Tag: Social Security

A Divergent View

One of the problems Clinton the Inevitable is having is some rumbling from her base. This is not surprising, given that Clinton is a hawk, a favorite of Wall Street, an ardent supporter of the surveillance state and an opponent of drug legalization. I suspect, in the end, it won’t matter. The Democrats will vote for Hillary anyway. But to appease them, she’s having to embrace parts of their progressive agenda, including expanding Social Security.

Seriously:

Progressives have a few such priorities in mind. First, they want Clinton to embrace an expansion of Social Security benefits. It’s an idea that seemed unthinkable during the period of fiscal austerity from which Congress has slowly been emerging, but it has gained steam among Democrats in recent months. Championed both by Warren and by the significantly more conservative Senator Joe Manchin of West Virginia, the proposal earned support from all but two Senate Democrats when it came up during last month’s budget vote-a-rama. “She says her focus is on economic security. There’s no question Social Security is a key part of economic security,” said Nancy Altman, co-director of an advocacy group dedicated to boosting the public-pension system. “So it’s hard to understand why she wouldn’t do it.

Their other goal includes eliminating college loans in favor of a free education. Because, apparently, what this country really needs is another multi hundred billion dollar entitlement that will massively hike the cost of college. Oh, and they also want a pony and an action man figure and toy train.

The progressives know these ideas won’t get anywhere with Republicans in control of Congress. But they are tired of the Democrats being “cautious” (i.e, somewhat responsible) and want them to be “bold” (i.e,. stupid).

I can attack any part of this agenda, but let’s take on Social Security expansion, which I’ve addressed before:

Only an idiot would ignore that Social Security is already running a primary deficit and its “solvency” through 2033 comes from a trust fund that consists of nothing but IOU’s. Only an idiot would ignore the problem that massive retirement guarantees have created in Europe — plunging fertility rates, slow growth, waves of early retirement, even less personal savings. And only the heir to the throne of the kingdom of idiots would propose tripling this problem.

Even if you ignore the political aspects, you’re talking about a massive tax hike which the government will, as it has done with Social Security, loan to itself and spend, leaving us in an even worse situation. Instead of having a Social Security Trust fund with $5 trillion fictitious dollars in it, we’ll have one with $10 trillion. I haven’t seen a proposal this stupid since Algore said he would shore up Social Security with the money we were borrowing from it.

The wealthy in this country are already paying an effective tax rate in the high 30’s. As Mcardle points out in a series of rebuttals to progressive talking points, this is a historic high. Contrary to the claim that Reagan and Bush 43 put the rich on easy street, the current tax code is just as onerous as it always was:

In 1986, in the face of a persistent budget deficit of roughly 5 percent of GDP, the Reagan administration undertook a massive tax reform that lowered marginal rates but also got rid of most deductions, which actually ended up raising effective taxes on the highest-income groups; the total average tax rate for the top 1 percent jumped from 24.6 percent in 1986 to 30.3 percent a year later. That’s why you could lower the top marginal rate to 28 percent from 70 percent and only see effective tax rates decline by five percentage points over that period.

But even that didn’t last. The George H.W. Bush administration did a big budget deal that raised taxes. The Bill Clinton administration raised them again, and the effective tax rate for the top 1 percent peaked at 35.3 percent in 1995, slightly higher than it had been at the previous peak in 1979. Even after the Bush tax cuts, the effective tax rates of this top group ran somewhere slightly north of 30 percent, or about where they’d been in 1981, before Reagan’s tax reform took effect. They only dipped back into the 20s under Barack Obama, because of the lasting effects of the recession.

Most of the tax relief of the last thirty years has come in the form of eliminating income taxes on the poor and drastically reducing for the lower middle class.

