Skip to comments.The Point of No Return: Failure Is Coming (Social Security)
Posted on 06/21/2010 8:06:35 AM PDT by blam
The Point of No Return: Failure Is Coming
by: David Merkel
June 21, 2010
I first became interested in Social Security back in the 80s. In order to become a Fellow in the Society of Actuaries you had to study all manner of insurance programs, both private and social, to understand the framework in which insurance and pension products existed.
The Greenspan Commission back in 1981-1983 proposed another large increase to Social Security taxes. The system only needed a small lift to get it past some demographic difficulties, but the Commission proposed, and Congress passed a large change, which would mean that the Social Security would develop a large base of Treasury Notes, because income to the system would outstrip benefit payments for a long time, and the proceeds would be invested in Treasuries, because they are a neutral asset. Investing in other assets would invite socialism and cronyism.
But really, what was needed was to move to a pay-as-you-go system, as Pat Moynihan suggested in the early 1990s.
But the fix could never be permanent, because even as taxes were increased, the benefits increased along with them, and there would come a day of reckoning. But when? There are three dates that many would point to:
When the excess of taxes over benefits would peak. When benefits and taxes would be equal. When the trust fund would be broke. I always looked at the first of these, whereas most commentators looked at the last of them. My reasoning worked like this: the Federal Government has cynically integrated its budget with Social Security to make its deficits look smaller. This is like a drug to the government; the real pain will come to it when the subsidy begins to fall.
(Excerpt) Read more at seekingalpha.com ...
Obviously they have not read this GOVERNMENT PROMISE from 1964!
“The program is designed so that contributions plus interest on the investments of the social security trust funds will be sufficient to meet all of the costs of benefits and administration, now and into the indefinite future—without any subsidy from the general funds of the Government. Both the Congress and the Executive Branch, regardless of political party in power, have scrupulously provided in advance for full financing of all liberalizations in the program.”
How does Social Security NOT qualify as a Ponzi Scheme?
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What will happen when the taxpayer reaches his limit? All I am sure of is that it won't be pretty. In fact, am counting on it.
"FRreedom's just another word for nothing left to lose."
It atands to reason that the first to feel the pain will be current and retired politicians who are creating the epic FAIL.
Good intentions don't mean squat.
And then the Mensa Legislatures added millions of beneficiaries to the system who never did and never will contribute actual dollars to the system.
Of course it must fail. Even children can understand that.
Feb. 5, 1976, Prime Minister Thatcher said, “...and Socialist governments traditionally do make a financial mess. They [socialists] always run out of other people’s money. It’s quite a characteristic of them.”
Isn't that the same group that put out the lie about ObamaCare saving us money?
Ultimately, it is, I suppose. However, its decline has been accelerated by the murder of 52 million unborn.
Nothing to worry about here with regards to Social Security.
AS Soon as Obamacare kicks in Social Security will have been saved by denying care to the ones sucking the life blood out of the system, basically everyone over 65 to start with.
I’m planning to get my Social Security early in about 18 months..I hope before it goes under. My rationale is that if will be far more difficult for the government to take social security payments away from those currently receiving them than to think of reasons to not give you the benefit in the first place.
I think it is. The other bit no one wants to talk about is we as a people decided its OK for the govt to steal from our neighbor so we might have the plunder. The nit is the govt takes a huge cut and gives the ‘recipients’ a pittance. We The People are pretty stupid.
I was born in 1960.
I missed the free love of the late 60’s. We got disco, herpes, and AIDs. By the time Bill Clinton make oral sex chic, I was an old married guy.
I got the 1982 recession, and double digit inflation when I entered the job market from college.
My “peak earning” years are supposed to be from 2003-2015. Yeah, thanks for that. My 401k is 30% lower, the dow hasnt moved in ten years, and my house is worth about 30% less today than it was.
And Social Security is going to go bust, just as I am about to get it.
And my generation’s representative president is Obama.
Could I get screwed any more?
A total line of BS. The politicians have been spending the surplus of social security tax collections as part of the general fund since 1964. The demographics of taxpayers vs entitlement receivers finally crossed the line in 2010. The tax collections no longer cover the entitlement payouts. There is no longer a slush fund to pay for anything the politicians want. The failing economy pushed the break even date form the originally projected year of 2018 to 2010. The time of reckoning was coming anyway. It just happened sooner.
I remember one of my Dad's favorite sayings was, “even a stopped clock is right twice a day.” In his entire life, probably the only thing Al Gore ever got right was his “social security lock box” idea.
****I see very little mention of the fact that if there WERE an actual trust fund, the billions of dollars in it would be generating substantial interest. Unfortunately, since Congress has seen fit to only place IOUs in the trust fund, it is all imaginary.***
There is a trust fund and here it is! Read and weep!
I had a bit of fun today. I received my annual SSA projected benefit and earnings history letter, and instead of opening it, I marked a big arrow “Illegal PONZI scheme, please return to sender.” and dropped it back into the mail slot.