Social Security & Retirement -  a Tale of Two  Retirement Systems
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Social Security & Retirement - a Tale of Two Retirement Systems

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Social Security & Retirement -  a Tale of Two  Retirement Systems Social Security & Retirement - a Tale of Two Retirement Systems Presentation Transcript

  • THE SMOLDERING STORY OF MONEY, EGO AND ACTIONS TAKEN IN MULTIPLE SMOKE-FILLED ROOMS
  • “A TALE OF TWO RETIREMENT SYSTEMS” by WAATTHE DICKENSSuppose you had both a checking account and credit card inter-linkedat your local bank. Often, when your monthly income and expensesbecame a little tight, you borrowed some money from the card to funda few expense payments from the checking account. Probably not avery uncommon or newsworthy circumstance. Agree?But suppose one month you noticed that some funds were removed bythe credit card company from your checking account. AND YOUDIDN‘T AUTHORIZE OR IMPLEMENT THE TRANSACTION ! Now this isa different story. Very troubling indeed - - YES?Well, this blog asks whether this situation isn‘t the case with one ofyour accounts: YOUR SOCIAL SECURITY RETIREMENT ACCOUNT.So what‘s afoot here? A Ponzi scheme? Embezzlement? Somethinglegal, but hidden in the ―fine print‖? If Interested, please read on !
  • BLOG TOPICS / CONTENTSCONTRASTS: SOCIAL SECURITY VS. THE GOV‘T EMPLOYEE RETIREMENT PROGRAMA BRIEF DESCRIPTION OF THE SOCIAL SECURITY PROCESSSOME FACTOIDS FROM THE 2011 REPORT OF THE SOCIAL SECURITY TRUSTEESTHE ROLE OF SPECIAL ISSUE BONDS (SIB‘s)WHAT‘S AHEAD ?BIBLIOGRAPHY View slide
  • Social Security fund lost 100% in 2011 – again NEWS HEADLINES IN CONTRASTHere‘s a typicalheadline often seen invarious of themainstream media.But have you seenone like this ? Social Security Fund Drained 100% in 2011 – Again !Acknowledgement: adapted from - - ―Are You Ready To Scream Foul‖, Carla Howell,Centers for Small Government.dot com View slide
  • Social Security Fund Drained 100% in 2011 – Again !Our fictitious headline might have Includedsome facts such as these:• ―The SS TRUST FUND accumulates theincome paid in any given year and pays SSBeneficiaries. Any surplus ( and in past years,there generally has been) is withdrawn, by law,and replaced with Special Issue Bonds from theTreasury Dept. The monies are then put intothe U.S. General Revenues fund and spent onsuch things as Congress directs, includingcorporate bailouts; state gov‘t bailouts; aid toforeign gov‘ts; gov‘t employee retirementpackages; and multiple other gov‘t priorities.Acknowledgement: adapted from - - ―Are You Ready To Scream Foul‖, Carla Howell,Centers for Small Government.dot com
  • SO.. A KEY POINT THAT TROUBLES MANY FOLKS
  • WHERE’S THE MEDIA RE THE SOCIAL SECURITY CONCERN ?Mainstream newscoverage frequentlylaments that GOV‘TEMPLOYEE retirementfunds are only 70%funded. Or only 80%funded.They warn that we willsoon have to cough upmore tax dollars to pay forthe remaining 20% or 30%.But why should the focus be on a 20-30% shortfall in funding forgovernment retirement plans — when millions of Americanshave only the word of the gov‘t that future enrollee funds , paid inby the next younger generations which follow them, will beused to fund their own retirement .
  • ONE BIG REASON TO WORRY: If the average historical level of tax revenue isextended, spending on Social Security, Medicare, and Medicaid withObamacare, will consume ALL FEDERAL revenues by 2049.ref: HERITAGE FOUNDATION – BUDGET CHARTBOOK
  • CONCLUDING THOUGHTS RE GOV’T WORKER BENEFITSSO . . with no funds in theSocial Security Trust Fund,hundreds of millions ofprivate sector workers mustrely solely on FUTURE taxesextracted from FUTUREworkers – at the will ofCongress – to see a return onthe FICA taxes they‘ve beenpaying all their working lives.Meanwhile, Lavish funding of government retirement packagesis a major cause of today‘s alarming government debt. In2010, voters charged Congress to do something about highgovernment spending. Message received ??
