Skip to comments.SOCIAL SECURITY AND MEDICARE. THE PICTURE IS BLEAKER THAN EVER
Posted on 05/02/2006 8:30:41 AM PDT by upchuck
[This is an excerpt from Nealz Nuze for today.]
The irresponsibility of the American people, their true heartfelt fear of freedom, and the exploitation of this fear by elected officials is bringing us closer to true financial disaster. You're complaining about gas prices today? In the not-to-distant future you'll have a lot more to complain about than gas prices.
Most Americans believe that there is something out there called a Social Security trust fund. They believe that when the government collects its Social Security taxes every year, it takes the money left over after paying all benefits and puts that money aside for future retirees. Americans actually believe this --- but they're wrong. The Social Security trust fund exists in name only. There is no money there. Not one single dollar. It's all gone. Decades ago, when Democrats were running the congressional show, someone came up with the bright idea of taking all of the Social Security taxes that were left over after benefits were paid and use that money to fund some other federal vote-buying social programs. The idea was simple. The free-spending congress would just give an IOU to the Social Security administration for the money that was pilfered and spent.
Those IOUs now sit in a grey filing cabinet in some federal office in West Virginia. There's your precious Social Security trust fund. Paper. IOUs from a government that doesn't have the money to pay them.
So how is it that Grandma gets her check every month? Social Security is what they call a Ponzi Scheme. If you or I set one of these up, we would be carted off to jail...which happens from time to time, by the way. In a Ponzi Scheme, earlier investors are paid off with later ones, but there's no actual money being invested. Sort of like paying your Visa with your Mastercard....for 40 years.
So right now, some schlub is working at your local burger joint to pay for some retiree's check. What is going to happen over time, is the amount paid out will be greater than the amount coming in...and the payout scheme will collapse, since there won't be enough to pay.
In just about 11 years, in 2017, we won't be collecting enough in Social Security taxes to pay the benefits that will be due to baby boom retirees. In other words, It will be time to head to that filing cabinet in West Virginia, take some of the IOUs out, and present them to the U.S. Treasury for redemption. But how do you pay off those IOUs when you're already spending every single penny you make? Well ... there's only a few possibilities. You borrow the money and go deeper in debt; you raise taxes on the already tax-oppressed Americans to get the needed funds, or you simply default on the IOU. You could, of course, cut spending in other areas to come up with the money --- but remember who we're talking about here. Even for a congress that has doubled federal spending over the past decade or so, cutting spending even by one single dollar is simply not an option.
Privatization? Yeah ... that would have been a partial solution. It would have delayed the financial collapse of Social Security, but private retirement accounts don't serve the purposes of politicians --- especially Democrats. How, after all, can Democrats threaten you with the loss of a retirement account that you own in order to frighten you into voting for Democrats? In every single congressional election since 1960 Democrats have warned voters that if they vote for Republicans the evil Republicans will either reduce or take away their Social Security benefits. And in every single congressional election since 1960 that argument has worked as thousands of frightened and uninformed wizened citizens rush to the polls to reelect their Democrat protectors.
Another problem with the idea of privatization is that Americans only have a very superficial love of freedom. The less freedom demands personal responsibility the more people love it. The more freedom demands self-discipline the less freedom is revered. Personal accounts -- private accounts -- would mean that people would actually have to be responsible for investing their funds and, to some extent, managing those investments.
That's just a bit too much freedom for many.
So -- the crisis looms. Politics rule.
By the way ... and this has to be said. One way to forestall -- not prevent, but forestall --- the crisis in funding Social Security and Medicare is to enact the FairTax. Right now people who no longer pay income taxes because they no longer have taxable income don't contribute to the Social Security pool. Enact the FairTax and these people are suddenly funding Social Security with every purchase they make ... past the poverty level, that is. Ditto for foreign visitors, legal and illegal, to our country. Just a thought.
So whats your congressman or senator doing? Nothing. They really don't care. They don't want to allow private investment options...they won't raise the social security allowance...they won't kick certain folks off the deal. Nothing. I would start to prepare myself for things around 2015...just 9 years away. Prepare for a really bad period of political instability. No winners...just losers.
