by | ARTICLES, BIDEN, BLOG, SOCIAL SECURITY
President Biden is cutting Social Security by 23% for every single recipient across the board. This is the inevitable effect of his continued demand that there will be no entitlement reform. This should terrify absolutely everyone. Within the next 8-10 years, when the Social Security trust fund is depleted, Social Security recipients will look at their bank account and see that their benefits have been slashed. This is a mathematical fact.
President Biden is lying to each and every last one of us, by denying the inevitability of his idiotic refusal to make any meaningful changes to fix Social Security. Currently, the Social Security Administration (SSA) estimates that of the over 46 million Americans receiving Social Security retirement benefits… 21% of married couples and 45% of single persons rely on Social Security for 90% or more of their income. That number is only going to continue rising as life expectancy rises and more people begin to rely on social security. You should be angry; President Biden’s actions will cause significant harm to every American.
by | ARTICLES, SOCIAL SECURITY
Social Security was supposed to be a program where people paid in, and growth of their funds over time resulted in a reasonable pension. Instead, by giving people more than entitled, it stole money from new people contributing to the system. By continuing this overpaying, it forces the younger people to get a smaller and smaller return on their contributions, even now negative, and even that will be reduced more when the system goes bankrupt in a few years. By not fixing the system now, it continues to pillage the newer entrants. Yet Democrats argue, in their absolute ignorance, that reducing the future growth is cutting benefits, while in reality is restoring the money to the people who have been pillaged.
Giving additional benefits to retirees is really the opposite of what we should do. Those who reach 67 need to be strongly encouraged to continue to work. It is not realistic – in fact, it is not possible – for an average person to accumulate sufficient retirement benefits during a working life of, say, from 22-67, to be able to receive retirement pay from 67 to 90 or more.
Our Social Security System is bankrupt. In fact, there is not enough money in the entire world for the United States to make good on its entitlement promises to its present and future retirees.
We need to be including in our current budget the amounts we are promising to pay in the future. The promises that we’ve made in the past — what we are paying out today — are not a part of this year’s costs; these are old liabilities and are part of our already existing debt. The US debt is currently $31 Trillion. When the real social security debt is added, the true National Debt becomes at least $70 trillion.
It is clear that these promised benefits have zero chance of ever actually being paid. And the longer our legislators allow this fraud to continue, the worse it will be for ourselves, our children, and our grandchildren.
by | BIDEN, BLOG, ECONOMY, ELECTIONS, LAW, POTUS, SOCIAL SECURITY
In a now-deleted Tweet written a week before midterms, President Biden tried to take credit for the Social Security increases that recipients will receive in 2023. The White House twitter account gleefully announced that “Seniors are getting the biggest increase in their Social Security checks in 10 years through President Biden’s leadership.”
The problem is that Social Security increases are based on a formula known as COLA, or cost-of-living adjustment, which measures inflation and the Consumer Price Index. The CPI was up 8.7% in the year-over-year comparison and therefore, seniors will receive an 8.7% adjustment.
It’s worth it to note that this increase is actually the largest since 1981, not just 10 years, because inflation is the worst it has been in four decades. One could argue that indeed it is his leadership (via his atrocious economic policies, mind you) that is the basis for the escalation in prices. But COLA increases and decreases have been tied to the CPI since the 1970s. That’s the law, not the President.
by | ARTICLES, ECONOMY, ELECTIONS, FED, GOVERNMENT, OBAMA, POLITICS, POTUS, SOCIAL SECURITY, TAXES, TRUMP
Are we past the tipping point for economic reform? I would argue that Obama’s budgets and spending accelerated the deficits beyond repair. Some people will go back to Reagan and say that the deficit and the debt ballooned during the Reagan Administration and they will blame it on his tax cuts. But what is actually true is that the tax cuts generated a large increase in revenue, and the only reason why he had deficits was that the Democrat-led Congress increased spending even over the increased revenue. The same thing happened with the Bush tax cuts which were very pro-growth; the revenue went up sharply, but spending went up even faster. But at this point the debt was still manageable.
Then you come to Obama. At the beginning of his administration, we had the deep recession -which arguably could have benefited by one year of stimulus. The concept of a stimulus is supposed to be a one-off event. In other words, you engage in big one-time expenditures to get the economy on track and then spending goes back to previous levels as the recovery occurs. The problem is that Obama didn’t put things in for just one year. He did long term things, like food stamps, teacher’s compensation, etc., knowing full well that once put into effect they could not easily be withdrawn. And it was pretty clearly his intent all along, for political reasons, to bake them into the budget. So now when we started to have a recovery, you had ballooning deficits — even with a growing economy. Then by the time Trump was elected, the locked-in recurring spending with its locked-in annual increases made the deficit – and the debt – almost impossible to rein in.
