Category Archives: Pensions

Social Security Taxes Aren’t “Your” Money, by Ryan McMaken

Legally there’s no difference the government steals from you as Social Security taxes and the money the government steals from you as income taxes. The government is free to do as it pleases with both taxes. From Ryan McMaken at mises.org:

After French protestors took the street to complain about the increase in the retirement age, I read quite a few jokes in social media about how protesting in France is the local pastime.

That may be true, but let it not be said that Americans don’t feel very, very strongly about their own national pension program. I say this because in response to my article last week on raising the Social Security age, I received more furious responses than I have for any other article in many years. Here’s one example from a man whose initials are MF:

What are you, just nuts??? Having paid in to SS for over 40 years and experiencing big gov losing my records for some of my most productive years, so my stipend has been reduced; And after my wife and I planned for retirement and saved while contributing to SS, my wife died 2 months after her 65 birthday never having received a single payment from SS after paying in for 42 years. There are no spousal survivor benefits. All the contributions she paid in are gone. Age of qualification isn’t the issue. Corruption, graft and top heavy bureaucracy, while incompetents administer at the front line are the problems. Either wise up, do your research or stay away from topics you seem totally ignorant about.

Here’s one from reader RG:

I didn’t make the promise [to pay a pension at age 65] the guvvmint did. … You are a useless f**k wasting computer ink. Get your head out of your a** and breath the gathering doom. My father fought in France in WW2 and Korea, didn’t live long enough to collect his benefits nor my mother-in-law. F**k you again.

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Raise the Social Security Age to (at Least) 75, by Ryan McMaken

People live a lot longer now, and if that fact is not recognized, Social Security will soon be bankrupt. From Ryan McMaken at mises.org:

On January 10, the French government announced plans to raise the retirement age from 62 to 64. The change would mean that after 2027, workers in France would have to work 43 years to qualify for a government pension, instead of 42 years. French workers promptly took to the street in protest decrying even this very small reduction government welfare. 

Like many countries in Western Europe and North America, France faces a major demographic problem in that its population is aging and demanding ever larger amounts of public pension funds. Meanwhile, the younger working-age population is shrinking as birth rates continue to fall. So, the French state is looking for ways to stay relatively solvent.

For Americans who follow our own old-age social benefits systems, this problem will seem quite familiar. Although the US regime is not in as dire fiscal straits as the French one, the US’s federal government nonetheless faces huge and growing obligations to current and future pensioners. This will only grow more urgent as the population continues to age and as the numbers of prime-age workers stagnates. 

Indeed, the Social Security scheme is an excellent example of how government programs, once established, gradually become far more costly—in real per capita terms, not just aggregate terms—as time goes by.  Many recipients now spend decades collecting benefits on a program that had been sold as a program only for people who were too old, exhausted, and injured to work at all. Meanwhile, fewer and fewer workers are called upon to foot the inflated bill. 

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Dealing With Reality – There Is No “Security” In Social “Security”, by Dennis Miller

You know what’s in the government’s Social Security Trust Fund? IOUs from the government! From Dennis Miller at theburningplatform.com:

Man's hand building house of cards with social security cards isolated over white background - Dealing With Reality – There Is No “Security” In Social “Security” - Miller on the MoneyAs children, our elders programmed us with certain “core” beliefs. As adults, finding contrary evidence to those beliefs creates discomfort called “Cognitive Dissonance.” Psychology Today defines:

“Cognitive dissonance is a term for the state of discomfort felt when two or more modes of thought contradict each other. The clashing cognitions may include ideas, beliefs, or the knowledge that one has behaved in a certain way.”

My mother was a single parent long before it became commonplace. My grandmother was the predominant figure in my childhood development.

She was constantly praising President Roosevelt and Social Security. She explained, the government takes money out of your paycheck and “saves” it for you until you retire.

 

When I got my first real paycheck, the deduction for social security was more than income tax. I was shocked. She reassured me that I should be happy, the government was saving my money for me.

While she grumbled about taxes, she exempted social security, it was not a tax, it was the government saving YOUR money for YOU.

FDR Social Security Quote - Miller on the Money

It took decades for me to realize FDR, like all politicians, lied. “Cognitive dissonance” was real. I was very uncomfortable letting go of a core belief and facing reality. Despite my grandmother’s beliefs, the government was not “saving” my money.

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Doug Casey on How Social Security Increases Could Cause an Inflationary Death Spiral

Social Security was set up as a Ponzi scheme and now we are at the stage where the Ponzi falls apart. From Doug Casey at internationalman.com:

Social Security

International Man: The Social Security Administration recently announced an 8.7% cost of living adjustment for next year. That’s the largest increase in over 40 years.