  • BLOG TOPICS / CONTENTSCONTRASTS: SOCIAL SECURITY VS. THE GOV‘T EMPLOYEE RETIREMENT PROGRAMA BRIEF DESCRIPTION OF THE SOCIAL SECURITY PROCESSSOME FACTOIDS FROM THE 2011 REPORT OF THE SOCIAL SECURITY TRUSTEESTHE ROLE OF SPECIAL ISSUE BONDS (SIB‘s)WHAT‘S AHEAD ?BIBLIOGRAPHY
  • THE SOCIAL SECURITY SYSTEM - - VERY SIMPLIFIED
  • THE SOCIAL SECURITY SYSTEM - - VERY SIMPLIFIED
  • BLOG TOPICS / CONTENTSCONTRASTS: SOCIAL SECURITY VS. THE GOV‘T EMPLOYEE RETIREMENT PROGRAMA BRIEF DESCRIPTION OF THE SOCIAL SECURITY PROCESSSOME FACTOIDS FROM THE 2011 REPORT OF THE SOCIAL SECURITY TRUSTEESTHE ROLE OF SPECIAL ISSUE BONDS (SIB‘s)WHAT‘S AHEAD ?BIBLIOGRAPHY
  • BUT . . . GETTING BACK TO SOCIAL SECURITY - - AND Mr. WAATTHE DICKENSBased on the most recentSocial Security TrusteesReport (ref) , SocialSecurity projections showwe are now entering aprolonged phase of Largeannual deficits.It‘s an issue that needs tobe understood morecarefully, as it willdeteriorate increasingly inthe future .ref: - ―Social Security 2011 Trustees Report Shows Permanent Deficits‖, David JohnMay 16, 2011
  • A TOP LEVEL VIEW OF THE SS TRUST FUNDTHE DATASHOWN ATDECADE ENDARE NOTCUMULATIVE.THIS IS SIMPLYA GLIMPSE ATTHE ANNUALACCOUNTINGFOR EVERY10th YEAR. AT FIRST GLANCE, THIS DOESN’T LOOK SO SCARY - - ASSETS AREGROWING. GREAT ! BUT THE PROBLEM: THESE ASSETS ARE IOU’s AND THE GOV’T BACKS THEM WITH PROMISES - - NOT GOLD, NOT $$, NOT EVEN EQUITIES.
  • A GRAPHICAL VIEW OF FUND RECEIPTS AND PAYOUTSTHIS IS A2 ½ DECADE VIEWOF THE MONIESPAID IN TO THE SSFUND AND THEMONIES PAID OUTPREDOMINANTLYTO SS BENE FIC-IARIES.THIS SHOWS THEPOSITIVE CASHINFLOW EXCEPTFOR THEDETERIORATINGTREND IN THELAST YEAR.
  • A KEY POINT MADE IN THETRUSTEES REPORT: • OUTYEAR DIRECT DEFICITS ARE BALLOONING DUE TO THE WEAK ECONOMY AND THE INCREASING LONGEVITY OF OUR POPULATION. • E.G., 2020 $81B 2030 $288B 2035 $343BTHE FUTURE DEFICITS MEAN THAT U.S. GENERAL REVENUESMUST BE CONTINUALLY SIPHONED TO PAY FOR SS. BUT THE FEDERAL GOV’T IS ALREADY IN DEBT UP TO ITS EARS.
  • BLOG TOPICS / CONTENTSCONTRASTS: SOCIAL SECURITY VS. THE GOV‘T EMPLOYEE RETIREMENT PROGRAMA BRIEF DESCRIPTION OF THE SOCIAL SECURITY PROCESSSOME FACTOIDS FROM THE 2011 REPORT OF THE SOCIAL SECURITY TRUSTEESTHE ROLE OF SPECIAL ISSUE BONDS (SIB‘s)WHAT‘S AHEAD ?BIBLIOGRAPHY
  • KEY SOURCES OF THE SS FUND SHORTFALLTHE TRUSTEES REPORTELABORATES ON WHY THESYSTEM IS NOW PROJECTING ADEFICIT IN ALL FUTURE YEARS.REASONS:• CURRENT RECESSION ISIMPACTING $ PAID OUT TORECIPIENTS SINCE MORE AREFILING AT AN EARLIER AGE• UNEMPLOYED WORKERS ARENOT PAYING IN .THE SIZE OF THE AMOUNT SS OWES HAS GROWN TO $9.1T[THIS IS A NPV CALCULATION PROJECTED OUT 75 YEARS.]$9.1T = $2.6T (TO REPAY THE SIB‘S) + $6.5T (TO PAY BENEFITSAFTER SPECIAL TRUST FUNDS ARE EXHAUSTED IN 2036 ).
  • LET’S EXAMINE THE PROCESS A LITTLE FURTHERSIPHONING OFF CITIZEN PAYMENTS FOR OTHER USES MAY BE LEGAL, BUT IS IT HONEST OR MORALLY ACCEPTABLE ?
  • THE “IOU” GIMMICK MAY BE MAKE THE SYSTEM SEEMSOUND. AND IT MAY BE LEGAL - - BUT DO YOU WANT TO BET YOUR RETIREMENT ON THE WHIMS OF OTHERS ?