Progressives cling to the fantasy that we can simply raise taxes on the rich forever. “Hey!” they think, “we’re only taking 35.7% of the rich’s income. We could take another 5-10% easy!” Even assuming it were fair or even possible to take half the income of the “rich”; even assuming this wouldn’t damage the economy, we are already committed to spending that money. We already have trillions of dollars in unfunded liabilities for Medicare, Medicaid, Social Security and Obamacare. We already have hundreds of billions committed to interest on the debt and maintaining Obama’s (and soon Hillary’s) wars. We already have a time bomb of public and private pensions that our government may end up bailing out. You can’t just spend money and hope the tax revenue will materialize. You can’t raise taxes on the rich forever. Eventually, you are going to have to raise taxes on the middle class. And eventually, you are going to run into a fiscal wall.

Now, by contrast, Chris Christie this week laid out his plan for Social Security. It includes tapering benefits to people with incomes over $80,000 and raising the retirement age. In the link, Yglesias makes the reasonable point that this hurts poorer seniors the most, who often retire earlier and don’t live as long as wealthier seniors. That’s true, but we still can’t sustain the current system. Maybe you can step the retirement ages a little differently or up the benefits for the most needy seniors. But at least Christie’s plan acknowledges the fiscal realities of the 21st century. At least it’s not based on the pie-in-the-sky belief that we can just raise taxes on the evil stinking rich and pay for … everything.

Contemplating this issue and the opposing views this afternoon, I became a little more optimistic about the 2016 election. A lot of people see the broad Republican field as a weakness. But, in some ways, it’s a strength. Marco Rubio, Chris Christie, Rand Paul, Ted Cruz … these guys have a very diverse array of views on foreign policy, economics and budget issues. They’re all conservative, in their way. But we’re looking at a real debate about where this country needs to be headed. We’re getting a fairly broad and somewhat sensible palette of ideas from the Republican slate. And that becomes really obvious when you compare it to the toked-up-college-dorm-bull-session ideas emerging from Clinton’s base.

The question, as always, will be: do the American people prefer conservative fact or progressive fantasy? I guess we’ll find out.

Steal, Lie, then Steal Again

Earlier this year, I talked about an outrageous government swindle enabled by the Democrats. The IRS was withholding $75 million of people’s tax refunds based on decades-old Social Security overpayments to their parents. In the face of withering criticism, Social Security backed down.

Guess what?

The Social Security Administration, which announced in April that it would stop trying to collect debts from the children of people who were allegedly overpaid benefits decades ago, has continued to demand such payments and now defends that practice in court documents.

After The Washington Post reported in April that the Treasury Department had confiscated $75 million in tax refunds due to about 400,000 Americans whose ancestors owed money to Social Security, the agency’s acting commissioner, Carolyn Colvin, said efforts to collect on those old debts would cease immediately.

But although some people whose refunds were seized were reimbursed in recent months, some of those same taxpayers have since received new demands from Social Security, asserting that the debts remain and seeking repayment.

This shouldn’t surprise us. This is what our vindictive greedy government does. When they are caught in outrageous behavior, they back down, wait for the furor to die, and then continue to do it. They’re like roaches who scatter when the light is turned on then come back out when it’s dark. Asset forfeiture efforts slowed after Kelo, then resumed with greater furor. Drug War abuses will be suspended when there is a particularly horrible case, then resume when everyone’s moved on. And this particular Social Security-IRS grave-robbing hid under the baseboards for a few months and then came back. And any attention now will make them back down. And then in six months, they’ll be demanding money again.

Until Congress changes the law, Social Security will continue to hound people like this. It’s not enough to get outraged; Congress needs to act.

The Tax Man Cometh Again

Remember, as you read through these stories, the cardinal rule of government: everything you have is theirs. If you have such a thing as “take-home pay” it’s only because of their generosity in allowing you to take it home. Sort of the way a highwayman might let you keep enough bread to feed your family while stealing everything else.