No matter how you feel about the system, this is not going to be a good thing for anyone.
The losers in the US congress have their retirement, but the head in the sand to destroy and deny you to use any of your SS dollars for real investment is nil. Vote them out term limit them is the only way they are so pompous and relaxed in their power ploy. Just how much tax do you think it takes to staff one member of congress? It is phenomenal.
The wife and I have been retired
for 14 years. Since the '60's
it's been obvious to anyone who
cared to look that it takes two
paychecks to live decently in
this country. AND, the wise
couple MUST put aside part of
those two incomes towards their
Maybe it's the schools which
have failed the populace. I grew
up knowing Social Security as
devised by the Roosevelt admin.
was NEVER intended to foot all
the bills after a person leaves
the work force. It was a temporary
stop-gap for the elderly. And
most of the seniors today have
long outlived the age of their
grandparents! Wake up, America!
The government will never be able
to take care of you in your old age.
The sooner you realize you're on
your own, the sooner you'll stop
spending all your money and start
thinking about the future.
And for God's Sake, teach that
lesson to your kids!
Congress will take the easiest political route it can. The following will happen.
1. Increase taxes slowly over several years.
2. Decrease benefits slowly over several years.
3. They will means test and those with outside pensions will have their social security reduced based on the amount of their non social security pensions. The last one is actually a back door raid on your 401Ks that were supposed to be a supplement to your retirement but not your whole retirement.
Social Security is a scheme that would make Al Capone green with envy. First they tax you and your employer 14%. It is considered part of your gross so you then pay income tax on it. They spend the money and give you a worthless IOU. When they do give you some of the money back that comes from your children's taxes it is considered income and taxed again.
We should start funding each US baby with a $10,000 birth bonus (four million babies born every year @ 40 billion per year. Compare that to SS in the hundreds of billions). Over the course of 65 years, that can turn into a nice hefty retirement. At 6% interest, with NO ADDITIONS, you have $441,000. At 8% with NO ADDITIONS, you have over a million.
The account should follow the person whereever they go, they will be required add to it over their lifetime through automatic paycheck deductions (automatic employee deductions should go into this account over their working life). When the pot reaches a reasonable amount, the person can retire. You should also be able to afford your own retirement health insurance package. The money can pass to your children after death, increasing wealth and security through successive generations. Unlike SS, which takes away from the young and gives their money to others while promising a paltry payback.
A level staring point for all.
I'd be satisfied just to get back my SS inputs so I can invest them myself. Fat chance of that.
Of course, this should not apply to any children of any illegals, ever.
Bush II squandered his big win in 2004 by talking S.S. reform for the year 2005. The Democrats laughed at him and the Republicans ignored him.
He could have used the juice he had in 2005 to get his judges confirmed and make the tax cuts permanent.
Now his mojo is gone and we Republicans can only fight for an orderly retreat to the 2008 election. Americans don't give a hoot about S.S. as none believe they ever will be old or poor. Just like their fantasy that the terrorists will retire to some mud huts in the mid east without further troubling us.
Has the Ponzi family sued the US Government for using his idea.
Deportation to Italy -- On September 28, 1927 with Ponzi still in a Massachusetts prison, the Immigration Bureau issued a deportation order for Ponzi. The warrant, however, would not be executed until he was released in 1934. The basis of his deportation order was a federal law that allowed deportation of individuals having been convicted of a crime involving moral turpitude. Ponzi challenged the order, claiming that moral turpitude involved a crime against chastity, and did not apply to his larceny conviction.
Mrs. Anna C. M. Tillinghast, United States Immigration Commissioner for Boston, replied in a letter that turpitude was "an act of baseness, vileness or depravity in the private and social duties which man owes to his fellow-men or to society in general, contrary to the accepted and customary rule of right and duty between man and man." Another writ of habeas corpus was denied on June 3, 1932.
On February 14, he was released from Massachusetts prison and arrested by federal authorities as an undesirable alien. Having exhausted his funds, he was unable to raise bail. Ponzi appealed the Immigration Bureau's ruling to the Federal District Court in Boston which upheld the deportation warrant on July 30, 1934. He left the United States for Italy that year.
