Guest Post by Simon Black
Today the federal government will release a nearly $5 TRILLION annual budget proposal for Fiscal Year 2021 (which begins on October 1st of this year).
Needless to say, that’s more money than any government has ever spent in the history of the world.
And there are a few things in particular that are worth highlighting:
First– this budget proposal would create yet another trillion dollar annual deficit. And that’s simply astonishing.
Think about it: this is supposed to be the ‘everything is awesome economy’. The stock market is at a record high. Corporate profits are at record highs. Unemployment is at record lows.
If the government can’t make ends meet when the economy is this good, how many trillions will these people burn when the next economic downturn arrives?
Second– and perhaps even more importantly– the budget proposal aims to *cut* funding to Medicare and Social Security by hundreds of billions of dollars over the next decade.
Bear in mind that these programs are already insolvent, i.e. they can’t pay for the obligations they’ve already promised. AND they also lose money according to their own financial statements.
Right on page 5 of the 2019 Social Security annual report, the trustees explicitly state that “Trust Fund asset reserves become depleted and unable to pay scheduled benefits in full on a timely basis in 2035.”
And on page 2 of the report, they state that “Social Security’s cost has exceeded its non-interest income since 2010,” and that the cost of Social Security for 2019 exceeds non-interest income by $81 billion.
The Medicare annual report is even more bleak in its outlook:
“The Board projects that expenditures will increase in future years at a faster pace than either aggregate workers’ earnings or the economy overall . . .”
“[A]ny of these scenarios would substantially increase the strain on the nation’s workers, the economy, Medicare beneficiaries, and the Federal budget.”
“[T]ax income and other dedicated revenues will fall short of [program] expenditures in all future years”
“The financial projections in this report indicate a need for substantial changes to address Medicare’s financial challenges.”
They even state that the government needs to give taxpayers ample time to “adjust their expectations and behavior” to the major changes that will end up being made to the program as a result of these fiscal realities.
And they also project that Medicare’s largest trust fund will be fully depleted in 2026, just six years from now.
Again, don’t take my word for it. These are official government reports signed by (among others) the Treasury Secretary of the United States.
This is not some wild conspiracy theory. This isn’t even a political problem. It’s an arithmetic problem… and one that will never add up.
Both programs estimate their funding gap to be nearly $20 TRILLION.
This is a level that is obviously beyond the government’s capacity to bail out. The federal government loses a trillion dollars each year and is already in debt by $23.25 trillion.
(And to be clear, that is a record high amount. In other words, the federal debt level right now, today, is the highest that it has ever been in US history.)
They don’t have the money to scratch the surface of saving Social Security and Medicare, so a bail-out is not an option.
But like I said earlier– they’re actually moving in the other direction. Today’s budget proposes to CUT nearly a trillion dollars from the programs over the next decade.
So the government hastening the decline of Social Security and Medicare, not bailing them out.
Option 2 is default. And by ‘default’, I mean default on the obligations and promises they’ve made to tens of millions of taxpayers over the last 50+ years.
They have a number of ways to do this.
For example, they could push out the retirement age by 5 years or so. But this is effectively stealing retirement funds from people who have been paying into the program for their entire working lives.
Right now the average married couple receives $36,072 in Social Security benefits per year. So delaying benefits for five years means that the average couple loses more than $180,000 in retirement benefits that they’ve PAID FOR and been promised.
This is tantamount to a tax of $180,360 per couple.
Alternatively, Uncle Sam could simply cut benefits altogether. Social Security’s trustees have already indicated that a 23% cut in benefits would cover the short-term funding gap.
But based on average life expectancy in the US for seniors, this works out to be a total reduction of $160,400 per couple from the benefits they were promised… which is also tantamount to a tax.
It would also turn people’s lives upside down. Life isn’t cheap in the Land of the Free, and living on a fixed income is difficult. Slashing that income by 23% will hit a lot of people hard.
Bottom line: The government isn’t going to fix anything. According to today’s budget proposal, they’re actually making it worse. You’ll have to fix this yourself.
The good news is that there are plenty of ways to save more money, including turning your hobby into something that boosts your retirement savings.
Seriously– 15-year old kids are earning good money playing video games on Twitch. Instagram starlets make money from butt selfies. People sell homemade crafts online, rent their spare bedrooms out… I mean, there are countless ways to make extra money.
