modest financial impact on the financial situation of the country. How did that work out?
  • Entitlement spending in 2003 was $1.3 trillion. Entitlement spending in 2008 was $1.7 trillion. Entitlement spending in 2013 was $2.2 trillion. Entitlement spending in 2018 will be $2.8 trillion, as these programs are on automatic pilot.

When you consider the facts in a rational manner, without vitriolic denials, bitter accusations, acrimonious blame, and rejection of the entire premise, you come to the conclusion that we’ve passed the point of no return. Decades of bad choices, bad leadership, bad men in important positions, bad education, bad governance, and bad citizenship have led to bad times. But very few people, across all socio-economic classes, have any interest in understanding the facts or making the tough choices required to save future generations from a life of squalor. We willfully choose to ignore the facts.

“Most ignorance is vincible ignorance. We don’t know because we don’t want to know.” Aldous Huxley

Our degraded and ignorant society is incapable of comprehending their dire circumstances or acting for the common good of the country. We are a nation on the take. Greed really is good. Everyone needs to play the game. From the top floor corporate CEO suite to the decaying urban wastelands, we have chosen comforting ignorance to uncomfortable knowledge. Our warped form of democracy enriches the few at the top, while dispensing enough subsistence payments to the lower classes to keep them from revolting, while enslaving the middle class in debt and convincing them it’s really wealth. Mencken understood the pathetic impulses of the American populace decades before we reached our point of no return.

“Democracy is a pathetic belief in the collective wisdom of individual ignorance.” – H.L. Mencken

The only way a democracy can survive is if the population is knowledgeable, vigilant, skeptical, educated, individually responsible, self-reliant, moral, capable of critical thinking and willing to accept the consequences of their actions. A nation of takers, fakers and blamers will not last long. We’ve degenerated into a nation of knowledge hating book burners. Our culture of ignorance will lead to the destruction of our culture and the ignorant masses will wonder what happened.

 

“But you can’t make people listen. They have to come round in their own time, wondering what happened and why the world blew up around them. It can’t last.”Ray Bradbury – Fahrenheit 451

In Part Two of this examination about our culture of ignorance I’ll explore the roles of technology, family breakdown, government, and propaganda in creating the ignorance that is consuming our system like a mutant parasite. If you are seeking a happy ending, I suggest looking elsewhere.

TRYING TO STAY SANE IN AN INSANE WORLD – AT WORLD’S END

In the first three parts (Part 1, Part 2, Part 3) of this disheartening look back at a century of central banking, income taxing, military warring, energy depleting and political corrupting, I made a case for why we are in the midst of a financial, commercial, political, social and cultural collapse. In this final installment I’ll give my best estimate as to what happens next and it has a 100% probability of being wrong. There are so many variables involved that it is impossible to predict the exact path to our world’s end. Many people don’t want to hear about the intractable issues or the true reasons for our predicament. They want easy button solutions. They want someone or something to fix their problems. They pray for a technological miracle to save them from decades of irrational myopic decisions. As the domino-like collapse worsens, the feeble minded populace becomes more susceptible to the false promises of tyrants and psychopaths. There are a myriad of thugs, criminals, and autocrats in positions of power who are willing to exploit any means necessary to retain their wealth, power and control. The revelations of governmental malfeasance, un-Constitutional mass espionage of all citizens, and expansion of the Orwellian welfare/warfare surveillance state, from patriots like Julian Assange, Bradley Manning and Edward Snowden has proven beyond a doubt the corrupt establishment are zealously anxious to discard and stomp on the U.S. Constitution in their desire for authoritarian control over our society.

Anyone who denies we are in the midst of an ongoing Crisis that will lead to a collapse of the system as we know it is either a card carrying member of the corrupt establishment, dependent upon the oligarchs for their living, or just one of the willfully ignorant ostriches who choose to put their heads in the sand and hum the Star Spangled Banner as they choose obliviousness to awareness. Thinking is hard. Feeling and believing a storyline is easy.

