Politicians of all flavors continually remind us social security is in danger of going bankrupt. Now our esteemed leaders want to fix it by increasing benefits. What could possibly go wrong?
Newsmax Finance reports on a recent interview with former fed head (Big Al) Alan Greenspan: (my emphasis)
“Former Federal Reserve Chairman Alan Greenspan warns that cuts may be needed to eventually save the Social Security system.
Greenspan also predicted a slowdown in the U.S. economy could stem from an overloading of entitlement programs that aren’t being funded.
…. He said “the actuaries of the Social Insurance system say…to be actuarially solvent through the life of the programs, we would have to cut benefits by 25 percent right now and extending into the future.”
He said eventually America will have to come to some resolution with entitlement benefits because “the end of the road is very serious trouble,” while adding that defined benefits have been a big problem.”
When did Social Security become an entitlement program?
The law was titled “Federal Insurance Contributions Act” (FICA). The government required employers and employees to contribute to the insurance program to help fund our retirement. Benefits were based on the insurance premiums paid.
| “Big Brother is a fictional character and symbol in George Orwell’s novel Nineteen Eighty-Four. He is ostensibly the leader of Oceania, a totalitarian state wherein the ruling party wields total power “for its own sake” over the inhabitants.”
– Wikipedia |
Somewhere along the way our government, regardless of political party, became more like George Orwell’s character “Big Brother”. For generations, the insurance premiums paid exceeded the benefits paid out. Big Brother spent the excess collections “for its own sake”, filling the trust fund with IOU’s; mere political promises to fulfill their obligations.
Many times, Big Brother told us they “fixed” social security by increasing taxes and reducing benefits, – yet social security is broke! The Heritage Foundation reports:
“Since 2010, Social Security has taken in less money from payroll tax revenues and the taxation of benefits than it pays out in benefits, generating cash-flow deficits. Social Security’s estimated 2016 cash-flow deficit was $73 billion.
That $73 billion deficit requires $73 billion in new public debt because,…there is no real money sitting in [the trust funds] – just a bunch of IOUs. Thus, when the Social Security Administration pays out benefits that exceed its payroll tax collections, the government converts those trust fund IOUs to new public debt.
…. Without reforms, Social Security’s combined trust funds would be depleted by 2034, threatening program recipients with indiscriminate benefit cuts or payment delays.”
Big Al Greenspan suggests an immediate 25% benefit cut and converting the program to a “defined contribution” type program. Big Brother knows that would cause the masses to storm the castle.
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Big Brother’s looking out for ya!
Nancy Altman reports in Forbes, “A Huge Step Forward In The Quest To Expand Social Security”: (my emphasis)
“Representative John Larson (D-CT), Chair of the Social Security Subcommittee of the House Ways and Means Committee, announced the introduction of the Social Security 2100 Act. …. The bill has over 200 original cosponsors. That many original cosponsors is truly remarkable and underscores how important and wise the legislation is.”
…. Congress has added no new protections nor voted increases in benefits for over half a century…. What stopped the building was a billionaire-funded campaign to undermine Social Security. That decades-long campaign succeeded in convincing too many policymakers, ….that not only can’t we afford to expand Social Security, we can’t even keep the promises already made.”
Big Al and The Heritage Foundation are convinced the program is fiscally unsustainable. If a public company handled their pension plan like Big Brother handled social security, their leaders would be in jail.
| Every article I researched about the Social Security 2100 Act reflected extreme political bias. |
Max Richtman, writes in The Hill, “A bill to boost Social Security will finally get a full and fair hearing”. (my emphasis)
“Boosting – rather than cutting – Social Security makes good financial sense.
Rep. Larson’s bill…maintains Social Security’s financial solvency for generations while giving seniors a bump in benefits.
Among other things, the bill would:
1. Provide a 2 percent benefit bump for all beneficiaries.
2. Protect retirees against inflation with a new formula for calculating cost-of-living adjustments, the Consumer Price Index for the Elderly (CPI-E).
3. Increase the special minimum benefit threshold so that more low-wage workers qualify.
4. Cut taxes for over 12 million Social Security beneficiaries.
These improvements – and the extension of Social Security’s solvency to the end of the century – would be paid for by adjusting the payroll tax wage cap so that the wealthy contribute their fair share.”
Jamie Hopkins provides details in this Forbes article: (my emphasis)
“…. The benefit increase would be around 2 percent…. Lower wage earners would see the biggest increase in benefits. The minimum benefit would be set at 25 percent above the poverty line, ensuring a safety net for workers in retirement and continuing the initial purpose of Social Security – to provide a floor of income for keeping retired lower-end earners out of poverty.”