And if you’re smart about how you structure it, you can divert most of that extra cash into an inexpensive, tax-advantaged retirement account.
This will go a long way in solving an obvious problem.
It is my sincere desire to provide readers of this site with the best unbiased information available, and a forum where it can be discussed openly, as our Founders intended. But it is not easy nor inexpensive to do so, especially when those who wish to prevent us from making the truth known, attack us without mercy on all fronts on a daily basis. So each time you visit the site, I would ask that you consider the value that you receive and have received from The Burning Platform and the community of which you are a vital part. I can't do it all alone, and I need your help and support to keep it alive. Please consider contributing an amount commensurate to the value that you receive from this site and community, or even by becoming a sustaining supporter through periodic contributions. [Burning Platform LLC - PO Box 1520 Kulpsville, PA 19443] or Paypal
-----------------------------------------------------
To donate via Stripe, click here.
-----------------------------------------------------
Use promo code ILMF2, and save up to 66% on all MyPillow purchases. (The Burning Platform benefits when you use this promo code.)
Why not STOP ALL FOREIGN AID for starters.
Then REDUCE the military budget to no more than the #2 spender in the world.
Close all overseas bases immediately.
Stop that Space Force bullshit.
Kill off NASA as they haven’t done anything significant in decades.
Kill the various Federal Departments that have no Constitutional mandate and fire all their staff.
I could go on, but enough for now.
Your last one alone would cut the budget massively….and appropriately.
The one I really like is the one I didn’t list.
Kill the Fed Gov entirely as it’s a useless piece of shit and completely detrimental to the decent portion of society.
Goes without saying.
Whenever there is a government shutdown-whether for budget impasse or even severe weather we hear the phrase “non-essential government employees need not report”.
Hmmmm, how can we make that permanent?
Tax revenue is at record highs, but our “public servants” are spending like there is no tomorrow. Federal government should be cut by 25% this year and next. Assess the needs next year and prepare to cut another 25%.
If it is not authorized by the Constitution (other than general welfare), it should be deleted.
Here in GA, where they are NOT able to simply print all the money they want, the Governor demanded 10% cuts in ALL state agencies. Its a start.
24 million plus local, state and federal ” public servants” whose salaries and pensions are paid by non governmental employed people like many of us who read TBP everyday!
The City of South Bend, Indiana. Mayor and associated hangers on
The County of St Joseph, Indiana in which South Bend is situated. Councillors x 3 and associated hangers on.
The State of Indiana in which St Joseph County is situated. Governor + LG, and associated hangers on.
The USSA in which Indian is situated.
You get the picture.
Four tiers of government that you pay for and wonder why the USSA is fucking broke like a San Franshitsco bum.
Oz is not much better, Fatman. Local councils, states, and fed government, several layers of judiciary, etc.
Oz local councils are corrupt as can be.
G’day mate. Oz local councils and shires corrupt. No way, never couldn’t happen. Canterbury Bankstown council is the benchmark for what all local councils throughout the world should aspire to. If you believe me, I have the Pacific Ocean bridge for sale at a good price.
Still, I guess we are a little bit luckier that we only have three levels of incompetence and not the four that permeates the USSA.
Your tax dollars at work:
There are to many individuals sucking off the federal Teat! This is most likely why none of this will change until a reset takes place. This beast has become so large and self serving that it simply is feeding itself now.
I understand that this issue has been hashed and rehashed to the point where no new suggestions or answers have surfaced. The can kicking down the road has allowed us to better prepare. Are we as a people ready to say enough to our self serving managers? Are we at that point where we start pushing back at this leviathan? It is up to the people to get involved and move this thing forward to a solution. This should not include looking at another form of governance, those have already been tried. The only one so far that all the other forms have been trying to kill off is the Representative Republic. We have a set of rules or a guide line. We just don’t seem to get behind it and make the ass hats at all levels of government follow it. When will the people of this country stand up to this present day tyranny?
Did tyranny start when checkpoints began?
Did you start resisting when smoking was banned, TSA groping began, or NSA wiretapping was set up?
Do you live in a police state when the government takes your belt or when a CIA agent punches you?
Tyranny is permanent and gets worse by the day.
Americans used to be able to make decisions for themselves, but Americans are just dependent retards now who wait for the state to tell them what to do.
