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>> Monday, September 27, 2010

A Charade of Mass Proportions
A historical perspective of the social security nightmare

--Joel Bowman, The Daily Reckoning

"The arrogance of officialdom should be tempered and controlled, and assistance to foreign hands should be curtailed, lest Rome fall."

- Marcus Tullius Cicero, 55 B.C.

What rhymes with Cicero? Not much. But if, as the saying goes, history itself rhymes, today's welfare-warfare state has plenty worth holding up against the soft, fading light of that long-fallen empire: Corrupt politicians...predatory bankers...ruinous military misadventures to faraway lands...a gluttonous citizenry feeding at the trough of public monies and, of course, the insidious, ridiculous illusion that any single participant could have made one jot of difference to the great charade as it unfolded before their very eyes.

The charade to which we refer is the very same phenomenon the Roman poet Juvenal referred to as "bread and circuses" in the tenth of his Satires. It is the superficial appeasement of the masses by the political class who, seeking to prevent massive uprising and revolt against their rule, dole out meager alms in the form of mass distraction. The success of this grand dupe depends on, and excels because of, the widespread assumption that the political class is working for the benefit of their employers, the taxpaying populace, rather than, as is the stark, impassionate reality, their merely effecting to do so. Nothing, not a sunrise at midnight, not a man immortal, could be further from reality. Far from serving their masters on bended knee, elected officials behave more like dogs than public servants, entirely dependent on their keepers for food and forever assuming they will be around with a doggy bag to clean up their mess.

"Government," as Frédéric Bastiat, writing some 1,800 years after Juvenal, expressed it, "is the great fiction through which everybody endeavors to live at the expense of everybody else."

And so we come to better understand our own predicament today. When a lending institution lends too much and is repaid too little, the poisoned olive branch of government extends. When a profligate spender - with sufficient influence in the public sphere, mind you - falters under the weight of its own obligations, the state appears with a bottomless cup. Multi-trillion dollar bailouts, and more still to come. Schemes, scams and stratagems that, we are told, are all for our own good. From the floor of Congress to the evening news, a trumpet calls all "men and women of reason" to fight against "total collapse of our system" lead us back from the "edge of the abyss."

Bread and circuses...

What then, when the Treasury is spent and the Fed's arsenal deployed? When debts sold off to once willing foreigners inevitably come due? When the children to whom this legacy of larceny is left realize the hand they were dealt and demand, with clenched fists of their own, a fair and equal opportunity, the chance to ruin or succeed based on their own generation's cowardice or courage? What comes after the determined destruction of the nation's currency...again?

Nowhere is Bastiat's observation better reflected than when the looking glass is held up to Social Security. The ruse, sold to American's under the same old banners, fraught with "safety net" misnomers and "falling through the cracks" platitudes, is up. On September 30, this Thursday, six years ahead of schedule, the "fund" officially goes into the red. What will they tell us next? What price must we pay in order that the grand charade is allowed to go on? What story must we now swallow?

Don't fret, Fellow Reckoner. They'll surely think of something. And that's precisely the problem.

Personal Note:
The problems we face today are not solely the responsibility of the Democrats; Republicans too have learned to eat at the trough with equal fervor and glutinous abandon. But the problem would not have existed (in this current form at least) were it not for Democrats-- Wilson, Roosevelt... the depression lasting far longer than it needed thanks to democratic, liberal intervention in the economic collapse of the 1930s. The irony in today's democratic economic mantra, however, is the fact that the first depression lasted as long as it did because of Democratic intervention, and now blaming Republicans for this collapse (even though it was Democratic tom-foolery in the housing market), they resort to the same failed interventions of the 1930s, thus ensuring that THIS economic disaster will last far longer than it would otherwise-- assuming no wasteful Democratic spending. That's right, while braying about the failed policies of the previous administration, they are themselves presently guilty of revisiting the failed policies of 'previous administrations' seventy years ago.

The hypocrisy on the left is stunning. As is its lack of long-term memory and its inability to learn from its past mistakes. On November 2nd, God willing, The People will put a leash on Congress, and force THAT dog to heel... as it should be.