 

A moral society must be inhabited by an informed, educated, aware populace and   governed by honorable leaders who oversee based upon the nation’s founding principles of liberty, freedom and limited government of, by and for the people. A moral society requires trust, honor, property rights, simple just laws, and the freedom to succeed or fail on your own merits. There is one major problem in creating a true moral society where liberty, freedom, trust, honor and free markets are cherished – human beings. We are a deeply flawed species who are prone to falling prey to the depravities of lust, gluttony, greed, sloth, wrath, envy and pride. Men have always been captivated by the false idols of dominion, power and wealth. The foibles of human nature haven’t changed over the course of history. This is why we have 80 to 100 year cycles driven by the same human strengths and shortcomings revealed throughout recorded history.

Empires rise and fall due to the humanness of their leaders and citizens. The great American Empire is no different. It was created a mere 224 years ago by courageous patriots who risked their wealth and their lives to create a Republic founded upon the principles of freedom, liberty, and the pursuit of happiness; took a dreadful wrong turn in 1913 with the creation of a privately held central bank to control its currency and introduction of an income tax; devolved into an empire after World War II, setting it on a course towards bankruptcy; sealed its fate in 1971 by unleashing power hungry psychopathic elitists to manipulate the monetary and fiscal policies of the nation to enrich themselves; and has now entered the final frenzied phase of pillaging, currency debasement, war mongering, and ransacking of civil liberties. Despite the frantic efforts of the financial elite, their politician puppets, and their media propaganda outlets, collapse of this aristocracy of the moneyed is a mathematical certainty. Faith in the system is rapidly diminishing, as the issuance of debt to create the appearance of growth has reached the point of diminishing returns.

 

Increase in Real GDP per Dollar of Incremental Debt

“At the root of America’s economic crisis lies a moral crisis: the decline of civic virtue among America’s political and economic elite. A society of markets, laws, and elections is not enough if the rich and powerful fail to behave with respect, honesty, and compassion toward the rest of society and toward the world.”Jeffrey Sachs

Five Stages of Collapse

The day of reckoning for a century of putting our faith in the wrong people with wrong ideas and evil intentions is upon us. Dmitry Orlov provides a blueprint for the collapse in his book The Five Stages of Collapse – Survivors’ Toolkit:

Stage 1: Financial Collapse. Faith in “business as usual” is lost. The future is no longer assumed to resemble the past in any way that allows risk to be assessed and financial assets to be guaranteed. Financial institutions become insolvent; savings wiped out and access to capital is lost.

Stage 2: Commercial Collapse. Faith that “the market shall provide” is lost. Money is devalued and/or becomes scarce, commodities are hoarded, import and retail chains break down and widespread shortages of survival necessities become the norm.

Stage 3: Political Collapse. Faith that “the government will take care of you” is lost. As official attempts to mitigate widespread loss of access to commercial sources of survival necessities fail to make a difference, the political establishment loses legitimacy and relevance.

Stage 4: Social Collapse. Faith that “your people will take care of you” is lost, as social institutions, be they charities or other groups that rush to fill the power vacuum, run out of resources or fail through internal conflict.

Stage 5: Cultural Collapse. Faith in the goodness of humanity is lost. People lose their capacity for “kindness, generosity, consideration, affection, honesty, hospitality, compassion, charity.” Families disband and compete as individuals for scarce resources. The new motto becomes “May you die today so that I can die tomorrow.”

The collapse is occurring in fits and starts. The stages of collapse do not necessarily have to occur in order.  You can recognize various elements of the first three stages in the United States today. Stage 1 commenced in September 2008 when this Crisis period was catalyzed by the disintegration of the worldwide financial system caused by Wall Street intentionally creating the largest control fraud in world history, with easy money provided by Greenspan/Bernanke, fraudulent mortgage products, fake appraisals, bribing rating agencies to provide AAA ratings to derivatives filled with feces, and having their puppets in the media and political arena provide the propaganda to herd the sheep into the slaughterhouse.

