sunset from behind the wire

sunset from behind the wire

Wednesday, February 24, 2016

The Future of Social Security

Demographic change in the United States and elsewhere in the world presents enormous challenges. In much of the world, the combination of increased life expectancy and a reduced birth rate has created a situation in which median age is rising rapidly. As a result, government transfer programs (used to be called a ponzie scheme), such as Social Security, that rely on taxes born by those currently working to fund benefits for those who are out of the labor force will come under increasing strain.

Policy makers will face difficult decisions because fiscal balance can be restored in such programs only by reducing promised benefits, raising taxes or through some combination of the two. Two of the more palatable and often discussed options are the removal of incentives that encourage early retirement and a gradual increase in the age of eligibility for retirement benefits to reflect increased life expectancy. Whether such reforms will be sufficient will depend, of course, on how quickly they are implemented and how far they go.

Republican front runner, Donald Trump, has vowed to save Social Security and Medicare through creating a vibrant economy, which will in turn increase the amount of money that the government takes in as a result of growth. Maybe that will work, but I doubt that it's a viable long term problem because the boom and bust cycles of market economies dictate that sustainable growth (over a long period of time) is an elusive goal.

Success in America requires that a combination of things happen and they've never happened for long enough. If you could have cloned Ronald Reagan and kept him in office indefinitely, maybe it would have been a reality, but that's not how it has worked in practice. There's always a Jimmy Carter or a Barack Obama waiting in the wings to appeal to people's greed or lust. President Johnson liquidated the Social Security Trust Fund to pay for the Vietnam war. Somebody will always there be there to steal it from the people paying into it.

I hear people's impassioned cries that it's "their money". As New Jersey Governor Chris Christie said in his inimitable way, "You've been jobbed. Your money was stolen."

Social Security was never intended to be a retirement plan. Medicare is emblematic of all government programs that grow to be absolute entitlements and economies grow up around them. And both of those ponzie schemes will end. The only question is how much they destroy on the way out.

The nation needs a safety net for the poorest, weakest and the generally f-ed up among us, but it can't be a debt that accounts for 71% of the federal budget (entitlements). I understand that not all of the entitlements are social security and medicare, but they count for the bulk at roughly two and a half trillion dollars.

In order for Social Security and Medicare to be sustained at their present level, my sense is that they need to be reduced by 50%. To put it in crude terms, it's a shit sandwich and we all need to take a bite.




11 comments:

  1. Yes, LBJ shoulders much if not all of the scorn deserved in the Social Security mess. Up until he decided to direct that the FICA funds be deposited directly into the Treasury general fund, the 'lock box' was relatively sound, but shrinking. Had the funds stayed in the lock box, the Ponzi scheme would have been realized long ago, perhaps as early as 1970.

    But once the general fund was immediately flooded with Ponzi money, then politicians who wanted to remain in office gave it to every constituent group that promised block votes in exchange for the government goodies.

    Yes, crooked sumbitches in office are at the base of the SS problem.

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    1. The money has been spent. The sooner that the voters accept it, and the sooner that we no longer have to worry about those payroll deductions, and accept that the government checks will no longer be coming, the better.

      Of course there are some old snipers out there who may object to eating dog food and may thin the ranks of the elite...

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    2. Between failing eyesight and pacemakers, sniping may not be an option. Of course, there are always improvised explosives.

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  2. I don't see any way any of this is going to end well.

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    1. Maybe the DLC will be called on to quell the food riots?

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    2. Smart members are stocking their freezers with hawg and venison.

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    3. And strong spirits for medicinal purposes (as defined by the DLC code of conduct for officers, senior enlisted and other ranks)

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  3. two step solution...
    first...mens testing... if your houshold income is 3X the poverty level, you don't need S.S. nd will not be able to draw any UNTILL YOUR INCOME FALLS BELOW THAT LEVEL. so you can still get what "is owed to you"...just like your auto or home owners insurnce.

    second..sunset the dmn thing...those over 55 see no chnge..45-55 will pay 25% less AND RECIEVE 25% LESS..
    35-45..50%...25-25..75% and those under 25 will pay no payroll taxes...and will recieve no old age insurance benifits.
    instead, a manditory 401K with a manditory 5% deduction and 5% match...portable between jobs..additional donations and matches allowed..no minimun of hours/income..all employees included...can't be touched before age 65.

    but it won't happen...takes all the power from the politicians...and they ain't gonna give up their vote buying bargining chips....ever. they would rather crash the system so they can ride in on their white horses and "rescue" us......from the problem they themselves created
















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    1. That's a common sense solution. Which as you point out, is why the politicians wouldn't want to implement it.

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  4. NO question it's going to get ugly... sigh

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    1. No matter who is in charge, Americans took the high hard one, and there is a lot of anger at the bloated elite, such as Jeb! Hillary will fall as well. I've got the popcorn in the microwave, all ready to hit 'start' for that one.

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