First, Chicago. The city of Chicago has figured out what every economist knows: when you tax something, you get less of it. This is why, for example, paying for healthcare reform with cigarette taxes never works. People smoke less in response and revenues fall below expectations. Taxes and fees on cars and gasoline are driving some people to ride bicycles. This is a good thing, right? Less fossil fuel use, more people getting exercise. The only losers are people like me who wear out their brake pads trying not to run over these hippie fruitcakes when they cut across a road all of a sudden with NO consideration for anyone else and NO concept of how much momentum a car has and there’s a Goddamn bike lane right there and we paid taxes to build that thing so why don’t you use it, you self-important piece of …

Sorry, lost my train of thought there.

Anyway, Chicago is floating the idea of taxing bikes.

A city councilwoman’s recent proposal to institute a $25 annual cycling tax set off a lively debate that eventually sputtered out after the city responded with a collective “Say what?” A number of gruff voices spoke in favor, feeding off motorists’ antagonism toward what they deride as stop sign-running freeloaders. Bike-friendly bloggers retorted that maybe pedestrians ought to be charged a shoe tax to use the sidewalks.

Chicago is by no means the only place across the U.S. tempted to see bicyclists as a possible new source of revenue, only to run into questions of fairness and enforceability. That is testing the vision of city leaders who are transforming urban expanses with bike lanes and other amenities in a quest for relevance, vitality and livability – with never enough funds.

Two or three states consider legislation each year for some type of cycling registration and tax – complete with decals or mini-license plates, National Conference of State Legislatures policy specialist Douglas Shinkle said. This year, it was Georgia, Oregon, Washington and Vermont. The Oregon legislation, which failed, would even have applied to children.

Don’t mention the shoe tax, guys. They’ll take it seriously.

Second story: you remember how our budget deficit problems result from not being able to raise taxes? Well, welcome to 2014 when a slew of new taxes will be heading your way.

The new taxes and fees include a 2 percent levy on every health plan, which is expected to net about $8 billion for the government in 2014 and increase to $14.3 billion in 2018.

There’s also a $2 fee per policy that goes into a new medical-research trust fund called the Patient Centered Outcomes Research Institute.

Insurers pay a 3.5 percent user fee to sell medical plans on the HealthCare.gov Web site.

Americans also will pay hidden taxes, such as the 2.3 percent medical-device tax that will inflate the cost of items such as pacemakers, stents and prosthetic limbs.

Those with high out-of-pocket medical expenses also will get smaller income-tax deductions. Americans are currently allowed to deduct expenses that exceed 7.5 percent of their annual income. The threshold jumps to 10 percent under ObamaCare, costing taxpayers about $15 billion over 10 years.

Then there’s the new Medicare tax.

Under ObamaCare, individual tax filers earning more than $200,000 and families earning more than $250,000 will pay an added 0.9 percent Medicare surtax on top of the existing 1.45 percent Medicare payroll tax. They’ll also pay an extra 3.8 percent Medicare tax on unearned income, such as investment dividends, rental income and capital gains.

Oh, and this morning, I found out about this little gem:

The new year is time for change, even in the service industry. Starting January 1, the IRS will classify automatic gratuities as service charges that are taxable as regular wages and subject to payroll tax withholding. That might sound like a bunch of arcane tax law mumbo jumbo, but what it means is that restaurants have to treat those tips like regular wages.

Typically, the IRS left it up to the waiter or tipped employees to declare that money. But with this new change the waiter won’t see those “tips” until payday—instead of the end of the shift. And restaurants will have to withhold federal income, Social Security and Medicare taxes on that money, too.

What it means for the diner is that those automatic 18% gratuity charges on tables of 6 or more may well be a thing of the past. The addition has been added onto large parties to ensure that servers are paid for catering to a large group.

That doesn’t mean you should use this an excuse to start stiffing people. Remember, the minimum wage laws here in the states for tipped workers is still at a shocking $2.13 an hour. And, as evidenced by this video, a few extra bucks means a lot to the service workers of America.

