Guest Post by Simon Black
Hot off the presses: The Board of Trustees for the Social Security and Medicare programs in the United States just released their annual report a few minutes ago.
And if you want to read all of its gory detail, check it out for yourself here.
Both of these programs are massively and terminally underfunded. And not by a little bit.
The Board of Trustees itself calculates Social Security’s long-term shortfall at a mind boggling $43+ TRILLION.
Simply put, the trust funds don’t have enough money to keep the programs going, at least under the current promises.
They admit right at the beginning of their report that, starting 2020, Social Security’s cost will exceed the money it earns in from interest and taxes.
That’s not some far out date decades into the future. That’s next year. And every year after that.
By 2034, just 15 years from now, Social Security’s primary trust fund will be fully depleted. And one of Medicare’s trust funds will run out of money in 2026.
In case you’re wondering, by the way, the Board of Trustees consists of the United States Secretary of the Treasury, Secretary of Labor, Secretary of Health and Human Services, etc.
This isn’t a bunch of conspiracy theorists. They’re some of the top executives in government.
So I’m not exaggerating in the slightest when I say this is a complete disaster. Millions of people depend on Social Security for their livelihood… people who have been promised for their entire working lives that the program would be solvent.
When the funds run out of money, countless people’s lives will be turned upside down.
You’d think this would be considered some kind of national emergency… that politicians would be doing everything they can to fix this.
But hardly a word is uttered about it. 15 years is far enough out that most of these people don’t expect to be in office anymore… so it will be someone else’s problem to deal with.
Not to mention, their options are extremely limited.
On one hand, they could try to actually generate more investment income for the program. To me this is an obvious choice.
Right now the Social Security trust funds have $2.9 trillion in assets. Yet they only earned a pitiful $83 billion in investment income last year, a return of roughly 2.8%.
That’s barely enough to keep up with inflation.
Seriously– is this the best these people can do? 2.8%? The United States is home to some of the most brilliant investment minds in history who could easily double that investment return.
This is what other countries do– Japan, Singapore, Norway, etc. Fund mangers for public pensions have the discretion to invest in assets all over the world in an effort to derive higher returns.
But that’s not going to happen in the Land of the Free.
It’s actually ILLEGAL for Social Security to invest in anything EXCEPT for US government debt. I’m serious. Social Security’s ONLY assets are Treasury Bonds, and under current federal law, that’s all it will ever be.
Thing is- the US government really needs that money. They’re already $22 trillion in debt and going deeper into debt each year.
They can’t afford to allow Social Security to invest in anything else other than US debt. They’re already over-reliant on Social Security as a lender, and allowing the trust funds to invest in anything else would be financial suicide.
So that option is off the table… leading to option #2: Cutting benefits.
And you can absolutely count on that happening. The Trustees themselves even say this– that after the fund is fully depleted in 2034, they will have to make deep cuts to the monthly benefit.
Again– tens of millions of people are depending on that money. Tens of millions more will be depending on it when they retire in the future.
Slashing benefits is going to have a massive impact on their lives.
The last option is to raise taxes. And just like cutting benefits, you can count on this happening.
Just wait for the Bolsheviks to rise to power. They have a limitless agenda and no qualms about jacking tax rates up to 70% or more.
I really don’t want to sound alarmist. But there are obvious realities here that any rational person should take very seriously.
At some point, most of us probably expect to retire. And retirement will take very careful consideration in full view of all the facts.
These are facts… and it’s important to start planning with these basic truths in mind: the longer you have until retirement, the less likely that you’ll ever see a penny in benefits.
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Since none of these fuckers have done anything to address the issue … guess you can cut to the chase (see Conclusion on page 5 of the report) to see what the hell is going to happen …. They will totally kick the fucking can down the road and beneficiaries will take a 20% to 23% haircut beginning in 2034 – 2035 …. Pretty fucking simple!!!
Oh, these gutless bastard politicians and their mainstream media lackeys suck donkey-balls.
Also, loved the “Letter of Transmittal” intro to Madame Speaker and the President: “We have the honor of transmitting to you the 2019 Annual Report of the Board of Trustees of the [Social Security] Trust Funds.”
My proposed alternative “Letter of Transmittal” for next year:
“Hey fuckers, you and your predecessors haven’t done shit with this fucking report for over 30 years … How about getting off of your fucking asses and doing something …. NOW!!!”
An above-average 8th grade algebra student with modest spreadsheet skills could solve this problem in about 15 minutes!!
