Why doesn't anybody talk about this?

Discussion in 'West Mall' started by Mr. Deez, Aug 9, 2016.

  1. Mr. Deez

    Mr. Deez Beer Prophet

    Buried under the colossal piles of stories about how racist Donald Trump is, how much Hillary lies, how badly Trump is losing, how the polls saying he's losing are phony, etc., I came across a story that's actually relevant. Apparently, Social Security's unfunded liabilities are about $32T rather than $11T that the government claims, and if you read the article, you'll see that even the $32T figure buys into the Ponzi scheme. Specifically, it presumes that there really is a trust fund that holds real assets.

    Even under the government's numbers, the system will start running a deficit during the next President's administration (2019). The government claims that interest and reserves will keep benefits flowing until 2034, but remember, it's a Ponzi scheme. The "interest and reserves" are IOUs, not cash, so the the government is going to have to either borrow or tax current workers to keep the scheme going even until 2034, so some kind of reform is going to be needed in 2019, not 2034.

    This is a colossal deal, and it's going to impact the next President. It's the biggest federal program (and by a long way - well over $1T per year), and it's the way we keep the elderly people living on the streets now and in the future. So it should be a central issue in the 2016 election campaign, right? Hell no. Nobody gives two squirts of piss about it. The political media largely ignore the issue and never hold the candidates' feet to the fire on it. In fact, the average American is absolutely brain-dead-stupid on the issue and doesn't care. Why young voters don't care about this is beyond me. Maybe millennials are just too doped up and focused on social justice issues to think about an issue that requires some 6th grade arithmetic to understand. Either way, they're going to have a rude awakening before they know it.

    Of course, in a normal election, we'd have a Republican running with a major Social Security reform proposal that protects current retirees but injects a little free enterprise and private ownership into the program to keep it solvent. However, since Trump is running as the "get off my lawn" candidate, he has abandoned the GOP's normal stance of supporting significant reform. He just says he'll make sure benefits don't get cut and that the economy will be so strong under him that the program will have plenty of money. ("Believe me, the Trust Fund will be huuuuuuuuge!!!") In other words, he's a scatterbrained buffoon on this issue as he is on most issues.

    Hillary is calling for tax hikes (of course) to help finance Social Security, but she's also calling for expanding the program to include people who have left the workforce to take care of children, spouses, and relatives. (Yes, that means that I, Mr. Deez, will become Social Security eligible if Hillary gets her way.) But will her tax hike be enough to cover the program's shortfalls and pay for the expansion she's proposing? Seems like a long shot to me, but of course, nobody's asking, so she doesn't have to clarify. It's also interesting that she breaks with her husband's position from the late '90s that a portion of the program's money could be invested in the stock market, which was a good idea then and a better idea now, but of course, the Democrats are getting nuttier and stupider as the Left becomes more dominant within the party.

    Anyway, enough about this. Let's talk about who's a racist, whether it's ok to say "all lives matter," how great Hillary is because she (probably) doesn't have a penis, whether trannies should be going to men's room or the women's room, whether Michael Phelps should have let a Muslim fencer carry the American flag at the Olympics, and other more important issues.
     
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  2. Seattle Husker

    Seattle Husker 10,000+ Posts

    The only answer...time to commence operation Soylent Green on retirees. ;)

    Seriously, this is a very important issue that none of the candidates are addressing likely because a sheer mention of touching social security will lose the AARP vote.
     
  3. WorsterMan

    WorsterMan SEC here we come!!

    Great post and an issue I have been concerned about for a number of years.

    If nothing is done soon the SS system / Ponzi scheme will blow up, one day... it's just a matter of time. But all politicians avoid the discussion of SS like the plague. It is far too toxic in public to seriously discuss, speculate on or explore steps to fix it.
     
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  4. mchammer

    mchammer 10,000+ Posts

    It's an issue that can be solved in an hour by combo of increasing taxes and decreasing benefits. It's actually easy to solve, but no one wants to go first.
     
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  5. Horns11

    Horns11 10,000+ Posts

    Could just be a case of pessimistic math. The write-in candidate guy gave no explanation for lowering the infinite horizon interest rate 0.2% other than "wages and economic growth." Extrapolating that over any amount of time is going scare the bejeezus out of voters who resist SS reform.

    Same thing with the Urban Institute. They claim that raising the cap on SS earnings only helps the richest who pay into it, but with current health trends and declining mortality age, I think it's more likely to make SS more solvent than it is now. As morbid as that sounds.
     
  6. Clean

    Clean 5,000+ Posts

    The MSM focuses the nation's attention where ever it wants it to go. Lately that is the latest white cop/black person incident or whatever BLM is protesting or the latest Trump foot-in-mouth event. Social Security can't break into the lime light because it gets no media attention.

    We've known that SS is going to crash for a long time now and 2034 is a long way off. The nation is betting that the Yellowstone Caldera will blow before 2034 or we'll nuke ourselves out of existence before then and we won't have to worry about it.
     
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  7. Musburger1

    Musburger1 2,500+ Posts

    The CPI is manipulated lower which prevents payouts to increase as much as the real inflation rate. This may buy a little time, but of course a negative consequence is lower standards of living for people realizing a smaller income stream as a result.