Now, who was it that said Social Security was still solvent? Can it truly be that only a Democrat has a grasp on truth? the ability to understand the numbers? and take nothing a politician says at face value?

As children, many of us were told that were we ever in trouble or lost we could go to a police officer or anyone in a uniform and all would be well... we would be safe. And yet we see, more and more as each year passes, just how human-- and not wholly trustworthy --ALL men and women are, even and especially those in uniform. We can't always trust someone simply because they wear a badge, or a uniform. Why then do we trust, near implicitly, the word of our pet politicians? The ones who have US on the leash, rather than the other way around?

Here's my final question. Why is it, knowing our own failures and inability to be wholly and reliably honest to all and at all times, take the word of politicians, mere mortal men, without question? I say, only a fool trusts the word of any man without question. Everything everyone says has motive. No one tells the truth all the time. 'Everybody's got something to hide, 'cept for me and my monkey.' [Bonus points]

And there's a lot of monkeys in Washington right this minute slinging shit everywhere. Unruly whores and sluts to their own careers. It's going to take a lot of time and effort to clean their shit up and get back to doing The People's work.


Jim September 27, 2010 at 10:11 PM  

"the "fund" officially goes into the red. "

The author provides no source for this claim. I, on the other hand, consulted the Social Security Administration's website and looked at the latest Trustees report. According to the report, in the worst case scenario, the Trust Fund assets increase until 2014. That is the point at which Trust Fund outgo is greater that income.

So the author's claim in simplest terms is not supported by the facts. Furthermore, the author, like others, seems to think that once outgo is greater than income, the Fund is insolvent or Social Security is "broke". There is no evidence to support this as the Trust Fund was put in place to build a reserve as boomers hit the rolls. The Trust Fund will be able to pay out full benefits into the late 2030s. Past that, Social Security can payout 75% or more of scheduled benefits indefinitely IF LAWMAKERS DO NOTHING. A simple increase in caps or retirement age will solve this issue.

Your link includes the following: "Over the next 75 years, the Fund will require an additional $5.4 trillion to pay for scheduled benefits." This makes it sound like we have this staggering debt with no hope of paying it back. However, my back of the envelope method calculates that if the average working American makes only $20,000 a year and there are only 150 million working Americans on average over the same 75 years, the funding of the "unfunded liability" will be over $29 trillion.

So much for "unfunded liabilities". Let's dump that term altogether.

ELAshley September 28, 2010 at 9:48 AM  

I wonder if, while performing your 'back of the envelope' calculations, you accounted for inflation, continued governments spending, growing entitlements (largely unfunded mandates), and a decreasing middle and upperclass? Of course you didn't. You, like just about every other liberal apologist, choose to continue believing the very people who got us here in the first place.

Unfunded Liabilities? How is it that our public debt can sit at about 13 trillion, and you think that a mere 150 million Americans making only 20k a year can pay it all off, AND make all the social security payments coming due as well? ALL of governments' "budgetary obligations" currently equals over 100 trillion dollars... that's everything all rolled together.

Now, you seem to think 150 million Americans making $20 grand a year (gross or net? I'll assume gross) can pay for the outlays in social security till the late 2030s. 20k a year, calculating in a conservative 20% reduction in take home wages via the payroll tax leaves each taxpayer looking at sixteen-grand a year-- take home --to survive. Considering inflation, continued government spending, increased taxes upon ALL level of wage-earners via boondoggles like Obamacare and Cap & Trade, the inevitable rise in oil prices (this from the "peak oil" crowd), and God only knows what else government will heap upon these tragic 150 million taxpaying, 16k net a year folk, and you insist that social security is solvent? How about all the folk this scenario adds to the welfare rolls? When that number reaches above 50% of the population? We'll have a permanent underclass. And we'll be fucked.

Now, as to these amazing 16k net a year, 150 million...

Many will receive all or near all of their payroll taxes back in form of tax returns. So much for that 26 trillion number of yours.

Many will continue to receive the earned income tax credit, which enables individuals to receive more back through their tax returns than they paid in via income withheld.

Then there's the continued and rising cost of food stamps, and WIC.