You can’t escape because the whole world is a police state. What would you gain if you escape tyranny in the US only to be shot by the Gestapo in Canada?
Its actually worse than that. Even countries that don’t appear tyrannical, suddenly become that when the US steps up with piles of cash, threats of sanctions, etc. So if you think you could be safe over “there,” guess again. The US respects the sovereignty of only one country….Israel.
BF – I make that point continually. All the folks that claim they will fight, but are not. How much worse will it have to get?
I do not argue for fighting, quite the contrary. But the hypocrisy of those saying to fight when we all know they are full of shit is monumental.
Persons who did not already know the sham of Social Security (+ Disability) and Medicare (Medicaid) must have their heads so far up their arses, they are popping hemorrhoids instead of pimples. EVERYONE is complicit in this mess. You have the scammers on disability who can’t work, but can play golf. You have the mother with multiple children all collecting SS benefits and for years on end….the MIC (Medical Insanity Cabal) milking that system dry and the assh-ole patients who continue to use a system that is slowly* killing them. And you have schmucks like me (forced) to pay into a system…that I don’t want to ever use . (1. Because I believe orthodox medicine, for the most part, is evil. 2. I would have rather had saved or invested on my own, what I payed into that ponzi.) And when it comes to even trying to deal with this mess, everyone gets up in arms. The ship sank. The oxygen tanks are empty. Start swimming on your own and teach your children and loved ones to doggy paddle. You need help? PRIVATE CHARITIES. Old School.
*slowly so they can extract the most funds they can from you and the system.
https://cnsnews.com/article/washington/terence-p-jeffrey/irs-sent-46378040-refunds-23994-unauthorized-aliens-1-atlanta
Unauthorized aliens aren’t going to pay themselves.
Hey man, I brought my abuelita from Croatia. She needs her SS.
Stop making fun of me. I have been quarantined!
Your infected? Maybe old Nick can help out with the hot beef injection.
You’re
I don’t think the author has even read the budget.
It does not cut Social Security and Medicare. It cuts puts work requirements and eligibility requirements on Social Security Disability. Social Security Disability is a totally abused part of Social Security.
And it changes the way Medicaid is distributed to the states. It does reduce Medicare cost for drugs but through negotiation with pharmaceutical companies.
And yes we could be more aggressive in cutting the deficit than this budget but that would cause even more journalist to squeal.
The author says some good things, but a lot of bullshit as well. He says: “But this is effectively stealing retirement funds from people who have been paying into the program for their entire working lives.“
Clearly, you cannot steal that which the person never has had. The author knows that the SS recipients have paid far too little in to cover their withdrawals, and he knows that that is unsustainable. And he also knows that the money was spent, not saved nor invested for any individual.
It is a tax, and the tax take is insufficient to cover outlays.
So the shit will hit the fan. Sorry, no SS soup for you.
If you have not prepared for your own future, I hope you adjust to catfood.
Plus when you get SS, you apply for an entitlement. It’s welfare, basically.
“The author knows that the SS recipients have paid far too little in to cover their withdrawals”-accurate or bullshit? Let’s take a look at a real situation; this exercise may be helpful for your thinking, especially if you have yet to start collecting your own SS.
My first FICA “contribution” was in 1965 and before it was all over the sum of my + my employer’s “contributions” was in the vicinity of $250K. Had those funds instead gone into an annuity with a decent rate of return how much would the NPV of the account have been in 2012?
But it is SS and not an annuity, so can you run some numbers and tell me why my payment of $250K over 40 years should not justify a sustainable stream of benefit payments over the remainder of my life?
Make whatever assumptions you feel necessary, but please tell me how much I should be able to fairly expect from SS.
Well, let us look at things this way – average balance of $125 k over 40 years, invested at govt bond rate of say 2%, less tax. The interest on that is around $100k, plus the $250k = say a nest egg of $350k. The higher the assumed rate, the bigger the nest egg. But they did not invest it, they spent it.
Further, you are the exception. Lots and lots of folks did not work for 40 years.
The fact is, if they had done as you say, and enough money was paid in, the SS would not be running out of money in its trust fund.
The rate of return on offer via Treasuries, I suspect, are low, and the nest egg simply did not grow.