Now we have the pandemic and we have no place to go. There’s no surplus to go to the deficit. Millions of Americans are unexpectedly unemployed, which means they’re not paying into Social Security. At the same time, we see older workers who have lost their jobs choose to draw their benefits as soon as they become eligible. This will speed up the insolvency train. But then Trump did something that was very stupid (though his political motivation is clear). He said that entitlements are off the table. If entitlement reform is off the table at this point, we’re headed to bankruptcy.
We’ve been talking about the coming insolvency of the Social Security and Medicare programs for many, many years now and Congress has done nothing to stave off the inevitable. Couple that with Obama budgets, Trump’s lack of action, and the pandemic, and the deficits are even larger now. Anyone seriously looking at the situation knows that absent a major change to entitlements, the mandated annual increases, both because of cost of living adjustments and demographics, will bankrupt both programs in the next ten to fifteen years. It’s very safe to say that absent major entitlement reform, we’re basically past the tipping point.
by | BLOG, FREEDOM, RETIREMENT, SOCIAL SECURITY, TAXES
Everyone thinks he can retire at age 65. It’s an American ideal born in the last century with the rise of unions, the defined benefit plan, and generous pension systems. In reality — especially due to advances in health, medicine, and nutrition — many people have great capability to continue to work and contribute to society and themselves until 70-80. And they should, because they need to.
There is a crisis of affordability looming. Besides the enormously wealthy, for the most part no average person can afford to retire at 65. It is simply not possible, living a normal lifestyle, for anyone to put enough toward retirement by age 65 that will enable him to be supported for another 20-30 years. A life span of 85-95 is swiftly becoming the new norm. The only workers today who are the exception to this reality, and have any hope of a lengthy retirement with comfort, are public service employees. (That point is addressed in a subsequent piece entitled, “Abuse to the Taxpayer by Public Service Employees.”)
With the lifespan of Americans growing longer, retiring at 65 is no longer viable; the systems are badly strained. And it is certainly not rational for the longevity of Social Security and Medicare either. Yet the steadfast refusal of most of government to overhaul retirement systems or make age and formula adjustments to entitlement programs — in order to maintain this retirement facade — only compounds the problem.
Another one of the biggest detriments of being able to retire at 65 is investment return. Interest rates have been historically low for the last six years and there is a strong likelihood of them staying low for some time. As a result, people’s retirement portfolios have lagged in their anticipated growth and goals. The low rates mean less money overall for retirement time, a problem which can be offset by continuing to work and contribute to a retirement fund past the basic age.
Likewise, inflation is not the issue that everyone thinks it is. The true problem is the cost of living — but really, it’s the cost of modern living, the “keeping up with the Jones’s”. The cost of aspirin, color TV’s, computers, and long distance calls are NOT going up. But people now can have Celebrex instead of aspirin, surround-sound with flat screens instead of color TV, and smart phones instead of computers and standard phones. Newer models of everything due to technology is constantly changing — upgrading quality of life, but at an increased cost.
In sum, with living longer, low rates of return, and the “cost of Jones’s increase”, people must begin to realize that the time span between 65 – 75 can be, and should be, a healthy and productive time of life. Working, staying active, and continuing to save will be beneficial in the long run. The mindset of older citizens needs to change and they need to understand that they can should aim to be productive until they are 75. At 65 they can certainly slow down, but the concept of retiring and not working anymore at that age is unrealistic and unaffordable.
by | ARTICLES, BLOG, ECONOMY, FREEDOM, LAW, RETIREMENT, SOCIAL SECURITY
Entitlement reform is necessary for the fiscal health of this country, but it is something that no one wants to talk about, much less tackle. How can we begin? How can we open up the conversation and the possibility to reform and improve our social security system?
One step in the right direction would be to treat Social Security as a true retirement plan, and not as a wealth transfer system that it currently is. This could begin with reclassifying the payroll tax. The majority (6.2% out of 7.65%) of the payroll tax covers Social Security retirement benefits. If we actually used it (or at least most of it) for that individual’s social security retirement, everyone’s perception would change. Instead of being viewed as a hated tax (just ask any young person who has received their first paycheck), it would be viewed as a desirable saving for their future!