What surprises me — actually it doesn’t surprise me — is how much this stuff is going to hit the middle and working classes. Cycling taxes, insurance taxes, tip taxes — these will hit hardest on young people, the working poor and the middle class. This is a running theme in Obama’s America: the plebs get screwed; the elites pat themselves on the back for caring so much. Even when the elites do bad things, they are never punished for their misdeeds, not to the extent the rest of us would be for smoking a joint or chewing a pop-tart into the shape of a gun. It’s enough to make you think the system is broken beyond repair.

Enjoy your new taxes.

When Is A Cut Not A Cut?

When it’s a program we like. A couple of Republicans have proposed a change to the budget — eliminating the sequester on the military in exchange for chained CPI for Social Security. It’s not going anywhere, but it does serve to highlight the cognitive dissonance that defines the Left:

Reps. Jim Bridenstine (R-Okla.) and Doug Lamborn (R-Colo.) are introducing the Provide for the Common Defense Act on Tuesday. The legislation would cancel out the next two years of sequestration cuts for the Pentagon by putting a heavier burden on senior citizens and federal workers.

Even without the sequestration, military spend will go down under the BCA. But notice that HuffPo gets its math right here: these are actual cuts in defense spending and the Republican are, well, making the cuts smaller — in real dollars. Sequestration is real cutting. In my own work, I’ve seen NASA closing down programs or canceling new ones in response to it.

Now let’s go a paragraph earlier:

A pair of House Republicans have a new bill that would spare the military from sequestration by cutting the Social Security benefits of many Americans who already experience painful federal budget cuts.

Emphasis mine.

These are not cuts. They are changes in the rate of growth of Social Security benefits. Many economists believe these changes reflect actual spending patterns. You can disagree with you want* but you can’t change the language life that.

(*Many fools on the Left want Social Security massively expanded despite its current and swelling fiscal shortfalls. Krugman says that Social Security is the only part of the retirement system that’s working well. All Ponzi schemes work well … until they collapse. My 403b would be working great too if my bank could stock up an imaginary portfolio against expected future investments.)

If the Republican proposal were to increase military spending very slightly, HuffPo wouldn’t call those cuts. But slow the rate of growth of their pet program and it’s “cuts!”.

The Unserious GOP

Ladies and gentlemen, if you want to know why I voted for Gary Johnson this year, here it is in one tweet:

That’s Marco Rubio, rising star of the GOP, boasting that the GOP is refusing to tackle entitlements and insisting that we blame Barack Obama for one of the few good ideas to emerge from the Fiscal Cliff mess.

I haven’t posted much on the Fiscal Cliff mess since I knew the Congress and the President, like dumb students who have known a paper was due all semester, would wait until the last minute. I will not be surprised at all if we go over the cliff. But keep this in mind: the President and his party are laughable clowns. But a big obstacles here — as boasted by Rubio — is that the GOP doesn’t really want to cut spending.

California Squeezing

Turns out the unions suffered another defeat Tuesday night:

The most significant election on Tuesday wasn’t in Wisconsin.

It was in San Jose and San Diego, where nearly 70% of citizens voted for public-sector union pension reforms, introduced by Democrats, that could save their cash-strapped cities billions of dollars.

California voters rallying behind pension reforms introduced by mayors shows the sea change in the politics of public-sector unions. Connect the dots between Scott Walker’s decisive defeat of the recall effort spurred by his rollback of collective bargaining and the push by Democrats and Republicans to restore a semblance of fiscal responsibility and you’ll see this once controversial idea is beginning to garner bipartisan support.

The union is suing, incidentally.

This is part of a nationwide shift toward reigning in public pensions. Let’s be clear: the public doesn’t want public employees to go without pensions or to be deprived. What they realize is that We. Are. Out. Of. Money. And we simply can not afford the hundreds of billions in future liabilities these pension plans are racking up. We can not afford to have people retire after 30 or even as little as 20 years and then be paid their maximum salary plus wage growth forever.