Do you honestly think that government will keeps its hands OFF the 26 trillion you project and keep it set aside wholly for the use of making social security payments?

Okay. So you can work a calculator, or put the back of an envelope to good use. But you're not taking government into account. They've lied, stolen, and cheated us into this new paradigm, and you're willing to believe they're all gonna go cold turkey? Get on a methadone program?

ELAshley September 28, 2010 at 10:13 AM  

Let's take me as an example. I made just under 20k last year... $19,850, roughly. On my W2 I allowed an additional 15 dollars to be taken out (I was working 2 jobs, and the 2nd job took taxes out on the basis that that was my only job). I didn't want to get screwed come tax time, hence the extra dough each payday taken before I could see it.

My tax return was, roughly, $1200 bucks. But the government still kept approximately 900 bucks.

Assuming all of these imaginary 150 million, 20k a year (gross) taxpayers did the very same thing I did, and all paid in $900 after their return, that's only 135 billion dollars a year. Multiply that out 25 years to 2035 and that's only 3.375 trillion. A pretty good distance from your 29 trillion.

Government isn't playing a zero-sum game with the lives and livelihood of today's individual Americans, it's better described as generational theft. And considering the implications of that, how long do you think it will be before the people rise up and say "enough's enough"? Do you really think today's teen and twenty-somethings will bow down and take it up the butt just so this generation of thieves can get their promised share from the democratic ponzi-scheme we call social security?

I don't care where you're numbers are coming from. At worst they're lying, at best they're painting the rosiest picture they can on the fattest ass in America.

Marshall Art September 28, 2010 at 8:36 PM  

'Everybody's got something to hide, 'cept for me and my monkey.'

From the John Lennon song of the same title which appeared on the album The Beatles, more commonly referred to as The White Album.

"Why then do we trust, near implicitly, the word of our pet politicians?"

I think your final question is a rewording of this one. The answer is found in our own shortcomings, our own desire to avoid the responsibility of watching over those who are supposed to work for us. We'd prefer to set 'em and forget 'em when we should be electing them and correcting them, subjecting them to constant scrutiny and rejecting their missteps or ejecting them at the first opportunity. But it means staying involved and engaged, direct phone calls to their offices, showing up where they speak to hold them accountable. But who wants to spend the time? Tea partiers don't want to spend their time, but they do, as should we all all the time. It's making a difference (how much remains to be seen), but it should have been routine for all of us since each of us was just about old enough to vote.

Jim September 29, 2010 at 10:55 PM  

"You, like just about every other liberal apologist, choose to continue believing the very people who got us here in the first place."

Uh, no. I voted them out in 2008.

Now on with the rest of your post. WTF?

You are all over the place, so either you just feel like ranting or you have no idea whatsoever what Social Security is about or how it works.

I wasn't talking about the public debt. I was talking about Social Security. I was talking about the so-called "unfunded liability" mentioned in the linked article.

I have a mortgage. Let's say it's $300,000. Because it's a mortgage, I don't have to pay it today. Good thing, because I don't have $300,000. So that $300,000 is a liability and it's unfunded. OMG! I have $300,000 in unfunded liabilities! Over the next 20 years, I'll pay it off.

So over 75 years (which if I'm not mistaken, would be 2085, not the late 2030s), according to the author of the link, we will need to pay out $5.4 trillion (his number). We don't have it now. We have some money socked away in the Trust Fund, but let's just skip that for the moment for simplicity.

But what we do have is (new numbers here because I looked up some stats. These are even better.) is people paying into SS for those 75 years and if we, for simplicity sake, say that on average a person makes $25,000 gross a year, and there are and will continue to be 134,000,000 people making that average $25,000, SSA will actually take in $32.7 Trillion over those 75 years, pounding the hell out of that measly $5.4 trillion.

Forget about some 20% reduction. SS taxes come right off the top.

There's a lot wrong with our economy and our economic system. Social Security isn't one of them.

Craig October 11, 2010 at 4:49 PM  

They've done so well with SS that for the second time in history no COLA. Please tell my mom who counts on SS for a significant part of her income how well things are going with the trust fund.