The American people neglected their civic duty to elect leaders who would tell them the truth and represent current and future generations equally. They have neglected the increasing lawlessness of Wall Street, K Street and the corporate suite. The American people have lived in denial about their responsibility for their own financial well-being, willingly delegating it to a government of math challenged politicians who promised trillions more than they could ever deliver. The American people have delayed tackling the dire issues confronting our nation, including: $200 trillion of unfunded liabilities, the military industrial complex creating wars across the globe, militarization of our local police forces, domestic spying on every citizen, allowing mega-corporations and the financial elite to turn our nation from savings based production to debt based consumption, and allowing corporations, the military industrial complex, Wall Street, and shadowy billionaires to pick and control our elected officials. The civic fabric of the country is being torn at the points of extreme vulnerability.

“At home and abroad, these events will reflect the tearing of the civic fabric at points of extreme vulnerability – problem areas where, during the Unraveling, America will have neglected, denied, or delayed needed action. Anger at “mistakes we made” will translate into calls for action, regardless of the heightened public risk. It is unlikely that the catalyst will worsen into a full-fledged catastrophe, since the nation will probably find a way to avert the initial danger and stabilize the situation for a while. Yet even if dire consequences are temporarily averted, America will have entered the Fourth Turning.”  – The Fourth Turning – Strauss & Howe – 1997

Our Brave New World controllers (bankers, politicians, corporate titans, media moguls, shadowy billionaires) were able to avert a full-fledged catastrophe in the fall of 2008 and spring of 2009 which would have put an end to their reign of destruction. To accept the rightful consequences of their foul actions was intolerable to these obscenely wealthy, despicable men. Their loathsome and vile solutions to a crisis they created have done nothing to relieve the pain and suffering of the average person, while further enriching them, as they continue to gorge on the dying carcass of a once thriving nation. Despite overwhelming public outrage, Congress did as they were instructed by their Wall Street masters and handed over $700 billion of taxpayer funds into Wall Street vaults, under the false threat of systematic collapse. The $800 billion of pork stimulus was injected directly into the veins of corporate campaign contributors. The $3 billion Cash for Clunkers scheme resulted in pumping taxpayer dollars into the government owned union car companies, while driving up the prices of used cars and hurting lower income folks.

Ben Bernanke has peddled the false paradigm of quantitative easing (code for printing money and airlifting it to Wall Street) as benefitting Main Street. Nothing could be further from the truth. He bought $1.3 trillion of toxic mortgage backed securities from his Wall Street owners. He has pumped a total of $2.8 trillion into the hands of Wall Street since September 2008, and is singlehandedly generating $5 billion of risk free profits for these deadbeats by paying them .25% on their reserves. Drug dealer Ben continues to pump $2.8 billion per day into the veins of Wall Street addicts and any hint of tapering the heroin causes the addicts to flail about. Ben should be so proud. He should hang a Mission Accomplished banner whenever he gives a speech. Bank profits reached an all-time record in the 2nd quarter, at $42.2 billion, with 80% of those profits going to the 2% Too Big To Trust Wall Street Mega-Goliath Banks. It’s enough to make a soon to retire, and take a Wall Street job, central banker smile.

“The money rate can, indeed, be kept artificially low only by continuous new injections of currency or bank credit in place of real savings. This can create the illusion of more capital just as the addition of water can create the illusion of more milk. But it is a policy of continuous inflation. It is obviously a process involving cumulative danger. The money rate will rise and a crisis will develop if the inflation is reversed, or merely brought to a halt, or even continued at a diminished rate. Cheap money policies, in short, eventually bring about far more violent oscillations in business  than those they are designed to remedy or prevent.” Henry Hazlitt – 1946

Any serious minded person knew Wall Street had too much power, too much control, and too much influence in 2008 when they crashed our economic system. When something is too big to fail because it will create systematic collapse, you make it smaller. Instead we have allowed our sociopathic rulers to allow these parasitic institutions to get even larger. Just 12 mega-banks control 70% of all the banking assets in the country, with 90% controlled by the top 86 banks. There are approximately 8,000 financial institutions in this country. Wall Street will be congratulating themselves with record compensation of $127 billion and record bonuses of $23 billion for a job well done. It is dangerous work making journal entries relieving loan loss reserves, committing foreclosure fraud, marking your assets to unicorn, making deposits at the Fed, and counting on the Bernanke Put to keep stocks rising. During a supposed recovery from 2009 to 2011, average real income per household grew pitifully by 1.7%, but all the gains accrued to Bernanke’s minions. Top 1% incomes grew by 11.2% while bottom 99% incomes shrunk by 0.4%. Therefore, the top 1% captured 121% of the income gains in the first two years of the recovery. This warped trend has only accelerated since 2011.