Note also: it was Democrats who introduced these changes, just as Democrats have introduced such changes in Massachusetts and Democrat Tom Barrett, in the Wisconsin recall, dropped the union benefits issue from his platform. The Democrats know that this must be done. And they’re fine with it being done … as long as they do it. But when Republicans do the same thing, it’s too big of an opportunity to scream blue murder for them to admit that it’s the right thing.

(As a contrast, the new French government wants to lower the retirement age. French socialists: making Democrats look smart.)

We are finally seeing the defusing of the fiscal time bomb that has been hanging over us for a decade.. If we ever get some movement on Social Security and Medicare, there may actually be hope for this country.

Update: Miguelito points out that the San Diego provision was strongly opposed by Democrats. And it bears remembering that Jerry Brown opposes reform and Michigan is currently in a big union fight. Most of the Democrats are still in the union pocket. But there are cracks in the facade. That Tom Barrett dropped the union benefits issue was it was a ten-pound maggot tells you they can read the writing on the wall.

But the government can do it!

That should be what the defense uses when they mount the defense of Tate George who has been accused of running a Ponzi scheme:

Former NBA player Tate George surrendered on Friday to federal authorities who accuse him of orchestrating a multimillion-dollar Ponzi scheme.

George, who made an iconic shot for UConn against Clemson during the Sweet 16 game of the NCAA tournament in 1990 before moving on to play with the New Jersey Nets, Philadelphia 76ers and Milwaukee Bucks, gave himself up to FBI agents and postal inspectors in Newark.

A criminal complaint charges him with one count of wire fraud, alleging that as the CEO of The George Group, he took money from prospective investors, and instead of using it for real estate developments as promised, he paid off other investors in a classic Ponzi scheme.

Among the allegations are that George represented to prospective investors that their money would be used to fund The George Group’s purchase and development of real estate development projects, including projects in Florida, Illinois, Connecticut and New Jersey.

The difference here is that government allows itself to do this – under the pretense that it will seriously keep its promise – and the won’t give Tate the same leeway. Heh. Priceless.

Playing games and holding us hostage

I am getting real tired of the left’s usual tactic of threatening to, or actually go through with their threats, to cut critical services first whenever budget battles come up. Here in my state of Connecticut, our new democrat governor, in order to pretend he is asking everyone to “share equally in the financial burden”, caused by our legislators – which have been dominated by the left for many decades, with all the usual consequences and bullshit – spending like drunken sailors on a rampage, promised us a billion dollars in public union concessions in return for the largest tax hike ever enacted, I hear the real figure is close to $3 billion over the next 2 years, and when the unions whom own the left balked, threatened them with layoffs. Of course, it was all for show.

Now the shit hit the fan, the unions are not budging as expected, and the layoffs are supposedly starting, but instead of cutting the damned parasites working at the DMV or other such useless government money pits, the first measly group, less than 400 in all, targeted all are critical providers, like Department of Corrections officers – the guys that keep the jails running- and state troopers, which provide for security.

At a minimum the strategy is that since these people are critical, reversing the layoffs a few months down the line, hopefully when the state has more money, or even if they don’t and they can lay blame for something bad that happens on the lack of manpower, is all but a given. After all, less police dealing with crime or correction officers watching the psychopaths in jail, is a dangerous thing for us all. Of course, the people getting laid off will all be the younger harder working, and cheaper to keep employees too. It also pisses me off that the media, as is in the case of this news here in Connecticut, then never points out this is a choice, and a callous one at that, intentionally made by these leftists to prey on people, and that they are playing political games and risking the lives of the people for their own personal gain.

The choice to layoff these critical employees that provide valuable services, with possible serious implications, is not a coincidence. This is the SOP on the left when they are put in a position where they have to cut the bloated government bureaucracy, don’t really want to do it, and hope the cuts will put pressure on the public to reverse their stance government is too big. And our Petulant in chief collectivist in DC is doing more of the same when he threatens to target Social Security for seniors and Veteran benefits, then gets pissed when the right calls his bluff.

