Wednesday, May 2, 2012

Yes Virginia, Social Security Really is Going Broke

Andrew Napolitano states it flat out:  Rick Perry was right about Social Security.  It has become a Ponzi scheme:
In the first of several challenges to the constitutionality of Social Security, the Supreme Court found that the Social Security fund did not consist of your money. It was merely tax revenue.

It also held that [...] Congress could collect funds, claim it was holding the funds in a savings account and then spend those funds as it saw fit -- for those in need after age 65 or for any other purpose.

... even the court recognized that there would be no trust fund in the traditional sense when it found that the tax dollars collected and supposedly designated for Social Security were "not earmarked in any way."

Thus, the feds have conceded and the courts have agreed that the money you have involuntarily contributed to the so-called trust fund is not yours and can be spent by the government as it pleases, just like any other revenue that the feds collect. (Andrew Napolitano)
I say this with no glee in my heart, and my purpose is not to anger my progressive friends, but to establish some inconvenient and uncomfortable facts.  We all know it by now—Al Gore’s lockbox is full of IOU’s written by the pirates in both parties, but even if it were not, Social Security is still unsustainable in its current state. Payouts have exceeded contributions for decades, making it a de facto pay as you go system, and demographic changes will only exacerbate the problem.
In 1960, there were five workers per recipient; today, there are three, and by 2025 the ratio will approach two. (Origins of Entitlement)
Something’s gotta give. FDR himself wanted to prevent what Social Security has become…
Roosevelt rejected Social Security as a "pay-as-you-go" system that channeled the taxes of today's workers to pay today's retirees. That, he believed, would saddle future generations with huge debts - or higher taxes - as the number of retirees expanded.
Discovering that the original draft wasn't a contributory pension, Roosevelt ordered it rewritten and complained to Frances Perkins, his labor secretary: "This is the same old dole under another name. It is almost dishonest to build up an accumulated deficit for the Congress . . . to meet."
But Roosevelt's vision didn't prevail. In the 1940s and early 1950s, Congress gradually switched Social Security to a pay-as-you-go system.
Millions of Americans believe (falsely) that their payroll taxes have been segregated to pay for their benefits and that, therefore, they "earned" these benefits. […] The trouble is that contributions weren't saved. They went to past beneficiaries. The $2.6 trillion in the Social Security trust fund at year-end 2010 sounds like a lot but equals slightly more than three years of benefits. (Origins of Entitlement)
Recipients get more out than they pay in...
A one-earner couple with average wages retiring at 65 in 1960 received lifetime benefits equal to nearly 14 times their payroll taxes.    (Origins of Entitlement)
Government has made improvements since then (ironically, Reagan is the big hero here) ...
A two-earner couple with average wages retiring in 2010 would receive lifetime Social Security and Medicare benefits worth $906,000 compared with taxes of $704,000, estimate Steuerle and Rennane. (Origins of Entitlement)
Who fills in that $200K per couple shortfall? Should Social Security be converted to an old-age welfare program, with checks sent only to those who are in need and apply for the benefit?

Lest the Left Blotistanis accuse me of defaming FDR, I post this link wherein Conrad Black (one of the many Bete Noires of the left) defends FDR.   I believe Roosevelt was wrong on many things, but sincerely wrong rather than sinisterly so.

We can argue over government crowding out private enterprise, which FDR did do, but I generally agree with Black's assessment.  Roosevelt took action to give men work so they could feed their families, and it got a lot of infrastructure built.  Also, from the previous links I have cited, perhaps FDR could not foresee the great damage future politicians would do to Social Security and other originally-modest social programs.

See also:
Social Security Trustees Report 2012
Social Security Funds to Run Out by 2035

40 comments:

Always On Watch said...

The phrase "cluster f*ck" comes to mind.

Without Social Security, the single-family home will largely be a thing of the past. I recall the days before Social Security and how my father had to take in his mother (who never worked outside the home after she married) to live in the same house with the rest of us. When the inevitable day for a nursing home arrived (She had murderous dementia), my father and his brother had to pick up the tab as there was no Medicare or any other old age provision for the individual; the sale of "the old homeplace" had occurred years before -- to finance the confined care of my grandfather (who also had murderous dementia and could not possibly be cared for at home).

End result for me: barely any college funds available.

Now, I'm not arguing in favor of Social Security. I'm just pointing out what the impact will be on families -- and that influence can last for more than one generation, too.

A lot of people who clearly do not NEED Social Security or Medicare are using those benefits. My neighbor is one such family. Both members of the couple have HUGE retirements from their government jobs (one federal, one public school system). They have a lot of expendable income, that is, everything they draw from Social Security and what they are saving on health insurance. Ah, to take the vacations that my neighbors do and to buy the goodies that my neighbors buy!