How will Big Brother pay for these expanded benefits?
“The new means for funding the Social Security system would be to tax high-income earners on wages over $400,000. The tax would only impact the top 0.4 percent of wage earners but would bring in significant revenue.
Currently, Social Security taxes stop at roughly wages of $132,900. The new system would essentially start the tax back up again at $400,000. It is not entirely clear if this provision – crucial to the bill’s success – will garner support on both sides of the political aisle.”
This Motley Fool article adds: (my emphasis)
“The Social Security 2100 Act aims to raise revenue such that no benefit cuts need to be made over the long term (the next 75 years). It also intends to expand benefits for current and future beneficiaries. According to Chief Actuary Stephen Goss, the estimated $13.2 trillion budget deficit between 2034 and 2092 would be replaced by a $2.1 trillion net surplus – a $15.3 trillion swing.”
Big Brother says “Trust me, we will have a surplus.” BS, politicos say that every time they “reform” social security.
| The projected $2.1 trillion surplus won’t begin for 15 years while accumulating over 58 years beyond that. |
That averages around $36 billion a year – a mere rounding error. Don’t you just love government math!
Who is the .04% who foots the bill? Most billionaires make their money through investing, not subject to social security taxes. In 2004, CNN writes, “Gates gets pay hike”. Microsoft Chairman Bill Gates earned under $1 million in salary, but received $176 million in dividends, increasing to $311 million the following year.
It’s the small business owner, paying both shares of the social security tax (proposed raising to 14.8%), who will be most affected. Raising taxes on small business causes unemployment.
Dave Gonigam, asks some tough questions in this Agora Article: (my emphasis)
“”Wait a minute – you said that $132,900 rises with inflation every year. Doesn’t that mean eventually the ‘doughnut hole’ goes away and all income would be subject to payroll tax?”
Answer: Yes.
“OK, so would those higher payroll tax contributions translate to higher benefits in retirement?”
Answer: No. (Really, was there any doubt?)
“The Social Security program is intended to be primarily a required-savings program….” says William Reichenstein, business professor emeritus at Baylor.”
| “In a required-savings program, there is a reasonably close relationship between taxes paid and benefits received, while in an income-redistribution program this relationship is not close.” |
Is America willing to take this major step toward socialism, giving Big Brother even more control over our money and lives?
The political ploy
This bill is a ploy to force all members of Congress to take a stand on social security before the upcoming elections.
This is right out of George Orwell’s book, baiting the socialism trap to make the bill politically popular. Big Brother knows the inhabitants will gladly take benefits as long as they don’t have to pay for them – making them even more dependent on Big Brother.
Should the bill get through the government sausage making machine, it will be so full of political compromise, it won’t be long before taxpayers will be faced with the same problem – long before the end of the century.
| If Big Brother really wants public support, and the program is so good, why aren’t they rolling congressional pensions into social security? |
I’m worried. Big Brother is not just kicking the can down the road like every other social security reform bill, they are trying to bribe the public to take another major step toward a socialist nation. That will cause many bigger problems down the road.
| There’s no security in Big Brother’s political promises – EVER! |
Do we “inhabitants” really want Big Brother to steal more individual wealth and redistribute it for their benefit? Welfare, food stamps and other entitlements are means tested, will social security benefits soon follow?
What if the old saying, “The masses can VOTE their way into socialism, but you always end up having to SHOOT your way out of it”, is true?
What are we doing to future generations?
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Until next time…
Dennis
Social Security is another tax used to benefit not only seniors but also illegals who have never paid a dime into the system. Obama, Mr. Cloward Piven himself, disallowed informing employers that some of their employees were using fake SS numbers. “Their report draws attention to a move by former President Barack Obama to stop sending so-called “no match” letters to employers notifying them that numbers used by employees on the wage forms do not match their identity.
The change followed the president’s decision to approve amnesty for some 700,000 younger immigrants let into the U.S. under his Deferred Action for Childhood Arrivals. Some of those have been dubbed “dreamers.”
https://www.washingtonexaminer.com/washington-secrets/illegal-immigrants-cited-in-theft-of-39-million-social-security-numbers
Australia has a system called “superannuation”. It is similar to SS, but the money is earmarked only for you, and is supposedly yours, and is very modestly taxed.
But guess what? It has become such a huge pile of money overall (there are trillions piling up) that the govt simply cannot leave it alone, and is endlessly coming up with schemes to take it from those who have saved it. When any govt sees trillions of dollars, they just gotta get them some of that, no matter what they promised previously, which was to leave it the hell alone.