Here in Connecticut we are basically screwed, because the left owns the god dammed government – which means the public unions do – and we are not going to get any redress to this situation. But we don’t have to put up with this shit at the federal level. If Boehner had any sense he would immediately put together a bill in the House that would mandate government fund Social Security, Medicare, veteran benefits, the military, and any other interests they do not want the left to hold hostage during this fight, then dare Reid and Obama to vote it down or veto it, leaving no doubt whom is playing games with us. Then point out that despite the left’s new found “optimism” that an unemployment number over 9% is signs of things getting better, while contrasting the way they used to report unemployment at the low end of 4% when the guy in the WH had a different letter next to his name.

Seriously, republicans need to stand fast and tell Obama and the left that we need cuts now – not promises of cuts in a decade – to get government spending under control, that any new revenue steam will only be used to pay down debt, not prop up the impossible to keep bloated social system, that we have to reform these bloated systems to make them work for the future, and that they should stop the games. The fiscal insanity has to end, and then in a way that it grows the economy, not the left’s big government.

Obama Moves Right

If true, this is pretty stunning:

Here’s what appears to have been in the $4 trillion deal [Obama] offered the Republicans: A two-year increase in the Medicare eligibility age. Chained-CPI, which amounts to a $200 billion cut to Social Security benefits. A tax-reform component that would raise $800 billion and preempt the expiration of the Bush tax cuts — which would mean, for those following along at home, that the deal would only include half as much revenue as the fiscal commission recommended, and when you add the effect of making the Bush tax cuts a permanent part of the code, would net out to a tax cut of more than $3 trillion when compared to current law.

Obama said that the retirement age was on the table, which actually places him to the right of many Republicans. His base would explode and he would almost certainly get a primary challenge. But it would be a massive step on the road to fiscal sanity. And it’s a big step by the Democrats.

At some point, however, the Democrats are going to stop making concessions. And the GOP will have to decide — do they really want to fix the budget? Or do they just want an issue to attack the President in 2012? As I watch them, I worry that the really don’t want a deal in which spending cuts can also be hung on them. Clinton did a two-step in 1996, both claiming credit for welfare reform and blaming Republicans for it. It’s likely Obama will do the same thing on entitlements. But we’re beyond caring about the politics.

Update: Predictably, reliably, the Left is having a hissy fit. How dare Obama exercise a modicum of fiscal responsibility?

Social Security system is in deep trouble

As our political class is locked in a fight about government, with one group begging for cuts while the other refuses to let go of the idea that the problem is government isn’t taking enough money already from people, to tackle our out of control spending, one of the items I am afraid isn’t being discussed is the need for serious and massive SS reform. Social Security is in real bad shape. How bad? Well according to this Fiscal Times column, its in horrible shape right now. Here are some facts:

*Since last year, the present value of Social Security’s long-term funding gap widened by $1.1 trillion. In one year.

* Last year, the trustees reported that Social Security would be unable to pay all of its promised benefits beginning in 2037; now the expected default year is 2036.

* The year in which Social Security is projected to start running in the red—that is, the year in which it will start adding permanently to the budget deficit—advanced from four years in the future to one year in the past.

Let’s look at each of these in turn, starting with the first one: SS is running in the red because of a $1.1 trillion funding gap. Not my words. Here is the meat of that argument straight form the article.

First, Social Security stalwarts can’t say any more that the program doesn’t increase the deficit. Until last year, Social Security actually reduced Washington’s need to borrow, since the program took in more FICA tax revenue than it had to pay out in benefits. That was supposed to continue (with the exception of last year and this) until 2015. But in one of the more alarming changes from last year’s trustees report, the year of permanent red ink (revenues falling below costs and staying there) jumped ahead to 2010. In other words, we’ve been operating in the red for a year now, and it’s not going to change.