The median household income has fallen by $2,400 to $52,100 since the government proclaimed the end of the recession in 2009. Real wages for real people continue to fall. A record 23.1 million households (20% of all households) are receiving food stamps. After four years of “recovery” propaganda, we are left with 2.2 million less people employed (5 million less full time jobs) and 22 million more people on SNAP and SSDI. A record 90.5 million working age Americans are not working, with labor participation at a 35 year low. Ben’s money has not trickled down, but his inflation has fallen like a load of bricks on the heads of the middle class. Bernanke’s QE to infinity constitutes a transfer of purchasing power away from the middle class to the bankers, mega-corporations and .1%. This Cantillon effect means that newly created money is neither distributed evenly nor simultaneously among the population. Some users of money profit from rising prices, and others suffer from them. This results in a transfer of wealth (a hidden tax) from later receivers to earlier receivers of new money. This is why the largest banks and largest corporations are generating the highest profits in history, while the average person sinks further into debt as their real income declines and real living expenses (energy, food, clothing, healthcare, tuition) rise.

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Ben works for your owners. Real GDP (using the fake government inflation adjustment) since July 2009 is up by a wretched 5.6%. Revenue growth of the biggest corporations in the world is up by a pathetic 12%. One might wonder how corporate profits could be at record levels with such doleful economic performance. One needs to look no further than Ben’s balance sheet, which has increased by 174%. There appears to be a slight correlation between Ben’s money printing and the 162% increase in the S&P 500 index. With the top 1% owning 42.1% of all financial assets (top .1% own most of this) and the bottom 80% owning only 4.7% of all financial assets, one can clearly see who benefits from QE to infinity.

The key take away from what the ruling class has done since 2008 is they have only temporarily delayed the endgame. Their self-serving exploits have guaranteed that round two of the financial collapse will be epic in proportion and intensity. This Fourth Turning Crisis is ongoing. The linear thinkers who control the levers of power keep promising a return to normalcy and resumption of growth. This is an impossibility – mathematically & socially. Fourth Turnings do not end without the existing social order being swept away in a tsunami of turmoil, violence, suffering and war. Orlov’s stages of collapse will likely occur during the remaining fifteen years of this Crisis. We are deep into Stage 1 as our national Detroitification progresses towards bankruptcy, with an added impetus from our trillion dollar wars of choice in the Middle East. Commercial collapse has begun, as faith in the fantasy of free market capitalism is waning. The race to the bottom with currency debasement around the globe is reaching a tipping point, and the true eternal currencies of gold and silver are being hoarded and shipped from the West to the Far East.

Monetary Base (billions of USD)

When the financial collapse reaches its crescendo, the just in time supply chain, that keeps cheese doodles and cheese whiz on your grocery store shelves, Chinese produced iGadgets in your local Wal-Mart Supercenter, and gasoline flowing out of gas station hoses into your leased Cadillac Escalade, will break down rapidly. The strain of $110 oil is already evident. The fireworks will really get going when ATM machines run dry and the EBT cards stop functioning. Within a week riots and panic will engulf the country.