Jim October 11, 2010 at 10:28 PM  

COLA has no connection to the Trust Fund. COLA is based on inflation. There is none. It's a formula put into law in 1972.

Craig October 12, 2010 at 7:03 AM  

Really, there has been no inflation for the last two years, what kind of miracle is this. I guess if P-BO and the dems can keep the economy crappy enough, they can at least claim they've beaten inflation. I'm sure that is some strange way that 1.1 equals none. Of course there's really no trust fund either.

Jim October 13, 2010 at 12:06 AM  

Did your mom complain when the CPI went down and SS payments didn't? Didn't think so.

It's a formula and it's the law.

There is a trust fund. As of 2009 it held $2.5 trillion in assets.

ELAshley October 13, 2010 at 8:53 AM  

At the top of your link, just below the table's heading..."Old-Age, Survivors, and Disability Insurance Trust Funds, Fiscal Years 1977-2009", in brackets are the words "in Millions."

Not "trillions" as you claim.

According to your table, last updated on October 27, 2009, there was 2.5 MILLION (not trillion) in a 'so-called' trust fund.

Now, why is it media (on both sides) are talking about Social Security paying more out this year than it takes in? And let's be clear; we're not talking about this milestone occurring on Jan 1 of 2010, we're talking about now-- last month or so. How many Babyboomers are scheduled to be added to the rolls this year and the next 15 years to come? More than any 2.5 million dollars can support as the economy continues to hemorrhage jobs by the half-million each month, while that jackanape in the White House continues to piss on commonsense, instigate divisions, and engage in both out-right lies and hypocrisy.

What is it about the information our intellectual superiors possess (and understand) that differs from ours, including our feeble links to flaccid links? I'm willing to believe the information isn't near as simple as Jim and Obama want us to think. And just as Obama is a colossal rube in economic affairs, I'm similarly unimpressed with Jim's grasp of the Social Security issue. I think his head is in the sand.

Jim October 13, 2010 at 8:19 PM  

Yo! El. Take a look again. "2,503,612" millions is 2.5 trillion (as I claim).

"Now, why is it media (on both sides) are talking about Social Security paying more out this year than it takes in?" Because payroll taxes are not the only source of income to the Social Security Trust Fund. $2.5 TRILLION in US Treasuries makes for a lot of interest income. Besides, that's why the Trust Fund was set up in the Reagan years - to account for increasing numbers of boomers and be able to cover benefits when payroll taxes alone wouldn't.

Please, everyone. Read up on Social Security and how it works. Don't read NewsMax to get your information. Read the Social Security Administration website. Read other non-partisan sources of information.

Key points (sigh, again):

The Trust Fund hold US Treasuries. By law.

The assets in the trust fund are growing and will grow until late in this decade.

Conservative scenario calculations by the non-partisan trustees show the Trust Fund will allow all current and future beneficiaries to receive 100% of there projected benefits until 2037.

Conservative scenario calculations by the non-partisan trustees show that with no adjustments whatsoever (as in NONE), SS can pay out approximately 75% of projected benefits.

Social Security is not part of the deficit. It is self-funding. Any person who even mentions Social Security and cutting the deficit in the same breath is either lying or ignorant.

"I'm similarly unimpressed with Jim's grasp of the Social Security issue."

As am I with your lack of same.

Jim October 13, 2010 at 8:22 PM  

Amended. 75% of benefits can be paid out past 2037 indefinitely. Small tweaks in payroll tax caps and/or retirement age would bring payments to 100%.

ELAshley October 14, 2010 at 9:28 AM  

" (1)...the Trust Fund will allow all current and future beneficiaries to receive 100% of there projected benefits until 2037.

(2)...with no adjustments whatsoever (as in NONE), SS can pay out approximately 75% of projected benefits.

(3)Social Security is not part of the deficit. It is self-funding."

1 - The trust fund will allow? No, it won't. CONGRESS will allow.

2 - No it can't. Not without CONGRESS perpetuating the shell-game.

3 - Social Security is not part of the deficit? You've been lied to.

I'm continuing this thread here

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