SS is running in the red and impacting the deficit. That’s started in 2010, instead of as had been projected in last year’s report to not be an issue until 2015, because of this widening funding gap. Currently that Ponzi scheme is taking in $1.1 trillion less than it needs to pay out, and the Baby Boomer retirement bonanza hasn’t even gone full swing. So that brings us right back to the second argument that the defenders of the status quo use to pretend SS isn’t in big trouble: that SS has a large stash of money put away that can be tapped for quite a while. But there is a huge problem with that thinking, because that fund they can tap is simply a bunch of government IOUs, not real money. Let’s look at the article again.

At least until 2037—er, make that 2036 —Social Security can make up the shortfall by tapping its trust fund. Tapping the fund means, essentially, that Social Security presents a bill to the U.S. Treasury and Treasury has to pay. Of course, Treasury has to get the money from somewhere. And that means higher taxes, reduced spending elsewhere, or more borrowing. More borrowing means a wider deficit. Got it? To use the highly technical language of accountants, Social Security has gone from being a deficit good guy to a deficit bad guy five years ahead of schedule.

First off, it looks like every year that we look at a new report, it looks that the numbers have changed in such a way that the projected date that they run out of that IOU money happens earlier and earlier. But the real problem is the IOUs means that basically we have a situation where the Treasury will have to scrounge for money that it doesn’t have to pay off the IOUs. Worse yet is the fact that at the current pace things are going the bill that the financial arm of the SS will present the US Treasury each year to make up its own shortfall will be going up.

The US Treasury will have to then raise taxes, borrow, and/or cut spending on other things to pay back the IOUs. My bet is that the whole scheme implodes long before 2036, by a couple of decades at least, unless SS is reformed. The next time some liberal moron tells you that this SS crisis is made up and a ruse by evil people that want to throw Grandma off the cliff or under the bus, point out this horrible reality. SS is already broke, and the US Treasury simply doesn’t have the ability to pay them back for the IOUs you claim make the whole point moot short of destroying the economy.

And those that say that the problem isn’t that the Ponzi scheme was not just abused terribly but a scheme that was doomed to failure the moment that the left made it the mandatory retirement system it was never intended to be – because it ignored the fact that the whole scheme was set up as a lottery that rewarded the one out of over 90 people that actually lived long enough to collect – but that the Baby Boom generation was simply to big, and their mass retirement is responsible for the strain SS is now under, are also in for a rude surprise. Once all the Baby Boomers are gone, Gen X is going to face the same problem because Gen Y is yet again smaller than it. For a Ponzi scheme to stand a chance, the number paying in has to continue to increase and be larger than those taking out. If that’s not maintained, it implodes. Ask Madoff. Unlike the government though, he is now in the slammer for doing this stuff.

Here is what it all comes down to: to keep SS alive in its current incarnation we will need to put more money into the system, pay out less, and then a lot later, or do all three. If we raise the age to where it should be – in the 70s – it will shock too many people and cause a lot of hardship. If we cut the pay too drastically, people that then do collect aren’t going to get much value anyway from a system that basically robbed them. And as we all clearly see, with a ton of other liberal fantasy land obligations already competing for our cash, even if we basically took all the money from the rich people and the corporations like the crazy people tell us we should so we can avoid dealing with the fact we are running out of other people’s money, we ARE running out of other people’s money.

As I realized more than 2 decades ago, it now seems almost a given that SS will collapse under its own weight as the political class that benefits the most from this scheme continues to refuse to address the issues and fix it. Just remember that when Ronald Reagan proposed SS privatization back over 30 years ago and was shot down by the left over it, that it would have cost us less than $800 million to fix it. Now SS has a $1.1 trillion annual gap. A decade from now when it runs multi trillion dollar gaps, what’s the solution going to cost us, huh?

The lesson here is that there are no free lunches paid by others. Sooner than later it all ends up badly.

View Mobile Site