It represents an additional about $100 billion in annual spending for Social Security. Moreover, cost of living adjustments could increase even more in the future.

However, it seems the government will pay for this $100 billion by printing even more currency, which will make prices rise, even more, necessitating further cost of living increases.

What do you make of this?

Doug Casey: From its very inception Social Security was an unsustainable Ponzi scheme. They anticipated that money from new contributors would pay off early recipients. For decades they had demographics on their side; the average American was young and had a large family, and the economy was growing.

Worse, Social Security corrupted Americans, making them think they didn’t have to save for their own future—that the government would provide for them. Meanwhile, the extra tax burden made it harder for them to do so, supporting a dysfunctional bureaucracy of over 60,000 employees.

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America Just Bailed Out A Bunch Of Pensions At The Taxpayers’ Expense, by Bruce Wilds

This is a preview of things to come, until the government runs out of money. From Bruce Wilds at brucewilds.blogspot.com:

Unnoticed by most taxpayers and touted as good news was the fact we the taxpayers of America have stepped up to the plate and bailed out hundreds of failing pensions. Much of this took place without the average citizen even knowing it occurred. Buried deep in the American Rescue Plan signed into law by President Biden in March 2021 was a provision mandating the government to bail out ailing multiemployer pension plans.

The American Rescue Plan Act of 2021 was the $1.9 trillion economic stimulus package proposed by President Joe Biden to speed up the United States’ recovery from COVID-19. The huge bill was passed with little time for debate or even to be read, all under the idea congress needed to take  action to address the economic and health effects of the pandemic and the ongoing recession. While how this provision to assist troubled pensions has been addressed did not get a great deal of air time it may prove to be far more costly than predicted.

People are often led to believe pensions are a promise carved in stone, however, when the money is not there pensions and promises will be broken so pensioners should prepare for the pain. This is especially true in the public sector which has a history of granting pensions that are unheard of in the private sector. The 25 largest U.S. public pensions face trillions in unfunded liabilities. If Americans took the time to stand back and look at the bigger picture they will see the Pension Benefit Guaranty Corporation (PBGC) an independent agency of the United States government responsible for acting as the nation’s “safety net” for failed pensions is also in trouble. When a pension fails this agency is expected to take control of its assets and dole them out to its pensioners in the coming years. The ugly truth is the PBGC is not a rock but is in need of its own bailout. 

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How Public Pensions Turn Cities into Unlivable Hellholes, by MN Gordon

Follow the money, where it does and doesn’t go. From MN Gordon at economicprism.com:

“It’s like going to the ATM in Vegas and then going to the roulette wheel and it comes up red and you go back to the ATM.”

The remark was recently made by Steve Mermell.  The man retired last year as city manager of Pasadena, California.  He knows a thing or two about how borrowing to enhance pension fund returns can result in spectacular losses.

The Wall Street Journal article did not clarify whether red was a winning turn of the roulette wheel or not.  Within the article’s context it didn’t really matter.

The main point was that public pension funds are grossly underfunded.  Consequently, more and more pension funds are borrowing money to play the markets.  The goal is to boost returns to cover their massive funding gaps.

If you recall, public-sector retirement plans offer defined benefits, where retiree pension checks are calculated based on salaries and years of service.  Private employers, on the other hand, generally offer defined-contribution plans (like 401Ks), where payouts are based on market returns.

If you live long enough, and are a recipient of a public pension fund you will get out far more than you put in.  If you work in the private sector, there’s a good chance you will outlive your retirement savings.

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Social Security: Whistling Past The $96 Trillion Graveyard, by Lance Roberts

By traditional pension accounting Social Security isn’t just flat broke, it’s deep in the hole. From Lance Roberts at realinvestmentadvice.com:

Social Security has a problem. As Democrats push to expand entitlements to include free preschool and subsidized child care, little attention is getting paid to Social Security is a financial trainwreck.

“The program’s payouts have exceeded revenue since 2010, but the recent past is nowhere near as grim as the future. According to the latest annual report by Social Security’s trustees, the gap between promised benefits and future payroll tax revenue has reached a staggering $59.8 trillion. That gap is $6.8 trillion larger than it was just one year earlier. The biggest driver of that move wasn’t Covid-19, but rather a lowering of expected fertility over the coming decades.” – Stark Realities

Note the last sentence.