Ducky's here said...

A two-earner couple with average wages retiring in 2010 would receive lifetime Social Security and Medicare benefits worth $906,000 compared with taxes of $704,000, estimate Steuerle and Rennane.

--------
The old trick of conflating SS and Medicare.
Shame on you. It invalidates what might have been a good column.

Silverfiddle said...

Shame on you Ducky for not realizing it all comes out of the same pot, and it's going out faster than it's coming in.

So the question still remains,how do we fill the $200K per couple gap?

Silverfiddle said...

AOW: I purposely softened this message and added in props to FDR because I did not want to turn this into a Social Security good/bad battle, because as you show us, it's not a black/white issue.

The first step to solving the problem is to identify it, and progressives like Ducky can't face facts without lashing out.

I invite everyone to go read the 2012 report, or at least the executive summary.

conservativesonfire said...

A few people, like Paul Ryan, do understand. There are options to reform Social Security and Medicare while protecting those that are already dependent on the programs. All it takes is the will to be honest with the people instead of making it a political football.

Anonymous said...

It's MEDICARE that matters most. Social Security is largely a farce. No one could possibly live decently on the meager stipend it provides. I thank God every day that I don't have to. The litle I get from SS, I give to Charity. Losing Medicare, however would be a serious blow.

However, like nearly everything else you can think of these immortal sentiments from Piet Hein apply even to Medcare:

Medicare may
Be as great as they say,
But it wouldn't be missed
If it didn't exist.


It's they SYSTEM, Stupid!

~ FreeThinke

Sam Huntington said...

On the one hand, social progressives want everyone to live forever and leave no stone-unturned creating costly programs to achieve those ends. Why, we even want to ban smoking, a leading cause of early death and one solution to escalating social security and Medicare costs. Progressives even want to prohibit “happy hour” because alcohol isn’t good for you. Ironically, these same people complain loudest about the costs of Elder Care. We can only conclude that our present situation is the likely result of listening to people least qualified to make important decisions: Democrats.

Anonymous said...

AOW, SS and Medicare come to us, whether we want them or need them or not, from taxes we have paid on our earned income. SS was NOT designed to be a Welfare Program created only to help the poor and needy. Whatever benefits anyone gets from SS, they have EARNED, so I think -- while it may seem logical from a certain viewpoint -- it is manifestly unfair to imagine that even "rich" retirees should be required to give up their benefits to help the needy.

I am so sorry that your family had to face those hideous situations you described, but we should all bear in mind that when those terrible events occurred, it was still POSSIBLE for people of ordinary means to pay for care of that kind.

NOW -- thanks to government "help," -- the cost of medical and custodial care has become SO prohibitive only the likes of Warren Buffett, Bill Gates or Donald Trump could afford to carry their own costs.

The PROBLEM, as I see it, is that government's heavy, irresponsible hand drive costs skyward at a pace that makes inflation seem glacial in comparison.

When the government starts paying for things, no one can resist the temptation to sock it to 'em BIG TIME.

If we had continued to live in the REAL world -- the one you and I grew up in -- life might not be any less challenging, but at least it would still be AFFORDABLE.

The System is ROTTEN. FDR was either a fiend or an ignoramus. It doesn't matter which. Either way his entire political career was spent in service slavishly devoted to satanic objectives.

By their fruit ye shall know them.

As Scrooge would surely say had he known FDR, "BAH! HUMBUG!"

~ FreeThinke

Liberalmann said...

You lost me at 'Rick Perry was right,' lol!

Always On Watch said...

FT,
we should all bear in mind that when those terrible events occurred, it was still POSSIBLE for people of ordinary means to pay for care of that kind

Well, not exactly ordinary families by today's standards. For one thing, neither my father nor my uncle had a mortgage. Why? Because the farm was divided up fairly early on, and Dad and my uncle managed to build their small houses over a period of some years. Plus, this was in the days before credit cards and the like, so there was zero credit-card debt.

That situation rarely occurs today -- particularly in metropolitan and suburban areas.

End Medicare and Social Security (the latter for more than we realize, I think), and children and grandchildren will go bankrupt as they try to pay their parents' and grandparents' medical bills. Unless, of course, parents and grandparents have hefty retirements.

Always On Watch said...

Silverfiddle,
Yes, the matter we are discussing is not as clear cut as many present it.

Z said...

"Shame on you Ducky for not realizing it all comes out of the same pot, and it's going out faster than it's coming in."