Let’s make another incremental change. The employer and employee contribute equally to the Social Security Tax. If the individual’s part went towards his personal retirement, the other part could go towards defraying the past obligations that are coming due. If we had done such a thing 20 years ago, the entire system would have been fixed. Unfortunately, the present situation would probably require some portion of the individual’s portion to also go towards paying the ever growing obligation for past unfunded promises. It’s that dire! And every year that we do not fix it, it gets worse.
We must stop treating Social Security like welfare or wealth transfers and start treating it like a retirement system. It’s our money anyway, even though the government wants to act like it is being generous when it gives us back our money. This would lessen the loose-and-fast accounting gimmicks that contribute to the fiscal mismanagement of Social Security anyway — and may move it away from its impending insolvency.
by | ARTICLES, BLOG, FREEDOM, IRS, LAW, RETIREMENT, SOCIAL SECURITY, TAXES
Whenever tax reform, tax packages, or tax changes get discussed and debated, the focus is always on “the middle class.” While this sounds noble, the reality is that the middle class already pays very little in taxes. The majority of the middle class “tax bill” is actually Social Security — which is not truly a tax.
For example, my son made about $35,000 last year. He paid $1,500 in income tax and $4,500 in Social Security. But contributions to the Social Security system should not be viewed as a tax — it is effectively a forced retirement payment. Pundits and lawmakers need to stop calling Social Security payments a tax, and need to stop including Social Security payments in their tax equations because it does not operate as a tax.
I strongly believe that with some tweaks to the Social Security system that make the benefits more tied to contributions and allow for some ownership of the underlying assets, we can get people to view those payments in a positive light – investing for their future. When you remove the Social Security line item from the amount of tax liability, you see that the lower and middle classes have a very low income tax liability.
by | ARTICLES, BLOG, FREEDOM, GOVERNMENT, POLITICS, RETIREMENT, SOCIAL SECURITY, TAXES
Last week, the Social Security Board of Trustees released their annual report on the long-term financial status of the Social Security Trust Funds. The news does not continue to bode will for the long-term survival of Social Security — but on the other hand, this is nothing that we haven’t heard before. Unfortunately, no one really wants to tackle the problem of reform.
Straight from their press release:
“The Social Security Board of Trustees today released its annual report on the long-term financial status of the Social Security Trust Funds. The combined asset reserves of the Old-Age and Survivors Insurance, and Disability Insurance (OASDI) Trust Funds are projected to become depleted in 2034, the same as projected last year, with 77 percent of benefits payable at that time. The DI Trust Fund will become depleted in 2028, extended from last year’s estimate of 2023, with 93 percent of benefits still payable.
In the 2017 Annual Report to Congress, the Trustees announced:
- The asset reserves of the combined OASDI Trust Funds increased by $35 billion in 2016 to a total of $2.85 trillion.
- The combined trust fund reserves are still growing and will continue to do so through 2021. Beginning in 2022, the total annual cost of the program is projected to exceed income. (emphasis added)
- The year when the combined trust fund reserves are projected to become depleted, if Congress does not act before then, is 2034 – the same as projected last year. At that time, there will be sufficient income coming in to pay 77 percent of scheduled benefits.
“It is time for the public to engage in the important national conversation about how to keep Social Security strong,” said Nancy A. Berryhill, Acting Commissioner of Social Security. “People understand the value of their earned Social Security benefits and the importance of keeping the program secure for the future.”
Other highlights of the Trustees Report include:
- Total income, including interest, to the combined OASDI Trust Funds amounted to $957 billion in 2016. ($836 billion in net contributions, $33 billion from taxation of benefits, and $88 billion in interest)
- Total expenditures from the combined OASDI Trust Funds amounted to $922 billion in 2016.
- Social Security paid benefits of $911 billion in calendar year 2016. There were about 61 million beneficiaries at the end of the calendar year.
- Non-interest income fell below program costs in 2010 for the first time since 1983. Program costs are projected to exceed non-interest income throughout the remainder of the 75-year period.
- The projected actuarial deficit over the 75-year long-range period is 2.83 percent of taxable payroll – 0.17 percentage point larger than in last year’s report.
- During 2016, an estimated 171 million people had earnings covered by Social Security and paid payroll taxes.