When President Roosevelt first enacted social security in 1935, the intention was to serve as a safety net for the elderly. However, at that time, life expectancy was roughly 60-years of age. Therefore, expectations were that participants would not be drawing on social security for very long from an actuarial basis. Furthermore, roughly 16-workers paid into social security for each welfare participant.

Of course, given that politicians like to use government coffers to buy votes, additional amendments got added to social security to expand the participation in the program. Such included adding domestic labor in 1950 and widows and orphans in 1956. They lowered the retirement age to 62 in 1961 and increased benefits in 1972. Then politicians added more beneficiaries, from the disabled to immigrants, farmers, railroad workers, firefighters, ministers, federal, state, and local government employees, etc.

While politicians and voters continued to add more beneficiaries to the welfare program, the number of workers steadily declined. Today, there are barely 2-workers for each beneficiary.

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Ticking retirement timebomb? Unfunded state pension liabilities grow to $8.28 trillion, by The Center Square

Is default the only way out. Probably. From The Center Square at justthenews.com:

Unfunded state pension liabilities have climbed to $8.28 trillion, or nearly $25,000 for every person in the United States, according to a new report from the American Legislative Exchange Council.

The American Legislative Exchange Council released the latest edition of its report on pensions in all 50 states Thursday. The report, “Unaccountable and Unaffordable 2021,” shows just a handful of states with outsize pension liabilities account for a large share of overall pension debt in the U.S.

The report looked at 290 state-administered government pension plans and their assets and liabilities from fiscal year 2012 to fiscal year 2020. An example of state-administered government pension plans in Illinois would cover state employees, teachers, university workers, judges and lawmakers.

The states with the most unfunded liabilities were California ($1.53 trillion), Illinois ($533.72 billion), Texas ($529.70 billion), New York ($508.70 billion) and Ohio ($429.53 billion). These five states alone account for more than $3.5 trillion in unfunded liabilities, or about 43% of all unfunded liabilities in the U.S.

The bottom 10 states make up $4.9 trillion, or 59.36% of all unfunded liabilities, according to the ALEC report. On a per capita basis, the bottom five state were Alaska ($42,829), Illinois ($41,656.79), Connecticut ($40,427.58), Hawaii ($39,939.43), New Jersey ($39,849.02) and California ($38,713.16).

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Insecurity Made Social, by Eric Peters

Social Security is history’s biggest Ponzi scheme. From Eric Peters at ericpetersautos.com:

The paradox of what is styled “Social Security” is that it renders the victim insecure. How else to describe a person who has been serially mulcted for all of his working life such that his daily bread and the roof over his head are dependent upon a miserly dole?

Italicized to lay bare the unpleasant truth of the thing.

Well, one of them.

People are told by the government which forcibly compels them to give up 15 percent of every dollar they earn that they are contributing to Social Security. They are not given the choice to not “contribute.”

Government excels at definitional perversion. It uses a word to mean its opposite – in order to front-load any discussion of the subject with false premises, so as to sidetrack the debate over it into legalisms and irrelevances. The recent business regarding the possibility that the case law, Roe V. Wade may be overturned provides a fine example. The Supreme Court is not dealing with the question at issue. Instead, it is parsing legalisms having to do with the degree of federal oversight of over what is styled a woman’s “right to choose.”

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The Disney Company Quits Russia – And Not a Moment Too Soon, by Robert Bridge

It’s hard to see much symbiosis between a Russia returning to its Russian Orthodox roots and Disney, increasingly devoted to the brand of religion known as wokeism. From Robert Bridge at strategic-culture.org:

Russia now finds itself at a moment where it can forever shut the door to a rudderless company that finds itself promoting ideas that are totally at odds with Russian values and beliefs.

Although the news may seem a bit trivial, with war and economic chaos flaring in the background of the global stage, Disney leaving Russia will have the same mental and physical benefits as McDonald’s and Pornhub saying their goodbyes to Europe’s largest consumer market.

One of the results of Moscow’s military operation in Ukraine has been a number of Western companies abandoning Russia, some temporarily, some for good. This odious display of corporate virtue-signaling, conspicuously absent during the U.S.-led wars in Iraq, Libya and Syria, by the way, represents a setback not only for Russia, but the global economy. However, there is at least one silver lining to the ‘walk-out’ that should be celebrated, and that is how Russians will get a reprieve, maybe a permanent one, from the degenerate brain candy of Western entertainment, notably from the Disney Corporation. Disney’s preponderant footprint in Russia includes local productions and television channels, the licensing of content and consumer products, cruises, magazine and tours, among other business.

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