THis is one reason socialism can't work...people who prefer it just don't understand it.

By the way, SF...I agree about the infrastructure and getting people to work. Wait, wasn't THAT exactly what the huge stimulus programs under Obama were FOR? "shovel ready" and all of that? I thought we'd get people working and some bridges repaired, etc....sadly, the shovels are broken under the Obama administration and only his friends got big bucks, apparently.

I know it's not a conservative dream to reinvest in the WPA, CCC, etc., but I thought times were so bad it just might not be a bad idea.
Never happened...Where DID that money GO?

Anonymous said...

What’s Going to Happen to the Tots?

Life today is hectic.
Our world is running away.
Only the wise can recognize
The process of decay.
All our dialectic
Is quite unable to say
Whether we’re on the beam or not,
Whether we’ll rise supreme or not,
Whether this new regime or not
Is leading us astray.


We all have Frigidaires, radios,
Television and movie shows
To shield us from the ultimate abyss.
We have our daily bread neatly cut,
Every modern convenience but
The question that confronts us all is this:


What’s going to happen to the children
When there aren’t any more grown-ups?


Having been injected with some rather peculiar glands
Darling Mum’s gone platinum
And dances to all the rumba bands.
The songs that she sings at twilight
Would certainly be the highlight
For some of those claques that Elsa Maxwell
Takes around in yachts.


Rockabye, rockabye, rockabye my darlings,
Mother requires a few more shots.
Does it amuse the tiny mites
To see their parents high as kites?
What’s, what’s, what’s going to happen to the tots?


Life today’s neurotic, a ceaseless battle we wage;
Millions are spent to circumvent
The march of middle age.
The fact that we grab each new narcotic
Can only prove in the end


Whether our hormones gel or not
Whether our cells rebel or not,
Whether we’re blown to hell or not,
We’ll all be round the bend
From taking Benzedrine, Dexamyl,
Every possible sleeping pill
To knock us out or knock us into shape.
We all have shots for this, shots for that,
Shots for making us thin or fat,
But there’s one problem that we can’t escape.


What’s going to happen to the children
When there aren’t any more grown-ups?


Thanks to plastic surgery and uncle’s abrupt demise,
Dear Aunt Rose has changed her nose
But doesn’t appear to realize
The pleasures that once were heaven
Look silly at sixty-seven,
And youthful allure you can’t procure
In terms of perms and pots.


So lullaby, lullaby, lullaby my darlings,
Try not to scratch those large red spots,
Think of the shock when mummie’s face
Is lifted from its proper place,
What’s, what’s, what’s going to happen to the tots?


What’s going to happen to the children
When there aren’t any more grown-ups?


It’s bizarre when grandmamma, without getting out of breath
Starts to jive at eighty-five and frightens the little ones to death.
The police had to send a squad car
When daddy got fried on vodka
And tied a tweed coat round mummie’s throat
In several sailor’s knots.


Hushabye, hushabye, hushabye my darlings,
Try not to fret and wet your cots.
One day you’ll clench your tiny fists
And murder your psychiatrists.
What’s, what’s, what’s going to happen to the tots?

~ Noel Coward (1955)

If you’d like hear coward perform this astonishingly apt bit of social commentary couched in terms of a light-hearted music hall routine, try the following, which also contains some rather lugubrious didactic observations by a conservative critic as well.

http://americandigest.org/mt-archives/culture_civilization/whats_going_to_happen_to.php

Submitted by FreeThinke

Ducky's here said...

Even Sam Huntington's own dystopian view of a world without liberal arts and public service, a horrific society driven purely by corporate growth and consumerist greed, would be better served by a decent social welfare state. But he has dedicated himself to destroying what vestiges are left of it.

No z, shame on you fringe right wingers with no vision or ideas. Besides, I'm just here to watch you clowns rock the short bus.

Anonymous said...

Out of the mouths of babes, sucklings and jaded, super-sophisticated old queens drop pearls of wisdom 'tis folly to ignore.

~ FreeThinke

Anonymous said...

I was referring of course to the incredibly brilliant Mr. Coward, who besides being a brittle, mannered, occasionally waspish prancing pansy, was also one of the greatest literary, musical and artistic talents to come out of Great Britain in the twentieth century. Some of his performances on screen playing straight roles to perfection are touching enough to tear your heart out.

This was a very great man, who most unfortunately chose to make a living caricature of himself towards the end of his otherwise auspicious career. It was very sad to witness the self-destructive antics of a person of such remarkable intelligence and deep understanding of the meaning of life.