“At some point we are bound to hear, from across two oceans, the shocking words “Your money is no good here.” Fast forward to a week later: banks are closed, ATMs are out of cash, supermarket shelves are bare and gas stations are starting to run out of fuel. And then something happens: the government announces they have formed a crisis task force, and will nationalize, recapitalize and reopen banks, restoring confidence. The banks reopen, under heavy guard, and thousands of people get arrested for attempting to withdraw their savings. Banks close, riots begin. Next, the government decides that, to jump-start commerce, it will honor deposit guarantees and simply hand out cash. They print and arrange for the cash to be handed out. Now everyone has plenty of cash, but there is still no food in the supermarkets or gasoline at the gas stations because by now the international supply chains have broken down and the delivery pipelines are empty.”  Dmitry Orlov – The Five Stages of Collapse

We are witnessing the beginning stages of political collapse. The government and its leaders are being discredited on a daily basis. The mismanagement of fiscal policy, foreign policy and domestic policy, along with the revelations of the NSA conducting mass surveillance against all Americans has led critical thinking Americans to question the legitimacy of the politicians running the show on behalf of the bankers, corporations and arms dealers. The Gestapo like tactics used by the government in Boston was an early warning sign of what is to come. Government entitlement promises will vaporize, as they did in Detroit, with pension promises worth only ten cents on the dollar. Total social and cultural collapse could resemble the chaotic civil war scenarios playing out in Libya and Syria. The best case scenario would be for a collapse similar to the Soviet Union’s relatively peaceful disintegration into impotent republics. I don’t believe we’ll be this fortunate. The most powerful military empire in world history will not fade away. It will go out in a blaze of glory with a currency collapse, hyper-inflation, and war on a grand scale.

“History offers even more sobering warnings: Armed confrontation usually occurs around the climax of Crisis. If there is confrontation, it is likely to lead to war. This could be any kind of war – class war, sectional war, war against global anarchists or terrorists, or superpower war. If there is war, it is likely to culminate in total war, fought until the losing side has been rendered nil – its will broken, territory taken, and leaders captured.”The Fourth Turning – Strauss & Howe – 1997

In Whom Do You Trust?

“Use of money concentrates trust in a single central authority – the central bank – and, over extended periods of time, central banks always tend to misbehave. Eventually the “print” button on the central banker’s emergency console becomes stuck in the depressed position, flooding the world with worthless notes. People trust that money will remain a store of value, and once the trust is violated a gigantic black hole appears at the very center of society, sucking in peoples’ savings and aspirations along with their sense of self-worth. When those who have become psychologically dependent on money as a yardstick, to be applied to everything and everyone, suddenly find themselves in a world where money means nothing, it is as if they have gone blind; they see shapes but can no longer resolve them into objects. The result is anomie – a sense of unreality – accompanied by deep depression. Money is an addiction – substance-less and unreal, and sets itself up for a severe and lengthy withdrawal.” Dmitry Orlov – The Five Stages of Collapse

Our modern world revolves around wealth, the appearance of wealth, the false creation of wealth through the issuance of debt, and trust in the bankers and politicians pulling the levers behind the curtain. The entire world economic system is dependent on trusting central bankers whose only response to any crisis is to create more debt. The death knell is ringing loud and clear, but people around the globe are desperately clinging to their normalcy biases and praying to the gods of cognitive dissonance. It seems the only things that matter to our controllers are stock market levels, the continued flow of debt to the plebs, continued doling out of hush money to those on the dole, and of course an endless supply of brown skinned enemies to attack. With every country in the world attempting to the same solution of debasing their currencies, we are rapidly approaching the tipping point. India is the canary in the coal mine.

Government, Household, Financial & Non-Financial Debt (% of GDP)

An exponential growth model built upon cheap plentiful energy and debt creation has its limits, and we’ve reached them. With the depletion of inexpensive, easily accessible energy resources, higher prices will continue to slow world economies. Demographics in the developed world are slowing the global economy as millions approach their old age with little savings due to over consuming during their peak earnings years. Bernanke has already quadrupled his balance sheet with no meaningful benefit to the economy or the financial well-being of the average middle class American. Financial manipulation that creates nothing has masked the rot consuming our economic system. The game has been rigged in favor of the owners, but even a rigged game eventually comes to an end. Americans and Europeans can no longer maintain a façade of wealth by buying knickknacks from China with money they don’t have. The US and Europe are finding that their credit is no longer good in the exporting Far East countries. This is a perilous development, as the West has depended upon foreigners to accommodate its never ending expansion of credit. Without that continual expansion of debt, the Ponzi scheme comes crashing down. As China, Japan and the rest of Asia have balked at buying U.S. Treasuries with negative real yields, the only recourse for Ben has been to monetize the debt through QE and inflation. The doubling of ten year Treasury rates in a matter of three months due to just talk of possibly slowing QE should send shivers down your spine.