In July of 1935 he requested permission of the United States consulate to visit the country, and in September of that year he was reported to have been hit by a truck in Italy, receiving only minor injuries.
Authorities may have been concerned that Ponzi had not abandoned his love for the Land of Opportunity. In September of 1939 the FBI interviewed a California man but concluded that he "did not resemble the photograph of Ponzi in any respect."
Ponzi emigrated to Brazil sometime before World War II. The dates here are vague, leaving room for conjecture as to his activities and country of residence in the late 1930's. Nearly destitute when he arrived in Brazil, he eked out a living teaching English, receiving unemployment compensation in slack times.
He reported this most ambitious scheme was an attempt to swindle the Soviet Union out of 2 billion dollars by promising to smuggle gold, adding: "What a joke on the communists that would have been."
His declining years brought infirmity, with paralysis on his left side and partial blindness. He spent his final days in the charity ward of a Rio de Janeiro hospital, and died on January 15, 1949 at the age of 67. A legal agent claimed Ponzi's body and buried him using $75 Ponzi had saved from a Brazilian government pension.
Yes. I think of Bush as a pretty good visionary and we all know that this problem needs to be addressed sooner, rather than later. Unfortunately, he doesn't have the ability to get the masses to understand the importance of facing up to the problem.
Yeah, Neal, its all the Democrats' fault. Republicans have no culpability at all. Sure thing.
Once you've conceded the right of the government to take your money, at the point of a gun, to fund even your own retirement, you've lost the game.
Boortz just admitted that the FairTax will result in a net tax increase on all of us. What a scam! Fortunately, the vast majority of Americans aren't going to fall for that fraud.
Congress will "fix" this crisis when it becomes an actual crisis, and it will.
Kinda like drilling in ANWR, perhaps the pols will have the will when gas is $5/gallon and they start getting voted out of office.
I have a proposal for a "pay back". I say, those of us who will never see Social Security, we stop paying our taxes, and put that money into our own retirement accounts...equal to the amounts that have been extorted from our checks over the years.
And in the meantime, let those in the Gov't trough (are you listening Congress-critters?) contribute to those who depend on Social Security (and have earned it) today. They have stolen from it for decades.
When we are even and clear, we can resume our taxes.
Come to think of it, we will never break even.
One quick bandaid would be to increase the retirement age and not force people in to retirement at 65. When SS was first established, the average life expectancy was around 62.
Yes he did. He said enacting the so-called "FairTax" would forestall the funding problem on SS and Medicare. Since he isn't talking about reducing benefits that must mean the revenue to those programs will increase. That of course assumes he's willing to abide by logic.
I'm not thrilled about it, but I figure it's an acceptable compromise to escape the government taking more of my money to pay for people who aren't responsible.
I'll give up some of my freedom in that regard to keep their fingers out of my pockets when the irresponsible come calling with their tales of woe.
Another reason why I'm gonna get mine as quick as I can. Although I will grant you that this late in the game (my age) I doubt I'd get caught up in this.
But it's payback time and I want mine while it's still there. You know, in the filing cabinet in WV :)
I think it only fair that the geezers who have sucked the longest at the government teat should have to pay tax on everything they buy via the Fair Tax. They are the voters most responsible for installing the horrible socialist system we have now by voting for every politician who promised them something. They should be called "The Greediest Generation."
**You could, of course, cut spending in other areas to come up with the money --- but remember who we're talking about here. Even for a congress that has doubled federal spending over the past decade or so, cutting spending even by one single dollar is simply not an option**
Wrong there is one area of the budget that has been cut before and will be cut again. The Defense budget will be raided to keep Social Security afloat.
All the Chinese got to do is wait until when our military becomes a version of Canada's under the liberals.
Respectfully, not one retired Social Security beneficiary "has it coming." You didn't pay anything in (your social security taxes went directly to pay elderly retirees) and you haven't "earned" anything now (your benefits will be paid by younger workers, not by money you have paid in.)
Social Security is nothing more than an intergenerational transfer payment. It is not a retirement program.