I believe that God is Truth among several other indispensable, immeasurable, unquantifiable things. It's often said that God works in mysterious ways. It must be so, for the most profound expressions of absolute Truth are so often found in the oddest, most unexpected places. Noel Coward's satirical musical hall routines are high among them.

And if you think all this has nothing to do with our looming predicament with Social Security, please think again.

~ FreeThinke

Kid said...

I'll say this.

-401k's weren't around when SS was started and for much of its life.

-SS has "Not Become" a Ponzi scheme. The government turned it into one. Specifically LBJ stealing to start welfare and IN His Own Words "Have those N...rs voting for democrats for 200 years."

I reject any notion that after the government stole and pissed away the money like rock star coke addicts, that the meme is somehow that "The productive tax-paying people who kept this thing alive" are now the problem.

I say let it crash and burn and the the people who stop getting checks can converge on DC with every weapon they have available.

Seriously, I now I'm being screwed, but I'm not going to scream out that it's my fault I'm being screwed while its happening.

Kid said...

Don't have enough money for "entitlements" of which SS is Not, then stop the welfare checks, starting with WIC for sure. Paying for child abuse. Paying to make things exponentially worse by the second.

Kid said...

And no, I'm not on SS, and yes, I do have a 401k.

Sam Huntington said...

If there is anyone who demands a cacotopian society, it is Ducky and his brethren who demand more government at a cost of less personal freedom. All the rest of his blather is neo-communist boilerplate.

Z said...

Ducky "No z, shame on you fringe right wingers with no vision or ideas."
Oh, no.....the media just doesn't publicize them. You know very well there are ideas coming from Republicans. BUt, God forbid the public hears them. Sort of like the hearings Republicans hold...which fade into the sunset because your media doesn't like them or their results.
Shame on you.
By the way, you keep saying "Fringe"...you do understand that half this country can't be fringe, don't you :-)
YOU are the fringe..I'm hoping that not ALL lefties are socialists. THAT is FRINGE, trust me.

Silverfiddle said...

Ducky Wucky: You make the common socialist mistake of believing that if the government doesn't do it it won't get done. Wrong!

I live in Colorado Springs, a rightwing redoubt hated by the Denverroids to the north.

We have an art museum, a private liberal arts college, a wonderful symphony orchestra and a thriving opera that attracts performers from around the US.

One of my talented sons participates in the classical musical community, all of it funded by private citizens, corporations and public organizations. No government money.

So much for your short bus bullshit

Ducky's here said...

Silver, you don't see a fundamental difference between Medicare and SS? Are you kidding?

The deficits being run are for Medicare. You Free Market (LMFAO) freaks love to let for profit insurers to take a big bite right off the top.

This problem can be resolved but not by a for profit market. All you Libertarians want to do is whine.

But you mention Christ from time to time. I don't know if you limit his teaching to the afterlife like z but the loaves and fishes taught us that there is enough. We just need to learn to cooperate and share.

Silverfiddle said...

You mention Christ? "Render to unto Caesar... Render unto God..."

Now get lost with that progressive pseudo-religious propaganda. You're insulting me now.

Now, please go read the report, and you will see that they are both approaching insolvency.

Also, I have never said that it cannot be resolved, and I'm certainly not whining.

Do you have anything substantive to say?

Jersey McJones said...

You can't have a "scheme" where everyone has complete access to the "scheme."

To call Social Security a Ponzi scheme is like calling a a tree an animal because it moves with the wind.

It's a silly and pointless attribution.

Now. Does SS have problems? Yes it does. Can they be fixed? Yes. Are there various ways of fixing it? Yes. Should we be without it? In my opinion, NO!

It is the difference between a third world hell-hole and a civil society. Those among us who live into old age should receive benefits from the society to make their golden years livable. It is the least we as a society can do. We should make sure that our elderly, and our young, are never dependent on the hands of bad people.

JMJ

98ZJUSMC said...

A two-earner couple with average wages retiring in 2010 would receive lifetime Social Security and Medicare benefits worth $906,000 compared with taxes of $704,000, estimate Steuerle and Rennane. (Origins of Entitlement)


Given a super safe and reasonable (>3%) rate of return, that $704,000 would pay out far more than $1.5,000,000.00

Oh wait...that would mean the government wouldn't be involved. How foolish of me.

98ZJUSMC said...

Silverfiddle said...
Shame on you Ducky for not realizing it all comes out of the same pot, and it's going out faster than it's coming in.


*ding* *ding*. *ding*

A winnah!

Honestly though SF, you probably need to stop shooting fish in a barrel. Oh, wait... I forgot who you responded to.

98ZJUSMC said...

Liberalmann said...
You lost me at 'Rick Perry was right,' lol!