We are supposedly five years past the great crisis. Magazine covers proclaimed Bernanke a hero. If we are well past the crisis, why are the extreme emergency measures still in effect? If the economy is growing and jobs are being created, why do we need $85 billion of government debt to be monetized each and every month? Why are the EU, Japan, and China printing even faster than the Fed? The answer is simple. If the debt was not being monetized, it would have to be purchased out in the free market. Purchasers would require an interest rate far above the 2.9% being paid today. The debt levels in the U.S., Europe and Japan are so large that a rise in interest rates of just a few points would explode budget deficits and lead to a worldwide financial collapse. This is why Bernanke and the rest of his central banker brethren are trapped by their own ideology of bubble production. Just the slowing of debt creation will lead to collapse. Bernanke needs a Syrian crisis to postpone the taper talk. Those in control need an endless number of real or false flag crises to provide cover for their printing presses to keep rolling.

There are a couple analogies that apply to our impending doom. The country is like a 224 year old oak tree that has been slowly rotting on the inside due to the insidious diseases of hubris, apathy, selfishness, dependence, delusion, and debasement. The old oak gives an outward appearance of health and stability. Winter has arrived and gale force winds are in the forecast. One gust of wind and the mighty aged oak will topple and come crashing to earth. I think an even more fitting analogy is the sandpile with grains of sand being added day after day. Seven out of ten Americans receive more in government benefits than they pay in taxes. Goliath corporations and the uber-wealthy use the tax code and legislation to syphon hundreds of billions from the national treasury every year. We spend $1 trillion per year on past, current and future wars of choice. Annual interest on the debt we’ve racked up in the last few decades already approaches $400 billion per year. The entire Federal budget totaled $400 billion in 1977. The sandpile grows ever higher, while its instability expands exponentially. One seemingly innocuous grain of sand will ultimately cause the pile to collapse catastrophically. Will it be an unintended consequence of a missile launch into Syria? Will it be a spike in oil prices? Will it be the collapse of one of the EU PIIGS? Will it be an assassination of a political figure or banker? No one knows. But that innocuous grain of sand will trigger the collapse of the entire pile.

Worried people are looking for solutions. They often get angry at me because they don’t think I provide answers to the issues I raise about our corrupt failing system. They want easy answers to intractable problems. Sadly, I’ve come to the conclusion that our system and majority of citizens are too corrupted to change our course through the ballot box or instituting policies along the lines of those proposed by Ron Paul and many other thoughtful liberty minded people. We are experiencing the downside of a representative democracy.  Once a person is democratically elected a gulf is created between the electors and the person they elected, as the representative becomes corrupted and bought by moneyed interests. Elected officials become a class unto themselves. The political class grows to be puppets that resemble human beings but are nothing but cogs in a vast corporate run machine, pawns in an enormous game of chess played by powerful vindictive immoral men.

There are no cures for our disease. It’s terminal. Anyone telling you they have the answers is either lying or trying to sell you something. More people and organizations are on the take than are playing by the rules. The producers are being overrun by the parasites. The barbarians are at the gate. An implosion of societal trust is underway. The next stage of this crisis, which I believe will materialize within the next twelve months will try the souls of the weary.