Any defined benefits scheme in the US will go the same way – the money will pile up, and the govt will say damn, gotta get me some of that.
There is no answer so long as the welfare state exists. Liabilities will grow beyond any ability of the productive class to pay for them.
I was chosen to represent the Union at Collective Bargaining Agreement negotiations between The Company, the Union, AND the Federal Agent to negotiate a compromise to prevent an IAM strike at a large military base in 2007/8 when the really big military industrial contracts were about to start flooding the scene, behind which were greedy union thugs tacking on all sort of unfunded liabilities to the American taxpayer in a little negotiation trick called the PASS-THROUGH.
I’ve gone back and revised to explain. Now, I will try to edit it a bit. Pull your head in and leave if you are a turtle. No one is forcing you to read this.
So, the Union realized the Union needed the big guns when the Company walked in proposing a pay cut for the first year of the “new” contract (a subcontractor for The Boeing Company got a little cocky about cutting wages in the area.) I learned a lot about how the union has all these loopholes build into the ERISA laws to make sure the taxpayer is on the hook no matter what happens to that pension money they collect from WHOMEVER wins that contract forever and ever amen. Because the Federal government has to honor a CBA negotiated at arms’ length negotiations and if it tacks on additional dollars to the Contract, it just does. No fault of the Company or the Union. It is in the interest of the Workers. So, a 41 million dollar contract balloons to 50 million over a CBA negotiating table when the union negotiates increased benefits which kick in ERISA codes.
Back doors and loop holes are intriguing. Especially when they lead you into a whole fucking WARREN of rabbit holes.
Did I mention my husband received a letter from the IAM Pension Fund letting him know his benefits he applied for and received “early” at 58 were SAFE! Even though they have voluntarily put the IAM Pension Fund into Critical Status. A footnote to that informed me this activates a special statute of the ERISA Codes. Some of you business owners and 401K managers will recognize the impact of ERISA codes.
At those negotiations back when I thought the Fair Labor Standards Act seemed based on solid principles I could stand on in floodwaters, I asked the Regional Union Representative sent by the national IAM about giving employees the option to choose between 401K and IAM Pension Funds instead of demanding the 2% be earmarked for pension funds. Several of the people in my shop didn’t even want to BE in the union but were forced to pay dues via contract rules. You could opt out but it was a pain in the ass and you still had to pay the union a negotiating fee monthly. Is kind of how I ended up being an accidental Union Steward on the National Labor Board Investigation into my suspension that I brought upon myself by being able to read between the pre-packaged clauses added just to make sure the ERISA codes would stick.
About giving union members, the Employees, the right to choose whether to put that 2% into a 401K, IRA or the Union Pension Fund, his reaction left me zero misconceptions about that being on the new CBA. He glared at me, (feeling) and informed me, the lowly accidental negotiating team member with boobs because I know perfectly well why they chose me to be on the negotiating team. What they didn’t know was I had a brain as well.
The bitch they replaced me with ended up being Vice-President of the Local and draws a big enough salary from that to retire from her actual job early, like my husband did. Except in a slithery sort of way. [a LOT of thought there, but thought, nonetheless]
The IAM Regional Business Representive (and I do know his REAL name yes I do yes I do) circled the total dollar figure he was running in his “give” versus “take” column and informed me giving the employees that option meant nothing to the total for the union. Our interest was to benefit the Union, not individual employees. {His ACTION emphasized his Speech.}
Feeling. Thought. Action. Speech.
When will the people stop thinking and get moved to act? Is it still possible with the correct sort of speech? The sort that is truly free?
The PASS-THROUGH works something like this:
Even though the corrupt and evil Company wanted to cut pay to increase profit, believing if they came at the Union with that trick, the Union would back off its demands for other concessions by the Company. The IAM sent down a hard-nosed business representative who might know where Hoffa is entombed. He liked me a lot until he realized I’d read the laws before I joined the team. Later, when I got suspended for insubordination and he refused to take my calls? Well, I marched into a IAM local meeting and announced that I’d tried to file charges against the business representative with the National Labor Board but they wouldn’t let me. LOL.
The business representative lost the next election to business representative but you know what????
The NATIONAL IAM created a second business representative position JUST for him and made it permanent. Some people are indeed more EQUAL than others.
Canada has something similar but all moneys go into general revenue and the whole system is just one big accounting fraud, there is no money.
but, but, but, wasn’t W. going to fix SS once and for all?
Congress Wants To Fix Social Security By Increasing Benefits?
