Tag Archives: Social Security

…And Now For The Bad News, by Simon Black

Posted on May 28, 2017 | 3 comments

To think that the federal government can pull a rabbit from its hat and painlessly solve its debt problem is to believe in a fiscal Easter Bunny. From Simon Black at sovereignman.com:

In the late 1760s and early 1770s, the government of France was in a deep panic.

They had recently suffered a disastrous and costly defeat in the Seven Years War, and the national budget was a complete mess.

France had spent most of the previous century as the world’s dominant superpower, and the government budget reflected that status.

From public hospitals to shiny monuments and museums, social programs and public works projects, overseas colonies and a huge military, France had created an enormous cost structure for itself.

Eventually the costs of maintaining the empire vastly exceeded their tax revenue.

And by the late 1760s, France hadn’t had a balanced budget in decades.

Debt was ballooning, interest payments were rising, and the government of Louis XV was desperate to do something about it.

There’s a famous story in which the Comptroller-General of Finances summoned all the government ministers to make deep budget cuts.

But no one could come up with anything substantial.

The overseas colonies were too important to cut.

And they couldn’t cut public hospitals… because too many people were now relying on them. Similarly they couldn’t cut veteran pensions either.

At the end of the session they could hardly find anything to cut that would make a meaningful difference.

All of their fancy programs and benefits had become too ingrained in society at that point; and any cut would have proven politically disastrous.

I thought of this story earlier this week when the US government released a sweeping budget proposal that aims to cut the deficit over the next ten years.

In fairness I’m always happy to see any government cutting spending.

But before uncorking the champagne bottles it’s important to understand some basic realities:

The budget slashes $3.6 trillion in spending through 2028 while proposing zero cuts to Defense, Social Security, and Medicare.

To continue reading: …And Now For The Bad News

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Guns or Granny: The Looming Political Battle of the West, by Gary North

Posted on May 20, 2017 | 5 comments

Gary North conducts a political analysis of the US’s looming fiscal problems and reaches one conclusion: granny wins. From North at lewrockwell.com:

I begin with a familiar pie chart. It is well named. It is a chart of the political pie.

This chart is from 2015. The right side of this chart is going to expand relentlessly from now on. Every day, 10,000 people go on Medicare. Medicare costs the government over $1,000 a month for each person enrolled. This inflow of eligible recipients is not going to stop for the next 20 years.

Now look at the bottom of the chart: Non-defense Discretionary. It was 16% in 2015, but you can be sure that it is closer to 14% today. This is the political battlefield in Washington: available loot. The rest of the loot is spoken for already. Politics cannot change the rest of the budget. Politics today, in terms of federal spending, is now down to under 14% of the budget, and it is probably heading toward 10% by 2022, when a new President will be in power.

Sometime before the 20’s are over, there will be no more discretionary slice of the budgetary pie. At that point, there is going to be a guerilla war in Washington. It will be a battle over the size of the slices of pie. Political voting blocs that thought the size of their slice was guaranteed will find that it isn’t.

This outcome of battle is going to change the nature of civil government in the United States. A series of battles that parallel ours will take place in Western Europe, where it all began in the 1880’s: Bismarck’s welfare state.

THE BUREAUCRATIZATION OF AMERICA

The greatest single threat to liberty in the West is what it has been for at least a century: the expansion of administrative law. This system is extending the power of central governments into every nook and cranny of the West. Bureaucracies have created administrative law courts that have been substituted for civil courts all over the West. Bureaucratic agencies provide their own judges. They serve as their own juries. Then they execute the laws that they have interpreted autonomously. This process is well developed, and it appears to be irresistible. It is the overturning of the Western legal tradition, as described by Harold Berman in his Introduction to Law and Revolution (1983).

This process is relentless. It is not affected by politics. It is protected in the United States by Civil Service rules. All over the West, comparable protections exist. These people are tenured. They cannot be fired. Their word is the law. This system is manifested in the United States by the Federal Register, which publishes over 80,000 pages of fine-print regulations every year.

To continue reading: Guns or Granny: The Looming Political Battle of the West

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Taxation is Theft, by Andrew P. Napolitano

Posted on April 18, 2017 | Leave a comment

Taxation is theft and Social Security is a Ponzi scheme. Both are true statements, but in “conventional” political discourse, saying so will earn one condemnation. Here’s an article that cuts through the BS, from Andrew P. Napolitano at mises.org:

With a tax code that exceeds 72,000 pages in length and consumes more than six billion person hours per year to determine taxpayers’ taxable income, with an IRS that has become a feared law unto itself, and with a government that continues to extract more wealth from every taxpaying American every year, is it any wonder that April 15th is a day of dread in America? Social Security taxes and income taxes have dogged us all since their institution during the last century, and few politicians have been willing to address these ploys for what they are: theft.