“As the Crisis catalyzes, these fears will rush to the surface, jagged and exposed. Distrustful of some things, individuals will feel that their survival requires them to distrust more things. This behavior could cascade into a sudden downward spiral, an implosion of societal trust. This might result in a Great Devaluation, a severe drop in the market price of most financial and real assets. This devaluation could be a short but horrific panic, a free-falling price in a market with no buyers. Or it could be a series of downward ratchets linked to political events that sequentially knock the supports out from under the residual popular trust in the system. As assets devalue, trust will further disintegrate, which will cause assets to devalue further, and so on.”The Fourth Turning – Strauss & Howe – 1997

As a nation we have squandered our inheritance, born of the blood of patriots. A freedom loving, liberty minded, self-responsible, courageous people have allowed ourselves to fall prey to selfishness, apathy, complacency and dependency. Once we allowed our human appetites of greed, power seeking, and control to override the moral responsibility for our own lives and the lives of future unborn generations, collapse was inevitable. The danger now is what happens after the unavoidable collapse. Will the millions of dependency zombies beg for a strong dictator to protect them, provide for them and lead them into further bondage? Or will the spark of liberty and freedom reignite, allowing citizens to throw off the shackles of banker and corporate control? I believe most of the people in this country are good hearted. We are merely pawns in this game of Risk being played by those seeking power, wealth and world domination. We are all trapped in our own forms of normalcy bias. Have I cashed out my retirement funds, sold my suburban house and built a doomstead in the mountains? No I haven’t. Do I second guess myself sometimes? Yes I do. But even the aware have families to support, jobs to go to, bills to pay, laundry to do, lawns to mow, and lives to live. I can’t live in constant fear of what might happen. We only get 80 or so years on this earth, if we’re lucky. The best we can do is leave a positive legacy for our children and their children. A drastic change to our way of life is coming, but most of us are trapped in a cage of our own making.

Each living generation will need to do their part during this Crisis if we are to survive the coming storm. Since no one knows the nature of how the next fifteen years will unfold, it would be wise to at least make basic preparations for food, water, heat and protection. This is easier for some than others, but you don’t have to star on Doomsday Preppers in order to stock up on items that can be purchased at Wal-Mart today, but won’t be available when the global supply chain breaks down. Make sure you have neighbors and family you can rely upon. A small community of like-minded people with varied skills is more likely to succeed in our brave old world than rugged individualists. With no financial means to maintain our globalized world, living locally will take on a new meaning. After much turmoil, chaos, violence, and likely mass casualties the best outcome would be for the Great American Empire to break into regional republics, incapable of waging global war, led by law abiding moral liberty minded individuals, and willing to trade freely and honestly with their fellow republics. Daily life would revert back to a simpler Amish like time. Would that be so bad?

This Fourth Turning could end with a whimper or a bang. There are enough nuclear arms to obliterate the world ten times over. There are enough hubristic egomaniacal psychopathic men in power, that the use of those weapons has a high likelihood of happening. It will be up to the people to not allow this horrific result. I love my country and despise my government. The Declaration of Independence clearly states that when a long train of abuses and usurpations lead toward despotism, it is our right and duty to throw off that government and provide new guards of liberty. My family comes first with my country a close second. I will fight with whatever means necessary to protect my family and do what I can to influence the future course of our country. Time is running out. Will we have the courage, fortitude and wisdom to make the right decisions over the next fifteen years? Will we choose glory or destruction? The fate of our nation hangs in the balance. Are you prepared? Are you ready to fight for your family and your rights?

The Fourth Turning could spare modernity but mark the end of our nation. It could close the book on the political constitution, popular culture, and moral standing that the word America has come to signify. The nation has endured for three saecula; Rome lasted twelve, the Soviet Union only one. Fourth Turnings are critical thresholds for national survival. Each of the last three American Crises produced moments of extreme danger: In the Revolution, the very birth of the republic hung by a thread in more than one battle. In the Civil War, the union barely survived a four-year slaughter that in its own time was regarded as the most lethal war in history. In World War II, the nation destroyed an enemy of democracy that for a time was winning; had the enemy won, America might have itself been destroyed. In all likelihood, the next Crisis will present the nation with a threat and a consequence on a similar scale.The Fourth Turning – Strauss & Howe – 1997

  

 IT’S OUR CHOICE.