Well, the plan outlined by the President will be close to what eventually happens regardless of what Congress does. The relentless pressure of demographics and finance will mean that people over 55 now will be fine, people under about 40 will get new options and not do too badly, and those in the middle -- who have paid the most, since we started working when the SS rate went through the roof in the 1970's thanks to Wilbur Mills -- will get screwed.
"Means-testing" Social Security -- in other words taxing those who earned and paid in the most and also saved -- is designed to turn SS into a welfare program, as Ronald Reagan predicted in 1976.
However, SS and Medicare are just finance, nothing more. Fact is that the cost in man-hours and resources to care for all of the Baby Boomers will be astronomical. "Savings" for the economy as a whole doesn't really affect that -- the reality is that more people and resources as a % of GDP will be spent on health care twenty years from now compared with today.
Ping list for the discussion of the politics and social (and sometimes nostalgic) aspects that directly effects Generation Reagan / Generation-X (Those born from 1965-1981) including all the spending previous generations (i.e. The Baby Boomers) are doing that Gen-X and Y will end up paying for.
Freep mail me to be added or dropped. See my home page for details and previous articles.
Maybe so but if money's are confiscated by the government under a certain guise then the debt to the citizen must be honored.
He mentioned the reason for net taxes to increase, those people who now pay no or little taxes. There would be very little escape from taxes by people who are here illegally and do not pay taxes, people involved in the drug trade, etc. It doesn't necessarily raise taxes but brings everyone into paying them.
If the government has taken your money, they have fulfilled the promise of social security.
Isn't it strange how that's a foreign concept to some? "Screw the geezers!" is a despicable battle cry.
I agree with both sentences. I never said it was a retirement program.
I fully understand that this is nothing more than a Ponzie scheme and that it will need radical surgery some day (a day that the politicos will put off as long as possible, damaging those who come after me).
But, seeing as how the idiots in Wash DC chose to implement this doomed program and seeing as how I've involuntarily paid into it all my life, I'm gonna take full advantage of every penny they'll give me.
And, FWIW, I'm pissed that the government didn't long ago give me my own account to manage. I could have done better, MUCH better, than them buy hanging the WSJ stock tables on a wall and throwing darts to make the stock selections :)
That's our family plan in a nutshell.
With 30% Federal taxes on sales plus state sales taxes the drug dealers will make more money in black markets. No need to fear the IRS -- Boortz abolished it -- and state tax enforcement can't compete with the mob.
Al Gore says that's a risky scheme, and who are you to argue with such a distinguished author? He's a 'Rat politician and therefore much more qualified to make your decisions than you are. Just ask the people in his home state of Tennessee, who by their decisive vote in the 2000 Presidential Election made it clear exactly who did NOT deserve to be President.
Imagine a system modelled after Euro style "single payer health care" (now there's a euphemism) but instead of being for universal healthcare, it is scoped to deal with any and all aspects of elder care. And like a national healthcare system, only the wealthiest would have any reasonable alternatives other than leaving the country. I cannot discount the possibility that even such exceptions might be made illegal. The voters really are that stupid. Just wait. About 10 years from now, the Left will be calling for what I just laid out, in order to "contain costs and keep Social Security solvent."
No, they will solve it the same way they did in 1983 when SS went into a deficit. They raised the retirement age to 67, increased taxes, indexed the cap, and forced federal workers to join the system. This time around they will again raise the retirement age for full benefits, decrease the benefits for early retirement at 62 and/or raise the age, revise the formula to compute the annual COLA, and change the way benefits are computed further weighting it towards the lower end of the salary scale. They will also tax all SS. Both parties and the President will triumphantly declare that SS is now fixed and will be solvent forever, just like 20 years ago.
My point is that there is no debt that has been incurred.
Yes there has. The government told people that they were taking money from them for this scam called SS. They would receive benefits in return. Uncle Sam may have spent it on everything else but the lie it told was that the money would be there.
Now, if the government were to say that in 25 years the program will be gone but the tazes will be phased out in that time then there's no real issue. Can you imaging the stock market boom that would occur if everyone out there started investing an extra $3,000 or more a year in the market? Can you imagine the capital that companies could raise to expand? How about the 7.65% tax cut that businesses would get on their payrolls? That would boost earnings and stock value...
and I just woke up from my daydream.
That's a very pleasant daydream!