No. You're lost when the alarm rings in the morning.

Finntann said...

"Oh wait...that would mean the government wouldn't be involved. How foolish of me."

Or even more importantly, that means that politicians wouldn't be able to siphon money off to buy votes.

¡Viva la rep├║blica bananera!

Have you ever been to the third-world Jersey?

I have, sometimes I want to go back

It's not as bad as you think, and you're much closer to it than you realize.

Cheers!

Finntann said...

I was gonna say you lost me at liberal... never even got to the mann part!

98ZJUSMC said...

Ducky's here said...
Even Sam Huntington's own dystopian view of a world without liberal arts and public service, a horrific society driven purely by corporate growth and consumerist greed, would be better served by a decent social welfare state.


Yeah. Tell us all how wo
nderful it works out at the end of story. Be sure to include the ridiculously unrealistic funding initiatives, following the soul-crushing taxes levied to insure social justice among the faux entitled. Then you can tell us how Europe extricates it's head from it's rectum without a vigorous free market economy to fund it.

It's called fairyland. Been there?

Obviously.....

98ZJUSMC said...

Sam Huntington said...
On the one hand, social progressives want everyone to live forever and leave no stone-unturned creating costly programs to achieve those ends.


Yet, every one of their social spreadsheets depends on you (us) dying, as soon as possible.

Funny that, or not so much.

98ZJUSMC said...

We have an art museum, a private liberal arts college, a wonderful symphony orchestra and a thriving opera that attracts performers from around the US.


Yeah.....and it must be right wing!! The wackos......:-P Stick-up-Rectums like Duckless demand that all community programs must conform to their version of correct. Nothing else exists, outside of their stunted vision of life outside the urban dome.

I bear them no malice, actually. They are simply poorly educated. Poor slobs.

98ZJUSMC said...

Jersey McJones said...
You can't have a "scheme" where everyone has complete access to the "scheme."

To call Social Security a Ponzi scheme is like calling a a tree an animal because it moves with the wind.

It's a silly and pointless attribution.

Now. Does SS have problems? Yes it does. Can they be fixed? Yes. Are there various ways of fixing it? Yes. Should we be without it? In my opinion, NO!


Oh please, Professor. Do tell us how all of our problems can be fixed. Specific solutions with detailed means would be appreciated.

At least you admitted that the program is FUBAR and yes,..it is a Ponzi scheme. Ever since Lady Birds' female half decided to drop SS into the general fund. We won't mention the 50,000 + men and women he decided to consign to the scrap heap for a "Harry Reid" effort. Congrats.

98ZJUSMC said...

The deficits being run are for Medicare. You Free Market (LMFAO) freaks love to let for profit insurers to take a big bite right off the top

Huh.

You really are that stupid.

SF gives you waaayyy too much credit.

I don't. You're just not very bright. Sorry about your bad luck.

Mustang said...

Does anyone see the absurdity here? “It is the difference between a third world hell-hole and a civil society. Those among us who live into old age should receive benefits from the society to make their golden years livable. It is the least we as a society can do. We should make sure that our elderly, and our young, are never dependent on the hands of bad people.”

How about this, instead: Get your lazy ass to work, save or invest your money for the golden years, stop demanding that others pay for your Viagra and Depends, and tell AARP lobbyists to piss off.

Anonymous said...

The only reason SS does not have enough money, is because people like you vote "tax cut" Republican. You refuse to pay for the society that was left to you. The most successful society ever known. The "Greatest Generation" taxed themselves at twice the rate we tax ourselves. They knew money was the oil that greases the wheel, and were proud to pay it. I'm proud they won freedom for the World and built the greatest country ever known. Republicans are deadbeats, pandering to voters by not having the guts to tell Americans their taxes must be increased to pay for the upkeep of the greatest society ever known. If you hate the society we have built, please leave the country, for the better country of your choice.

Silverfiddle said...

Obviously, Anon, you didn't read the article. Go back to that part about the couple in 1960...

Then read the article about what Reagan did for Social Security.

Finally, just raising taxes is simplistic, and if that's the answer, why didn't Obama and the democrats do that when they had everything for two years?

Looks like the dems are also deadbeats more willing to pander than to fix things.

Nowhere did I say I hate society, so I'm not going anywhere.

Ducky's here said...

Wow, Andrew Napolitano a freaking fringe right wing judge. There's an expert.

No go back to watching Barabara Walters interviewing Mariah Carey about Nikki Minaj threatening to pop a cap in her ass.

Same level of intellect.

Kurt Silverfiddle said...

Right Ducky... And you are credible how???