SSDI IS THE SIZE OF GREECE

The number of people on SSDI now exceeds the entire population of Greece. Anyone who argues that the rise in people on SSDI is normal and predictable is either a dumbfuck or a lying liberal Obama lover. The aging of the population has nothing to do with the increase. In 1968 there were 51 workers for every person on disability. Today there are 13 workers for every person on disablity. I think even liberal douchebags would agree that medical advancements since 1968 have been significant. These medical advancements would argue for less people being on disability and unable to work. Even a liberal douchebag would agree that workplace safety measures have been increased exponentially since 1968, so that also argues for less disabled workers. The good old ADA law forced all workplaces to become disabled friendly. That argues for less people on disability. The country has transitioned from a manufacturing society to a service society. Workers don’t work on dangerous assembly lines anymore. Robots do the dangerous stuff. Even a liberal ideologue would agree. This should have dramatically reduced worker injuries and disabilities.

Everything I’ve pointed out is true. The tremendous increase in people on SSDI is nothing but a gigantic fraud, perpetuated by the Federal government and slimy lawyers. The government broadened the scope of disabilities to include stress, depression, and non-diagnosable things like aches and pains. I have stress, depression and pains too, but I get the fuck up at 5:15 every morning and go to work. The SSDI program is a joke. More than half the people on SSDI are lazy good for nothing leeches. They are sucking you and I dry while sitting around eating cheetos, watching Judge Judy on their government subsidized cable TV, and texting with other lazy fucks on their iPhones.

Now lets hear from the a few liberal douchebags about the cruelty of my assessment and how Wall Street does far worse things. I love that line of reasoning. The next time I see one of those shyster lawyer commercials urging me to get what I deserve, maybe I should join the FSASSDI party. You get the added benefit of Medicare coverage after only two years of SSDI stress.

WORKING IS FOR STIFFS

 This is the biggest scam in the country, besides Wall Street and the Federal Reserve. Obama has gained at least 1 million automatic votes in the last four years by encouraging lazy good for nothings to join the ranks of the disabled. There is no logical reason for the number of people on SSDI to surge by 17% in less than four years other than fraud. When 33% of the new enrollees claim back pain and 15% get on SSDI because they are depressed, you know it’s mostly dirtbags and lowlifes. It would be fascinating to see which cities acount for the largest proportion of SSDI enrollees. I’m going to go out on a limb and guess that West Philly and the other Democrat run urban shitholes account for the vast majority. The liberal response to the facts below would be that corporate welfare cheating is worse, so this is OK. 

That response is bullshit. Fraud and cheating the system is wrong whether it is done by an individual or a corporation. It is a stone cold fact that at least 50% of the people receiving SSDI are capable of working. That means they are robbing the working taxpayer to the tune of about $100 billion per year (SSDI & Medicare). That ain’t chump change. So, if you want to join the FSA just read TBP for a week and get really depressed.  

  • 76,983 workers enrolled in the Social Security Disability Insurance program in April.
  • More than 300,000 have joined the program so far this year. The number of workers on permanent disability is now a record 8,865,586, a net increase of one million in just three years.
  • Today, 6.5 workers are on disability for every 100 who have a job. That’s double the ratio from two decades ago. The number of people on disability has climbed almost sixfold since 1970.
  • The program has been running a deficit since 2009, and will be insolvent by 2016, according to the program’s administrators.
  • Last year, the federal government paid $135 billion in disability benefits, which is more money than it devoted to food stamps and welfare combined.
  • And because those on disability are eligible for Medicare benefits after two years, the sharp rise in SSDI enrollment has put a huge strain on Medicare’s budget, costing the program $80 billion in 2012, according to the Congressional Budget Office. In other words, one-sixth of Medicare’s budget now goes to pay benefits for working-age disabled.
  • From 1980 to 2010, the average age of those awarded benefits fell from 51.2 to 49.5 for men, and from 51.1 to 48.8 for women.
  • What’s more, the type of disabilities workers are claiming has changed, with more and more joining the program based on hard-to-verify ailments, like back pain and other musculoskeletal problems (about a third of new enrollees) or mood disorders (15% of workers on disability).