Tag Archives: Social Security

The Coming Age of Austerity, by Patrick Buchanan

Posted on November 3, 2015 | Leave a comment

Pat Buchanan does not have a degree in accounting, but you don’t need one to know that the US is heading towards fiscal disaster. From Buchanan at buchanan.org:

“Are the good times really over for good?” asked Merle Haggard in his 1982 lament.

Then, the good times weren’t over. In fact, they were coming back, with the Reagan recovery, the renewal of the American spirit and the end of a Cold War that had consumed so much of our lives.

Yet whoever wins today, it is hard to be sanguine about the future.

The demographic and economic realities do not permit it.

Consider. Between 1946 and 1964, 79 million babies were born — the largest, best-educated and most successful generation in our history. Bill Clinton and George W. Bush, both born in 1946, were in that first class of baby boomers.

The problem.

Assume that 75 million of these 79 million boomers survive to age 66. This means that from this year through 2030, an average of nearly 4 million boomers will be retiring every year. This translates into some 11,000 boomers becoming eligible for Medicare and Social Security every single day for the next 18 years.

Add in immigrants in that same age category and the fact that baby boomers live longer than the Greatest Generation or Silent Generation seniors, and you have an immense and unavoidable increase coming in expenditures for our largest entitlement programs.

Benefits will have to be curbed or cut and payroll taxes will have to rise, especially for Medicare, to make good on our promises to seniors.

As for the rest of our federal budget of nearly $4 trillion, we have run four consecutive deficits of over $1 trillion. To bring that budget to balance, freezes would have to be imposed and cuts made in spending for defense and other social programs.

From California to Wisconsin to New York, we see the process at work at the state level. Government salaries are frozen, government payrolls are cut, government pensions and programs are scaled back.

California and Illinois are on the precipice of default. Cities like Detroit, Birmingham, Stockton and San Bernardino are already there.

As for national defense, how long can we afford to spend more than the 10 other top nations combined? How long can we continue to defend scores of nations half a world away? How many more trillion-dollar wars like Iraq and Afghanistan can we fight on borrowed money?

To continue reading: The Coming Age of Austerity

Leave a comment

Posted in Debt, Government, Other Views, Taxes

Tagged , ,

Don’t Think the Status Quo Will Save You, by Charles Hugh Smith

Posted on October 27, 2015 | Leave a comment

From Charles Hugh Smith at oftwominds.com:

Here’s a chart that shows how the Status Quo “fixes” every problem: it transfers more debt and more losses to the taxpayers.

Many hold a touchingly naive faith that the Status Quo will save them even as the current system unravels. Why is this faith naive?

Let’s start with this key question: does the Status Quo strike you as being even remotely competent?

If you answer “yes,” we have to ask: what planet are you on? Mars? Here on Earth, no one that isn’t a bought-and-paid for-shill of the Status Quo would even make the risible claim of Status Quo competence, except as a bitter joke.

The Status Quo assumes we can’t deal with the truth like adults, and so it sugar-coats every unsolvable problem with lies and false assurances. The Status Quo assumption is the Great Unwashed 90% will shoot the messenger, i.e. toss out our public leadership should they be foolish enough to tell us the truth: the promises issued to you cannot possibly be fulfilled.

Not because of an evil cabal, but because the demographics and financial realities render the promises impossible to keep, regardless of who’s in office.

I’m going to get my Social Security, right? I wuz promised! Don’t be a chump, man. You’ll get something that’s called Social Security, but it will either be taxed to the point it only buys a loaf of bread or will only be worth a loaf of bread. So yes, you’ll get Social Security, but not the one you were promised or the one you’re imagining.

I’m going to get my Medicare, right? I wuz promised! Sure, you are, pal. Just not the Medicare you’re imagining, you know, the one that pays for everything.

To continue reading: Don’t Think the Status Quo Will Save You

Leave a comment

Posted in Collapse, Governments, Other Views

Tagged ,

The 2015 Untrustworthies Report——Why Social Security Could Be Bankrupt In 12 Years, by David Stockman

Posted on July 30, 2015 | 1 comment

David Stockman does a superlative job analyzing the accounts of the social security system, and skewering a recent report that says the system will remain solvent until 2034. From Stockman at davidstockmanscontracorner.com:

The so-called “trustees” of the social security system issued their annual report last week and the stenographers of the financial press dutifully reported that the day of reckoning when the trust funds run dry has been put off another year—-until 2034.

So take a breath and kick the can. That’s five Presidential elections away!

Except that is not what the report really says. On a cash basis, the OASDI (retirement and disability) funds spent $859 billion during 2014 but took in only $786 billion in taxes, thereby generating $73 billion in red ink. And by the trustees’ own reckoning, the OASDI funds will spew a cumulative cash deficit of $1.6 trillion during the 12-years covering 2015-2026.

So measured by the only thing that matters—-hard cash income and outgo—-the social security system has already gone bust. What’s more, even under the White House’s rosy scenario budget forecasts, general fund outlays will exceed general revenues ex-payroll taxes by $8 trillion over the next twelve years.

Needless to say, this means there will be no general fund surplus to pay the OASDI shortfall. Uncle Sam will finance the entire $1.6 trillion cash deficit by adding to the public debt. That is, Washington plans to make social security ends meet by burying unborn taxpayers even deeper in national debt in order to fund unaffordable entitlements for the current generation of retirees.

The question thus recurs. How did the untrustworthies led by Treasury Secretary Jacob Lew, who signed the 2015 report, manage to turn today’s river of red ink into another 20 years of respite for our cowardly beltway politicians?

They did it, in a word, by redeeming phony assets; booking phony interest income on those non-existent assets; and projecting implausible GDP growth and phantom payroll tax revenues.

And that’s only the half of it!

The fact is, the whole rigmarole of trust fund accounting enables these phony assumptions to compound one another, thereby obfuscating the fast approaching bankruptcy of the system. And, as will be demonstrated below, that’s what’s really happening—–even if you give credit to the $2.79 trillion of so-called “assets” which were in the OASDI funds at the end of 2014.

Stated differently, the OASDI trust funds could be empty as soon as 2026, thereby triggering a devastating 33% across the board cut in benefits to affluent duffers living on Florida golf courses and destitute widows alike. Needless to say, the army of beneficiaries projected for the middle of the next decade—what will amount to the 8th largest nation on the planet—- would not take that lying down.

To continue reading: Why Social Security Could Be Bankrupt In 12 Years

1 Comment

Posted in Debt, Economy, Government, Other Views

Tagged ,