If yo had invested the $125k in stocks at say 7% you would likely have a nest egg of over $1 million. But that did not happen.
Sorry.
Don’t forget immigrants that become legal at an older age, maybe work 10 years, then retire and get full SS benefits.
VV? I was trying to come up with a caption for this GIF…
And, it is just too much like real life, isn’t it? There’s the harmless little cricket making its way along and suddenly, a CLAW!
It looks more like a spider than a claw. It has good camouflage.
“full SS benefits” amounts are determined by the amount of contributions; low wage earners often get as little as $300/month while high wage earners can get over $4K/month.
The base amount is determined by the highest earning 40 quarters in your account. Someone who works continuously for 30 years has 120 quarters of contribution, but only the 40 highest quarters (usually towards the end of one’s career) are what counts.
Whoops, I’m wrong in the second paragraph above. The formula SS uses sums your highest 35 years of earnings; a minimum of 40 quarters (10 years) of earnings is required in order to get any benifit.
Actually, I did not work 40 years; I did, though, not collect until age 70 (am enjoying that especially nice growth rate of 8%/year for the retirement benefit from age 62 to age 70-particularly in these times of astronomically low interest rates). I did, however, accumulate 40 quarters of earnings history (hells bells, that is only 10 years full time), so am considered “fully insured”!!
I take my employer’s contribution as if it were mine, dismember the $250K total into an annuity like calculation over each of the years (not just the 40 quarters needed to establish “entitlement”), and make educated-guess type of assumptions about what the rate of return should be for each year. Remember Jimmy Peanut’s leagcy of 18% prime rate back in the late ’70’s?
Bottom line, the calculation is tedious at best and meaningless at worst-Uncle is gonna give you what he gives you, so no use belaboring the woulda/coulda/shoulda idea.
The thing to understand is that the program covers a very large segment of the population and is not designed to give equal treatment to everyone. For example, a high earner can die the day after he first files to collect, or a low earner can collect for 50 years if she lives to age 115. Yes, those are corner cases (one collects nothing while the other collects something for a very long time), but it shows that some people “win” and some people “lose”.
My only point is that-just like Billy Martin said-if you are going to play the game you ought to first know the rules. But, looking at the “social contract” can muddle the thinking somewhat. How much is fair? Should one be “allowed” to take out more than they contribute? Yadda, yadda, yadda. Sadly, those kinds of issues usually get settled by politicians.
One of the best thoughts on how to view SS retirement benefits is to consider them as “longevity insurance”. I.e., unlike life insurance where your policy pays off only when you die, your SS stream of income keeps coming (at least, we hope it will) until the day you die.
It is said that Boomers are turning age 62 at the rate of 10,000 per day and that the majority of them are filing to claim their SS at that time, which helps explain the fast advancing day of reckoning for the insolvency of the (tongue in check) “lock box”.
The main reason that I am an exception is I am a saver and not a spender, plus I took the time to learn and understand the rules of the game (such as playing the “file and suspend” gambit (which was eventually killed off by Obungo-it had been put in place by Slick Willie to help working women, if you can believe that)). I have about 10 years until I hit the crossover date, that is, the point at which my postponing filing yields more benefits versus had I taken those benefits at age 62. Sounds kind of like being at a casino, doesn’t it?
If you paid into the US SS System and retire to OZ, benefit payments are exempt from Australian tax. Personally, I have my eye on Launceston….
This is true. But retiring to OZ not so easy unless you have permanent residency, which is not easy to get – impossible, actually – at retirement age. Which means you had to have permanent residency earlier than that if you want to retire full time to OZ, which means you had to work in Oz previously, most likely, which means you would be in the OZ superannuation scheme, which means you are likely to get screwed out of some of your SS, as super is defined as an employer provided pension by the US and results in drastically lowered SS payments.
Let’s keep giving billions away to other countries that hate us, keep funding healthcare for illegals, and their anchor babies, keep giving illegals housing, food stamps, welfare, so all my hard work and efforts and tax will not be there when me and my hardworking spouse retire and have our hand out for what we Earned and it will be depleted because the illegals had their hand out for doing nothing but being brown and sending dollars back to their third world country. Sounds fair since we have all this white privilege i guess, huh? We have the privilege of works our fingers to the bone, paying taxes, giving up rights and benefits all while being scolded we are rayciss and privileged.