Uh, perhaps you haven’t noticed yet but your country is both run and populated mostly by halfwits whose only credible claim to exceptionalism lies solely in their exceptional stupidity. Surrender to Russia now and in return we promise to only execute your leaders and military commissioned officers. All others will be spared ..provided they can suck a good dick.
I am only a third of the way, but wanted to say I can see already the enormous grasp you’ve taken on this issue. I commend you and will now return to your piece, assured that it is worth my early morning reading time, which is too precious to waste on the Kabuki Theater ongoing in D.C. and Beyond.
It was indeed worth my time. Thank you. I’ve skimmed your articles before but to be honest, I come to your posts with a bias I shared with the Nova Scotia Kid on another thread. I thought you would be funnier.
I applaud your ability to condense this message into readable form for even a dumb hillbilly like me. Eloquence with words is like nectar to gods and goddesses but when the people need to know something, someone needs to just say it plainly. Thanks for doing exactly that on this issue. At least for me. I will try to forget the 1980s when I see your name.
I took a college course in a liberal arts sort of curriculum one time which was taught in the International Diplomacy section of La La Land.
I learned how Italy had developed so many political parties their government had fallen every single year since World War II, meaning the second-runner up in the Big Cheese position got to take over as Distributor of Big Cheese to the 50 some-odd political parties and factions represented in the body of idiots elected to be the Stewards of the Public Trust in Italy.
Since all 50 something political parties there pandered to various groups composed of single interest voters (interested in their own promised piece of the cheese), no single leader could garner enough support from the actual people in the national community to get a majority vote. So the government “fell” every year.
I don’t keep up on the politics of Italy, but some of the Grooch family resides in Italy. I talk to them, having relayed final tidings of love from Poppa Grooch to his beloved nephew and niece in Bari. They are highly concerned. Also, they are welcome here if they can get here. I would rather have them on my bootheel side instead of Italy’s. If you know I’m from Missouri and where the University of Italy in Bari they attended is located that is particularly funny. Especially if you don’t get it and I have to show you what I mean.
It was said that Italy could never lose in war because they would always switch sides if they were losing. But this isn’t that sort of war. The may really be the big one.
when all the money is gone and the debt overwhelms all, and money is being printed by the zillions, the system will also be gone.
Unless they do something really crazy like charging payroll taxes to capital gains, there’s no way this works. There just isn’t enough payroll income to fund social security. More and more income is being funneled into capital gains rather than payroll, because the tax is lower.
I look forward to collecting. I have put into it since I started working.
When money is debt and debt is money, all roads lead to ruin.
Since the bond market low of 1981 ownership of long-term IOU’s was like planting a money tree in the back yard. As debt value in the bond market rose (and interest rates fell) there was an insatiable appetite for more debt. Gov’t, corporations and individuals went on debt-fueled spending sprees, and the resulting economic activity generated
1. Income to tax.
2. Interest payments to banks.
3. Growth in industry after industry artificially stimulated by that debt-fueled demand.
It looked (for nearly 40 years) like a perpetual motion machine, borrow a dollar, get 2+ dollars in wealth (a GDP dollar raised to the velocity of money, and another dollar, AN ASSET, held by the creditor/bondholder.)
No wonder we ALL learned to spend like drunken sailors loosed in a Thailand whorehouse with a no-limit MasterCard.
This system has simply
A. Created unsustainable industry and jobs that will die the moment credit growth ceases.
B. Made half the world dependent on “government.”
C. Turned the world’s savings into IOU’s.
Someday the trust in those IOU’s will evaporate, and their value will collapse, taking with it all the value of people’s savings. It should be the greatest credit-collapse deflationary depression in history.
Social Security is just part of the promises that eventually won’t be kept.
And no, “they” won’t just print money to paper over it. Once confidence wavers, attempting to flood more credit into the system will simply cause panic. And it is quite literally IMPOSSIBLE to substitute paper banknotes for all the debt that now exists (AKA directly monetize it.) There aren’t enough trees, enough cotton or ink to print that many $100 bills.
The Debt has to be mostly repudiated (including pensions, SS, even bank balances.) Only after that happens will serious attempts to reflate via banknotes be likely, and the signal that it has begun will be the appearance of larger-denomination notes. Until the $100 is no longer the largest denomination, I don’t worry much about Wiemar Republic/Zimbabwe-style inflation.
We HAD our inflation. It filled an ocean with debt. But unlike banknote inflation, the value of the “money” evaporates with mass loss of trust.
My bet is that someday (could be soon, or could be a decade or more away, how should I know?) GDP will collapse perhaps as much as 80-95%. It was all based on compound artificial stimulus anyway, and like roses grown in a Fargo ND greenhouse, will wither and die when the heating bill can no longer be paid.