- The cost of $6.2 billion to administer the Social Security program in 2016 was a very low 0.7 percent of total expenditures.
- The combined Trust Fund asset reserves earned interest at an effective annual rate of 3.2 percent in 2016.
The Board of Trustees usually comprises six members. Four serve by virtue of their positions with the federal government: Steven T. Mnuchin, Secretary of the Treasury and Managing Trustee; Nancy A. Berryhill, Acting Commissioner of Social Security; Thomas E. Price, M.D., Secretary of Health and Human Services; and R. Alexander Acosta, Secretary of Labor. The two public trustee positions are currently vacant.”
View the 2017 Trustees Report at www.socialsecurity.gov/OACT/TR/2017/.
by | ARTICLES, BLOG, BUSINESS, RETIREMENT, SOCIAL SECURITY, TAXES
Entitlement reform is necessary for the fiscal health of this country, but it is something that no one wants to talk about, much less tackle. How can we begin? How can we open up the conversation and the possibility to reform and improve our social security system?
One step in the right direction would be to treat Social Security as a true retirement plan, and not as a wealth transfer system that it currently is. This could begin with reclassifying the payroll tax. The majority (6.2% out of 7.65%) of the payroll tax covers Social Security retirement benefits. If we actually used it (or at least most of it) for that individual’s social security retirement, everyone’s perception would change. Instead of being viewed as a hated tax (just ask any young person who has received their first paycheck), it would be viewed as a desirable saving for their future!
A move in this direction could be helped by a characteristic of the present structure. The employer and employee contribute equally to the Social Security Tax. If the individual’s part went towards his personal retirement, the other part could go towards defraying the past obligations that are coming due. If we had done such a thing 20 years ago, the entire system would have been fixed. . Unfortunately, the present situation would probably require some portion of the individual’s portion to also go towards paying the ever growing obligation for past unfunded promises. It’s that dire! And it gets worse every year.
Let’s stop treating Social Security like welfare or wealth transfers and start treating it like a retirement system. It’s our money anyway, even though the government wants to act like it is being generous when it gives us back our money. This would lessen the loose-and-fast accounting gimmicks that contribute to the fiscal mismanagement of Social Security anyway — and may move it away from its impending insolvency.
by | ARTICLES, BLOG, RETIREMENT, SOCIAL SECURITY
The Wall Street Journal recently published a discussion on the pros and cons of privatizing Social Security (“Should Social Security Be Privatized?”, March 27). Gus Sauter did a decent job outlining the positive aspects of this pathway showing that privatization is better for both retirees and taxpayers. On the other hand, Nancy Altman claimed that privatization would weaken people’s economic security, but filled her argument with erroneous information.
Nancy claims that Social Security is insurance and not a retirement savings plan — but that could not be farther from the truth. A retirement plan is exactly what it is, is how it was sold, and how it is even referred to on the government’s Social Security website. The problem is that the amounts paid in are not invested and therefore not sufficient to pay the promised benefits, which the federal government fraudulently hides by not recording the true cost of the program in the annual budget.
Therein lies the problem. By not doing that with their accounting, the federal government is able to simultaneously mischaracterize Social Security as a tax that is drafted from every wage earner’s paycheck. If wage-earners had been given the option to save and invest their own money instead, they could have easily earned a better return on it; if they wanted more fiscal security, they could buy an annuity.
Nancy goes on to describe Social Security more “universal, secure, fair and efficient — but at the same exact time, her article casually mentions “a projected shortfall.” In fact, the projected shortfall is some $30 Trillion – which in fact shows that it is not universal secure or fair (since it is in fact insolvent), nor it is efficient (it has lower costs because it does not invest the funds it collects). Her solution of making higher earners pay more is duplicitous – it simply has higher earners make pension contributions that inure solely to other people (this is known in the real world as embezzlement).
Nancy claims that a minimum-wage worker pays 6.2% of his income in Social Security taxes, but a person earning $1 million contributes “only eight-tenths of 1% of all their wages.” But this would only be a valid point if the retirement pension was based proportionately on income. And she certainly knows that it is not. As it is, social security is already a welfare system, with higher earners getting benefits much less than proportional to the amount they contribute.
Nancy’s entire rationale for supporting Social Security? “Government is permanent.” It’s too bad that the prior generation’s funding For Social Security has already been spent — the antithesis of permanent. It would be laughable if it wasn’t so tragic. If we privatize Social Security, it would give folks at least a fighting chance with their own money.
