The insane have no idea that they are insane.
Pelosi presents a birthday cake to Social Security.
Seventy-five years ago, in the depths of a depression, with a stroke of a pen, President Roosevelt created programs that would morph into the biggest mandatory spending initiatives of the US federal government.
We like the original name better: Federal Old Age, Survivors and Disability Insurance. In its original form, that’s what it was: An insurance plan – as in, most people might not need it.
Today, over 20 million Americans have more than one Social Security number associated with their name. More than 100,000 have five or more numbers, and according to consumer risk-management firm ID Analytics, only 15-20% of those cases are related to fraud.
“The majority of these cases are likely due to data entry errors,” says an executive with ID Analytics, “which occur somewhere along the food chain of these credit applications and then they propagate in the system.”
The politicians representing your district couldn’t be happier. They get to blame each other and give you false reasons to enter the voting booth this fall… at the same time! Whoopee.
Exhibit A: “We will continue to highlight the Democratic Party’s role in strengthening [Social Security] and the Republican Party’s role in opposing it,” said DNC national chairman Tim Kaine in a speech on Friday night, the day before Social Security’s official anniversary. “So that is one of the themes for the fall: It’s critical to elect Democrats who will stand with the president to protect Social Security.”
The same Democrats that won the 2008 platform on “change” will be advocating aggressively this fall that any drastic change to Social Security is a full-on attack on your way of life. Just to be perfectly clear: “The Republicans advocating these changes are not friends of senior citizens,” Kaine said.
Exhibit B: “Democrats in Washington are desperate to shift attention away from their reckless spending record and failure to create jobs,” responded Brian Walsh of the Republican Senate campaign committee. No word from Walsh on their own reckless spending record.
What a mess.
As we’ve detailed ad nauseum, in books and film, the Social Security program in its current state failed to account for the baby boom generation. There aren’t enough workers paying into the program to pay out benefits to those who need them.
The current economic malaise only makes that structural flaw worse.
“The problem,” The New York Times helpfully suggested when we ran this chart of CBO projections back in March, “is that payments have risen more than expected during the downturn, because jobs disappeared and people applied for benefits sooner than they had planned. At the same time, the program’s revenue has fallen sharply, because there are fewer paychecks to tax.”
Still, as you have no doubt seen in reader mail, those who’ve paid in expect to get paid back. Rightfully so, since that’s the bill of goods they’ve been sold since the dawn of the program…
“75 years of a fully paid-for insurance plan isn’t bad,” notes our income analyst Jim Nelson. “But frankly, neither the Republicans’ plan to privatize the program or the Democrats’ plan to do nearly nothing will fix the next 75 years.
“That’s why smart investors are looking elsewhere to save for their own retirement.
“Most are completely unaware of how easy it is to avoid ever having to rely on Social Security. We found one way to actually lock in another country’s ‘pension plan.’ And this one isn’t having birthday parties or at center stage in an election-year demagoguery battle.”
Addison Wigginfor The Daily Reckoning
Addison Wiggin is the executive publisher of Agora Financial, LLC, a fiercely independent economic forecasting and financial research firm. He's the creator and editorial director of Agora Financial's daily 5 Min. Forecast and editorial director of The Daily Reckoning. Wiggin is the founder of Agora Entertainment, executive producer and co-writer of I.O.U.S.A., which was nominated for the Grand Jury Prize at the 2008 Sundance Film Festival, the 2009 Critics Choice Award for Best Documentary Feature, and was also shortlisted for a 2009 Academy Award. He is the author of the companion book of the film I.O.U.S.A.and his second edition of The Demise of the Dollar, and Why it's Even Better for Your Investments was just fully revised and updated. Wiggin is a three-time New York Times best-selling author whose work has been recognized by The New York Times Magazine, The Economist, Worth, The New York Times, The Washington Post as well as major network news programs. He also co-authored international bestsellers Financial Reckoning Day and Empire of Debt with Bill Bonner.
It would have better irony for the Speaker to jump out of the cake. Of course, appearing that she is about to surf across it is nearly as good.
All-in-all it doesn’t seem like a big deficit to overcome. If you cut some benefits, raise the age before you can get your coverage and put income limits on the plan yuo probably are only one half of the 80B deficit that they are now projecting. When compared to the 180B we gave AIG and the other bailout programs it seems rather samll.
At first I thought it was HER 75th birthday, darn botox makes it hard to determine age nowadays. Wonder how those carnies do it.
For society as a whole, retirees are always supported on a “pay as you go” system: those who are producing pay for those who are not. Unless, that is, we adopt a policy of euthanasia (whether active or passive).
Now matter whether one’s country has a state-run pension scheme or not–all those different types of policy are just different kinds of accounting. Ways of figuring who’s entitled to what, and when.
The social security “deficit” would exist even if the USA didn’t have any social security program: a whole bunch of people are leaving the workforce one way or another, and the generation behind them are fewer in numbers.
In the current situation, either benefits must shrink, or taxes rise, or both. Or you could embrace passive euthanasia, and simply disentitle millions of pensioners who lack private means. It depends just how hardcore you are about your capitalism. In historical experience, ideological purity of any variety usually results in a death toll–all those human “eggs” get busted to make the tasty doctrinaire “omelette,” that only the “connaisseurs” have the sophistication to properly enjoy.
Look at the bright side. The demographic bulge will be passed away within another thirty years or so, and the worker to retiree ratio will improve substantially after that.
So I say you should just hang on and wait for the dawn. Yeah, it’s bleak for X and Y. But really, as far as sacrifices go, many others have had to sacrifice a whole lot more for their country and their society. Just give those post-boomers a bit of credit for once.
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