During the 2012 election, then-Texas Gov. Rick Perry caused a firestorm among big-government types during the Republican presidential primaries last year when he called Social Security a Ponzi scheme. He was right. It’s been a scam from its inception, and it’s still a scam today.

When Social Security was established in 1935, it was intended to provide minimal financial assistance to those too old to work. It was also intended to cause voters to become dependent on Franklin Delano Roosevelt’s Democrats. FDR copied the idea from a system established in Italy by Mussolini. The plan was to have certain workers and their employers make small contributions to a fund that would be held in trust for the workers by the government. At the time, the average life expectancy of Americans was 61 years of age, but Social Security didn’t kick in until age 65. Thus, the system was geared to take money from the average American worker that he would never see returned.

Over time, life expectancy grew and surpassed 65, the so-called trust fund was raided and spent, and the system was paying out more money than it was taking in – just like a Ponzi scheme. FDR called Social Security an insurance policy. In reality, it has become forced savings. However, the custodian of the funds – Congress – has stolen the savings and spent it. And the value of the savings has been diminished by inflation.

To continue reading: Taxation is Theft

 

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Why Social Security Is Doomed: “Birthrate At Lowest Level on Record”… And the Future Is Unfunded, by Mac Slavo

Posted on December 23, 2016 | Leave a comment

Like any good Ponzi scheme, Social Security needs a steadily expanding pool of new entrants. With the declining birthrate it is getting a shrinking pool. From Mac Slavo at shtfplan.com:

Here’s more evidence that the “recovery” never really happened, and good reason to think that the entire social net structure is doomed to fall apart.

The birthrate, long tied to economic growth, has been dropping to its lowest point in recorded history – both nationally and, in particular, in the state of California.

This demographic shift is bad news for the economy – in terms of housing, consumer markets, and especially for the long-term funding of social security, medicaid, medicare and other obligations that younger generations have typically been expected to pay into.

Whether or not you agree with the system in place, the fact that it is virtually certain to go bankrupt before the generation of baby boomers shift off this mortal coil should be troubling to everyone planning a future in the United States.

Official numbers show that the birthrate began to steadily decline in 2008 when the crisis hit and – unlike even during the Great Depression – hasn’t ever picked back up. 2016 saw the lowest point ever for California, even with higher births from immigrants factored in.

via the L.A. Times:

California’s birthrate dropped to its lowest level ever in 2016, according to data released by the state’s Department of Finance.

Between July 2015 and July of this year, there were 12.42 births per 1,000 Californians, the agency said this week. The last time the birthrate came close to being that low was during the Great Depression, when it hit 12.6 per 1,000 in 1933.

To continue reading: Why Social Security Is Doomed: “Birthrate At Lowest Level on Record”… And the Future Is Unfunded

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Obama’s Latest Whopper—-Let’s Raise Social Security Benefits! by David Stockman

Posted on June 2, 2016 | Leave a comment

There are lies, damn lies, and government projections. David Stockman takes apart government projections concerning the Social Security Trust Fund, and thereby eviscerates Obama’s assertion that benefits need to be increased. The government can’t afford the current level of benefits. From Stockman at davidstockmanscontracorner.com (SLL could not reproduce the charts referred to in the article, so click the link below if you want to see them) :

The U.S. has approximately $80 trillion of unfunded liabilities for social security, medicare and other entitlements sitting atop a work force that is rapidly aging and an economy that is lapsing into stasis. Yet in the midst of a campaign diatribe about Donald Trump’s alleged lack of preparation for the highest office in the land, the current White House occupant proved that in nearly eight years he has learned exactly nothing about the nation’s abysmal fiscal plight.

“And not only do we need to strengthen its long-term health, it’s time we finally made Social Security more generous and increased its benefits so that today’s retirees and future generations get the dignified retirement that they’ve earned,” Obama said in an economic call to arms in Elkhart, Indiana.

Don’t bother to say he must be kidding. After all, our President also claims the disaster known as Obamacare is a roaring success; and that he has created 14 million jobs—-when, in fact, there are fewer full-time, full-pay “breadwinner jobs” in America today than when Bill Clinton scuttled out of the White House 16 years ago.

Still, your don’t have to be even a know nothing about baby-boom demographics to recognize that the words “increase” and “social security benefits” will never again inhabit the same universe. To wit, there are about 50 million persons 65 or over at present, but this number will rise to 80 million by around 2040 and nearly 100 million a decade or two thereafter.

Moreover, as we keep insisting there is nothing in the OASDI trust funds except intergovernmental accounting confetti. Every dime that was ever collected from the social insurance taxes, which bring in more than $1 trillion per year in revenue, has already been spent on education grants, Federal salaries, aircraft carriers, cotton subsidies, windmill farms and thousands of other Washington boondoggles.