    Also, life expectancy in the US has begun to level off and should begin to reverse as the combination of diabesity and unaffordable health care costs eventually kill off some of the population prematurely. Again, not a desirable remedy, but it could add three or four years to the social security system.

    All Ponzi schemes come to an end sooner or later.
     
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  8. Musburger1

    Musburger1 2,500+ Posts

    I'm pretty sure even the rosiest scenarios for America will require dismantling of our economic system followed by some kind of reboot. If nuclear holocaust or natural disaster are avoided, perhaps we can come out of this OK, but not without going through the process of creating a workable structure once the corrupted one now in place implodes.
     
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  9. Horn6721

    Horn6721 10,000+ Posts

    I wonder if all those who lambasted Bush when he tried to get some minor changes to SS and to get people and Congress to address the issue and make changes now regret doing so.
     
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  10. Roger

    Roger 1,000+ Posts

    I'm pretty sure those people will blame Bush
     
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  11. Horns11

    Horns11 10,000+ Posts

    From Brookings:

    "According to the Gallup organization, public disapproval of President Bush’s handling of Social Security rose by 16 points from 48 to 64 percent–between his State of the Union address and June." This was 2005 right after he got reelected on the promise to reform SS.

    The bottom line is that he kept saying he wasn't privatizing SS, he was "modernizing" it, and no one bought it. Not even the hard core conservatives in the House. The ideas that PRAs would be linked to how well the economy was doing at the time scared people, and as we saw what happened in 2007-09, they had a right to be scared. He had GOP majorities in both chambers and his puppet child molester running the House. So if there's any blame to go around, Bush deserves at least an iota of it.
     
  12. Seattle Husker

    Seattle Husker 10,000+ Posts

    The only realistic solution for SSN is that you cap enrollment. This is a similar situation to the transition Unions went through moving from Pensions (guaranteed payout) to 401k (market driven valuation). The problem is that you need the generation moving to 401k to still pay into the Ponzi scheme for their elders or at least put money into a real lockbox (read: tax revenue) to pay for the SSN.

    The problem with SSN and Medicare/Medicaid is that those that are now receiving benefits underpaid by hundreds of thousands of dollars compared to the benefits they receiving.
     
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  13. Musburger1

    Musburger1 2,500+ Posts

    Social security, pensions, annuities, etc. are all basically the same in that in order to make payouts, there has to be a continual stream of deposits. And in order to be able to make the promised/guaranteed payouts there has to be enough deposits to also cover interest and administrative expenses. This requires both economic and population growth. The world economy hit a wall about 8 years ago and in order to continue the necessary growth to keep the systems functioning governments have increased debt and reduced interest rates to near zero, zero, and in some cases negative.

    Without cheap energy and some way to eliminate the large global debt hangover, there will not be enough growth in the future to sustain the retirement promises that were made. These systems will simply implode; probably well before 2030.
     
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  14. theiioftx

    theiioftx Sponsor Deputy

    Because we have more voters on the take than we have putting into the till. Politicians know this and will not jeopardize votes. Unfortunately it applies to both parties.
     
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  15. Seattle Husker

    Seattle Husker 10,000+ Posts

    This applies to young, old, poor, and rich. Truly, we want a government that we can't afford.
     
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  16. 4th_floor

    4th_floor Dude, where's my laptop?

    I seriously doubt it. The politicians takes care of themselves and their staphs (purposely misspelled). So the political class does not care. And the masses have a 1-second attention span. So when SS does implode, there will be an uproar and you'll hear "Why weren't we told about this problem?!"
     
  17. 4th_floor

    4th_floor Dude, where's my laptop?

    I believe you are mistaken about pensions and annuities. The major difference is there has to be an actual investment behind pensions and annuities. At least today's pensions have to have actual investments. Social Security is the unique legal Ponzi scheme, where current retirees are paid from the contributions of those paying into the system.
     
  18. Statalyzer

    Statalyzer 10,000+ Posts

    "Give your money to me, and I'll give it back to you in 40 years. Trust me, this is for your own good."
     
    • Like Like x 1
  19. Mr. Deez

    Mr. Deez Beer Prophet

    They only had a right to be scared if they also had a right to be stupid. The current system is not a safer investment than investing in the stock market or even junk bonds.

    Current system - Government takes FICA money and uses it to pay beneficiaries and then takes the surplus and buys treasury bonds with it. This launders the surplus into the general revenue fund, where it is spent on other things. The government then taxes the public a second time to pay off the treasury bonds.

    Alternative scenario using the stock market - Government takes FICA money and uses it
    to pay beneficiaries and then buys stock with the surplus. Suppose the stock market crashes and loses half its value. Because the Social Security system is backed up by the full faith and credit of the United States, the half that was lost in the stock market will have to be made up with general revenue when it's time to pay benefits.

    So what's the difference? In both cases, the public has to be taxed a second time, but under the second scenario, it only has to be taxed half as much or likely less than that, because in other years, the investment will make money to offset the losses.
     

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