  • THE SINKHOLE SEEMS BOTTOMLESSTHE TRUSTEES REPORT ALSOCALCULATES A―PERPETUAL PROJECTION‖, WHICHINCLUDES MONIES TO REPAY THENEW SIB‘S ( NOT INCLUDED IN THEBASIC $9.1T CALCULATION.)THE ―PERPETUAL PROJECTION‖FOR YEAR 2011 AMOUNTS TO:$17.9T = $9.1T + $8.8TTHIS IS UP $1T FROM THE 2010AMOUNT OF $16.9T
  • BLOG TOPICS / CONTENTSCONTRASTS: SOCIAL SECURITY VS. THE GOV‘T EMPLOYEE RETIREMENT PROGRAMA BRIEF DESCRIPTION OF THE SOCIAL SECURITY PROCESSSOME FACTOIDS FROM THE 2011 REPORT OF THE SOCIAL SECURITY TRUSTEESTHE ROLE OF SPECIAL ISSUE BONDS (SIB‘s)WHAT‘S AHEAD ?BIBLIOGRAPHY
  • SOME BOTTOM LINE THOUGHTS• FOR MANY YEARS THE SS RAN A YEARLY SURPLUS. THESEFUNDS WERE SPENT BY VARIOUS CONGRESSES ANDADMINISTRATIONS FOR NON-SS PURPOSES , AND THE SIB ―IOU‘S‖WERE LEFT IN THEIR PLACE.• SOUNDS LIKE A ―PONZI SCHEME‖ TO ME. [DEFN: EARLYENTRANTS ARE PAID WELL USING FUNDS FROM LATER ENTRANTSBUT EVENTUALLY THERE ARE TOO FEW LATER ENTRANTS ANDTHE SCHEME FALLS APART. THEN DUPLICITOUS BOOKS &REPORTS ARE PUT OUT TO ―REASSURE‖ OLD AND NEWENROLLEES. BUT, IN ACTUALITY, THE SCHEME IS BANKRUPT,UNLESS RESCUED BY A HEROIC ―WHITE KNIGHT‖.• WELL, FOLKS - - WE HAVE MET THE WHITE KNIGHT - - AND . . . HE IS US.
  • SOME BOTTOM LINE THOUGHTS• SOME FOLKS CLAIM THAT THIS SO IS SS A ―PONZIE‖ISN‘T A ―PONZIE SCHEME‖ BECAUSE SCHEME?THE SS FUND HOLDS THE SIB LET‘S ASK SOMEONE WHO‗IOU‘S‘ BACKED BY THE US GOV‘T. SHOULD KNOW:• WELL, LET‘S RECALL THAT OURU.S. GOV‘T CREDIT RATING IS NOW A PONZI?LITTLE LESS SHINY THAN IN PAST NAH !DECADES. THE REASON: BECAUSE COMPARED TO THESETHE S&P RATING AGENCY HAS LOST GOV‘T GUYS,SOME FAITH IN THE GOVT ‗S ABILITY I‘M JUST ATO MANAGE ITS MONEY. MOREOVER, PIKER !TO RAISE THIS MONEY, THE GOV‘TMUST: GROW THE ECONOMY;BORROW MONEY FROM OTHERS; MR. CHARLIE PONZIRAISE TAXES; OR OTHER DIFFICULTUNDERTAKINGS.
  • THE BOTTOM LINE MESSAGE• THE SOCIAL SECURITY SYSTEM ,AND IMPORTANTLY, ALL OURENTITLEMENT PROGRAMS ARENOT AS SOLID AS GIBRALTER. AMORE APPROPO DIAGNOSIS:THEY ARE AS SOLID AS SOME OFAMERICA‘S OLDER , RICKETYBRIDGES & ROADS.• THE Rx : THE SYSTEM GOINGFORWARD MUST ALLOW FORDIRECT COMPETITION FROM LET’S PUTRESPONSIBLE PRIVATEENTERPRISE. THOSE HAPPY WITH AMERICAN DREAMSTHE GOV‘T PRODUCT - - FINE ! AND ENTERPRISETHOSE PREFERRING MOREPERSONAL OWNERSHIP AND TO WORK !RESPONSIBILITY. FINE !
  • BLOG TOPICS / CONTENTSCONTRASTS: SOCIAL SECURITY VS. THE GOV‘T EMPLOYEE RETIREMENT PROGRAMA BRIEF DESCRIPTION OF THE SOCIAL SECURITY PROCESSSOME FACTOIDS FROM THE 2011 REPORT OF THE SOCIAL SECURITY TRUSTEESTHE ROLE OF SPECIAL ISSUE BONDS (SIB‘s)WHAT‘S AHEAD ?BIBLIOGRAPHY
  • BIBLIOGRAPHY1 ―Are You Ready To Scream Foul‖, Carla Howell, www.CentersforSmallGovernment.com2 ―Social Security 2011 Trustees Report Shows Permanent Deficits‖, David John May 16, 2011, Heritage Foundation, WEBMEMO #32563 http://en.wikipedia.org/wiki/Social_Security _(United_States)#History