So that steep demographic curve in the chart above means only one thing. Namely, that to fund even the current wildly unaffordable benefit schedule, massive amounts of additional cash will have to be extracted from taxpayers, the bond market or other programs.

The graph below gives a hint of the magnitude of the cash shortfall that is already baked into the cake under current entitlements. Even under the optimistic economic forecasts of the government chief actuary, the OASDI funds will be running a $250 billion annual cash deficit before the next presidential term ends, and upwards of $1 trillion per year by 2040.

But the sheer mathematical impossibility of funding higher cash and medical benefits for what will soon by 80 million retirees is only part of Obama’s latest whopper. An even more egregious element was the notion that Washington ought to pony up “more generous and increased its benefits” because present and future retirees should “get the dignified retirement that they’ve earned.”

Well, no, they haven’t earned what they are getting now, let alone the gravy that Obama is proposing to spread on top. That’s because one of the great lies of Washington is that social security and medicare are “insurance programs” which workers earn by paying “premiums” in the form of taxes.

In fact, the whole rigmarole of trust funds and actuarial bookeeping is a just a smokescreen to provide political cover. These programs are actually intergenerational transfer payment schemes that shift massive amounts of funds from the working population to retirees.

To continue reading: Obama’s Latest Whopper—-Let’s Raise Social Security Benefits!

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Obama Claims Power to Make Illegal Immigrants Eligible for Social Security, Disability, by Terence P. Jeffrey

Posted on April 7, 2016 | Leave a comment

From Terence P. Jeffrey on a guest post at theburningplatform.com:

Does the president of the United States have the power to unilaterally tell millions of individuals who are violating federal law that he will not enforce that law against them now, that they may continue to violate that law in the future and that he will take action that makes them eligible for federal benefit programs for which they are not currently eligible due to their unlawful status?

Through Solicitor General Donald Verrilli, President Barack Obama is telling the Supreme Court exactly this right now.

The solicitor general calls what Obama is doing “prosecutorial discretion.”

He argues that under this particular type of “prosecutorial discretion,” the executive can make millions of people in this country illegally eligible for Social Security, disability and Medicare.

On April 18, the Supreme Court will hear arguments in the case. Entitled United States v. Texas, it pits President Obama against not only the Lone Star State, but also a majority of the states, which have joined in the litigation against the administration.

At issue is the policy the administration calls Deferred Action for Parents of Americans and Lawful Permanent Residents, which would allow aliens in this country illegally who are parents of citizens or lawful permanent residents to stay in the United States.

“The Executive Branch unilaterally created a program — known as DAPA — that contravenes Congress’s complex statutory framework for determining when an alien may lawfully enter, remain in, and work in the country,” the attorney general and solicitor general of Texas explained in a brief submitted to the Supreme Court on behalf of the states seeking to block the policy.

“DAPA would deem over four million unlawfully present aliens as ‘lawfully present’ and eligible for work authorization,” says the Texas brief. “And ‘lawful presence’ is an immigration classification established by Congress that is necessary for valuable benefits, such as Medicare and Social Security.”

In the administration’s brief, the solicitor general admits that the president’s DAPA program does not convert people illegally in the United States into legal immigrants. He further asserts that the administration at any time can decide to go ahead and remove these aliens from the country.

“Deferred action does not confer lawful immigration status or provide any defense to removal,” he says. “An alien with deferred action remains removable at any time and DHS has absolute discretion to revoke deferred action unilaterally, without notice or process.”

Despite this, he argues, the administration can authorize aliens here illegally on “deferred action” to legally work in the United States.

“Without the ability to work lawfully, individuals with deferred action would have no way to lawfully make ends meet while present here,” says the administration’s brief.

Nonetheless, the solicitor general stresses that “deferred action” does not make an illegal immigrant eligible for federal welfare.

“In general,” he says, “only ‘qualified’ aliens are eligible to participate in federal public benefit programs, and deferred action does not make an alien ‘qualified.’… Aliens with deferred action thus cannot receive food stamps, Supplemental Security Income, temporary aid for needy families, and many other federal benefits.”

But, he says, aliens here illegally with deferred action will be eligible for “earned-benefit programs.”

To continue reading: Obama Claims Power to Make Illegal Immigrants Eligible for Social Security, Disability

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Trump’s Irresponsible Position on Social Security, by Chris Edwards

Posted on March 25, 2016 | 3 comments

From Chris Edwards at cato.org:

In the Republican debate last night, CNN’s Dana Bash pressed the candidates on how they would deal with Social Security. Senators Marco Rubio and Ted Cruz gave solid answers, explaining that the system was headed toward insolvency, suggesting ways to slow spending growth, and scolding candidates who denied the need for cost-saving reforms.

One of the candidates in denial is Donald Trump. He said, “And it’s my absolute intention to leave Social Security the way it is. Not increase the age and to leave it as is.” Trump is a smart man, who presumably understands accounting, so either he hasn’t bothered to examine the finances of the government’s largest program, or he is willfully providing a false narrative about it.