What do you suggest be done? Huge tax increases? Huge benefits cuts? There are few other options, you know.
Attack Libya, kill Gaddafi, and steal his gold and oil, oh, sorry.
Ok, attack Venezuela, kill Maduro, and steal his oil and gold.
Max Keiser suggests that 1% of the shares of every publicly listed co. in the US should be held by SS. Thus, giving a stake in the outcome of the markets/economy to SS. I’m not deeply enough involved in the nuts-and-bolts of such matters to completely understand the ramifications … but, I thought it was an interesting proposal.
Employers already pay half the social security tax for their employees.
I think Keiser would say, those contributions do nothing to provide “growth.”
From Wikipedia:
“The Karmabanque hedge fund project was designed to simultaneously short-sell companies while funneling profits into environmental and ethical-business pressure groups that further act to drive down the companies’ stock prices. Describing the project, Keiser stated, “The Internet allows people, activists, from all over the world to gather, or swarm, and hit a company where it hurts most—in their stock price.”[31]”
Sounds as if Keiser really doen’t care about the growth of a company or its “stake”, just its destruction.
The point is that it would have been a HELL of a lot easier to solve 20 years ago … would NOT have required HUGE tax increases or HUGE benefit cuts if it would have been addressed SOONER?
Now it WILL \require HUGE tax increases and/or benefit cuts!!! D’uh!!! No other answer because these gutless bastards continued (and continue) to kick the fucking can down the road.
As a 50+ year old, have a 35% decrease in benes baked into my retirement plan. That being said … SHTF and massive looming inflation scenarios could have me working until 80!!!
How many other idiots have no fucking clue about the SS storm brewing???
It is public knowledge that barry hussein’s bummercare raided a Medicare Trust Fund for something like $800 billion to help make bummercare a little less unattractive for a little while. What scares me is what we don’t know about raids on other trust funds. Of course we had our chance: we could have ‘lected algore and let him keep the key to the lockbox.
Tell the truth. Clinton and old blowhard stole the cash in the fund and had the goobermint give notes or promises to pay back. The goobermint will push the age limits up above 70 to slow down the take out, but will never stop payments to a program that has been paid into since FDR. They will print dollars no matter how worthless forever or face complete castration of the people in government.
I think the first IOU note was placed in the SSN lock box during WWII, then the last of it was taken out for the Guns-and-Butter programs under LBJ.
I took early SS just because. it’s only enough to pay some bills, I couldn’t live off of it but I wasn’t sure it would be around for long. Obama worked really hard and he succeeded in getting the third world in on SS and Medicare. Yes, he wasn’t the first but he sure as heck was the best at getting the money out to those who never earned a penny of it. He Cloward and Pivened the crap out of Medicare and SS and he had eight years to perfect what LBJ started. Clinton ‘balanced the books’ by raiding SS.
I feel badly for youguns who won’t see shit all the while having a gun pointed at their head to make them pay. I had the gun pointed at me all my working life and I’m getting a pittance, they won’t get to see nada. Then again, had I not been forced to pay into SS I guarantee I’d have lots more to show for the money that was taken from me.
Yep, I’m drawing SS and taking the interest off a retirement account. I have another retirement account still working, and hope to start using it when things start getting expensive. Luckily, I have good health so the doctor sees me once a year.
Waiting to see if I start pushing daisies before our illustrious leaders start forcing private retirement accounts into SS.
I think LBJ started that …
To all who are paying for my SS I appreciate your generosity. I’ll be 92 in 2034 if I make it that long . There will be a lot of pissed 50 and 60 year olds by that time. By my reckoning 2034 should be about the end of the 4 th Turning. The next 15 years should be very interesting. Best wishes to you who are younger and will live through to the end.
Over – you are 77? You are the new Muck around here. Do not forget to take extra fiber.
I don’t know if I’ll make it to 2034 either. Extra fiber? you must be young.
What could possibly go wrong? Pay people two or three times more than they ever put in. Pay people for life who are “disabled”. Pay surviving spouses who never put in. Do all this based on the Ponzi pyramid of ever growing populations, only to discover that the population does not grow rapidly enough. And that is just SS. Medicare – now that is a real bottomless pit.
Who would ever have thunk it that such a system would go broke.
You forgot to add initially setting the eligibility age at, or after, when people were dying of old age.
Then the miracle of modern medicine started bumping up people’s lifetimes.
It was supposed to be a tax on the benefit of breathing US air, but people started living longer.
Strange how you never hear of the MIC being in the same predicament as SS and Medicare. I wonder why.