Social Security time bomb

 

Liberals that say that Social Security is running fine don’t want to live in the real world but in a make-believe liberal world that doesn’t exist.

 

I don’t give the issue much attention on this blog, but I’m very interested in Social Security reform. I wrote my dissertation on Australia’s very successful system of personal retirement accounts, for instance, and I narrated this video on Social Security reform in the United States.

So I was very interested to see that the Associated Press put out a story warning about the dismal state of the program’s finances.

Here’s some of what the AP reported.

For nearly three decades Social Security produced big surpluses, collecting more in taxes from workers than it paid in benefits to retirees, disabled workers, spouses and children. The surpluses also helped mask the size of the budget deficit being generated by the rest of the federal government. Those days are over. Since 2010, Social Security has been paying out more in benefits than it collects in taxes… The projected shortfall in 2033 is $623 billion, according to the trustees’ latest report. It reaches $1 trillion in 2045 and nearly $7 trillion in 2086, the end of a 75-year period used by Social Security’s number crunchers because it covers the retirement years of just about everyone working today. Add up 75 years’ worth of shortfalls and you get an astonishing figure: $134 trillion. Adjusted for inflation, that’s $30.5 trillion in 2012 dollars, or eight times the size of this year’s entire federal budget.

First of all, kudos to the AP. I criticized them for a sloppy and biased report on poverty last month, so it behooves me to mention that their story on Social Security is mostly fair and accurate.

My only complaint is that the story does include some analysis of the Social Security Trust Fund, even though that supposed Fund is nothing but a pile of IOUs – money that one part of the government promises to give to another part of the government.

But let’s set that aside. Another interesting tidbit from the story is this quote from one of the kleptocrats at the American Association of Retired Persons. Note that he implicitly rules out any changes other than those that enable the government to “pay the benefits we promised.”  But that shouldn’t be a surprise. AARP is part of the left-wing coalition.

“I’m not suggesting we need to wait 20 years but we do have time to make changes to Social Security so that we can pay the benefits we promised,” said David Certner, AARP’s legislative policy director. “Let’s face it. Relative to a lot of other things right now, Social Security is in pretty good shape.”

But I will say that Mr. Certner is sort of correct about Social Security being in better shape than Medicare and Medicaid. But that’s like saying the guy with lung cancer who is 75 lbs overweight is in better shape than the two guys with brain tumors who are both 150 lbs overweight.

If you have to engage in fiscal triage, it would be smart to first address Medicare and Medicaid, but Social Security also needs reform. And not the kind of statist reform the folks at AARP would like to see.

By the way, you probably won’t be surprised to learn that President Obama’s approach is similar to the left-wingers at AARP. Here’s a video I narrated about his preferred policy.

It seems that the question doesn’t matter with this administration. The answer is always to impose more class-warfare tax policy.

P.S. If you need to be cheered up after reading this post, here’s a good cartoon showing the difference between Social Security and a Ponzi scheme, and here’s another cartoon showing what inspired Bernie Madoff to steal so much money.

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Comments

  • steveiii  On September 6, 2012 at 7:23 am

    Gross Domestic Product= FEDERAL SPENDING + Private Investment and Consumption + Net Exports

    The usual “solvency” arguments directed at the Social Security system and at Medicare are in any event complete nonsense. These programs are just programs, like any others, in the Federal Budget, and the Social Security and Medicare “systems” are thus fully solvent so long as the Federal Government is. Under our monetary arrangements (Monetary Sovereignty) there is no “solvency” issue for the federal government as a whole. The federal government is “solvent” so long as U.S. banks are required to accept US. Government checks — which is to say so long as there is a Federal authority in the Republic. This point has been demonstrated repeatedly in times of stress, notably during the Civil War and World War II.

    The whole “unsustainable” argument is non-factual and silly — designed by the 1% to confuse the ignorant.

    Even if SS benefits were 50% or 75% of GDP, they still would be easily sustainable.

    Meanwhile, Paul Ryan “reassures” seniors that his proposed Medicare changes will not affect people older than 55. But, if his plan is so good, why does he need to reassure people they won’t be affected by it?

  • steveiii  On September 6, 2012 at 7:36 am

    Our Monetarily Sovereign federal government easily could provide health care insurance to every man, woman and child in America. Instead, our politicians, at the behest of the ruling class, tell the 99% their own benefits must be reduced. Our Monetarily Sovereign government easily could support every retired person in America, without FICA. Instead, our politicians, at the behest of the ruling class, tell the 99% such support would cause inflation, bankrupt the system, and be “unsustainable” (a favorite word of the rulers).

    The power of the people begins with population. The ruling class is few in number. In a democracy, the power of the people comes is expressed with the ballot. But that power can be subverted by misinformation, a tactic the 1% have used for millennia.

    Because of previous brainwashing, many people initially resist anything that counters the propaganda of the ruling class (as delivered by the politicians and the media.).

    So we continue to pound away at the facts: The U.S. government never can run short of dollars, never can go bankrupt. The government can pay for Social Security and Medicare for everyone. FICA is harmful, unnecessary and saps the strength of the middle- and lower-classes. Federal taxes take dollars from the economy, do not support the government and should be reduced.. Federal deficits are necessary to grow the economy. Inflation easily can be controlled, even with massive, deficit spending.

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