The chart below compares Social Security and defense spending in real 2016 dollars, including Congressional Budget Office (CBO) projections going forward. For decades, the two programs have vied for the title of the government’s largest, but the battle is now over. Social Security spending has soared far above defense spending, and it will keep on soaring without reforms.

Defense is a “normal” program, with spending fluctuating up and down over the years in real, or inflation-adjusted, dollars. But Social Security has taken off like a rocket, and it is consuming more taxpayer resources every year. The government spent the same amount on defense and Social Security in 2008, but it will be spending twice as much on the latter program by 2023.

When the next president enters office in 2017, he will start planning his 2018 budget. In that year, Social Security will become the first trillion-dollar program, and it will be gobbling up an additional $60 billion or so every single year. Where will all the money come from? Pointing only to “waste, fraud, and abuse,” as Trump does, wastes our time, abuses our intelligence, and is a fraudulent story line to peddle.

Data notes: CBO baseline projections to 2026, then real defense spending assumed fixed after that, while real Social Security spending is assumed to increase at the same rate as CBO projects for 2026 (3.8 percent). For ways to cut Social Security, see here.

http://www.cato.org/blog/trumps-irresponsible-position-social-security?utm_content=bufferf95a6&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

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Supporting Social Security, from The Burning Platform

Posted on March 25, 2016 | Leave a comment

http://www.theburningplatform.com/2016/03/25/supporting-social-security/

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A Dangerous Moment for Social Security, by Justin Spittler

Posted on January 27, 2016 | 1 comment

From Justin Spittler at caseyresearch.com:

Social Security funds are drying up…will there be any money left when you retire?

Social Security is America’s largest federal program. In 2015, it paid out $870 billion to more than 59 million Americans.

Most Americans see Social Security as a retirement savings program. During your working life, you pay 6.2% of every paycheck to Social Security. In return, the government sends you a check every month after you retire.

However, unlike a retirement plan like a 401(k), the money you pay into Social Security doesn’t land in your own personal account. Instead, it goes into one big pot called the “Social Security Trust Fund.”

The Social Security program pays retirees from this pot. As long as enough money flows into the pot, the program works, and retired people get the payments they expect.

• Last year, the Social Security Trust Fund lost money…

On Wednesday, Investor’s Business Daily reported (emphasis ours):

The Social Security Trust Fund just suffered its first annual decline since Congress shored up the retirement program in 1983.

The unexpected $3 billion decline is an indication of the precarious state of Social Security’s finances. Since 2010, the program has been paying out more in benefits than it gets in tax revenue.

In 1955, there were 8.6 workers paying into Social Security for every one person receiving Social Security. Today, due to America’s aging population, there are just 2.8 workers for every recipient. And that number will decline as the “baby boomer” generation continues to retire.

The Congressional Budget Office (CBO) expects Social Security to go broke within 13 years, according to Investor’s Business Daily.

Social Security’s cash shortfall is expected to rapidly escalate from $74 billion a year to $361 billion in 2025 alone, the Congressional Budget Office projects. Under current policies, the CBO says the trust fund will be gone by 2029.

• To fix Social Security, the government would need to cut benefits by 29%…

According to Investor’s Business Daily, this would bring the program’s costs in line with how much money it takes in.

The average retiree receives $1,355 each month from Social Security. A 29% cut would reduce that to $962 per month.

That’s not going to happen. Because senior citizens are a huge voting bloc, most politicians consider Social Security benefits to be untouchable.

• The U.S. government will continue to make promises it can’t keep…

To keep the scheme going, Washington will run bigger deficits. It will go deeper into debt.

To continue reading: A Dangerous Moment For Social Security

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Social Security: The Long Slow Default, by Kirby R. Cundiff

Posted on November 12, 2015 | Leave a comment

From Kirby R. Cundiff at mises.org:

When an investor buys an annuity or another retirement product from an insurance or mutual fund company, the contract is constant and enforceable through the United States court system. When a United States taxpayer is forced to pay for a government backed retirement system such as the Old-Age, Survivors, and Disability Insurance program (OASDI) — also known as Social Security — the “contract” can be, and is, changed on a regular basis by the United States government, and those changes are generally not to the benefit of the taxpayer.

Participation in the Social Security system became compulsory in 1935 and the first monthly retirement checks were issued in 1940. The first monthly check was issued to Ida May Fuller of Ludlow, Vermont. She had paid approximately $25 into the Social Security system and received over $22,000 in benefits from the system due to living to 100 years of age. The other early retirees of the Social Security system on average also did very well. Retirees in 1977 are estimated to have received seven times what they paid into the Social Security system. Retirees entering the program as recipients today will probably receive a negative return on their “investment.”

To continue reading: Social Security: The Long Slow Default

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