About Me

In writing the "About Me" portion of this blog I thought about the purpose of the blog - namely, preventing the growth of Socialism & stopping the Death Of Democracy in the American Republic & returning her to the "liberty to abundance" stage of our history. One word descriptions of people's philosophies or purposes are quite often inadequate. I feel that I am "liberal" meaning that I am broad minded, independent, generous, hospitable, & magnanimous. Under these terms "liberal" is a perfectly good word that has been corrupted over the years to mean the person is a left-winger or as Mark Levin more accurately wrote in his book "Liberty & Tyranny" a "statist" - someone looking for government or state control of society. I am certainly not that & have dedicated the blog to fighting this. I believe that I find what I am when I consider whether or not I am a "conservative" & specifically when I ask what is it that I am trying to conserve? It is the libertarian principles that America was founded upon & originally followed. That is the Return To Excellence that this blog is named for & is all about.

Monday, August 9, 2010

Social Security Trustees' Dismal Report

Last Thursday the trustees for Social Security & Medicare released their annual report indicating that Social Security will pay out more in benefits than it takes in both this year & next. Although Medicare's longer term theoretical solvency calculation improved those improvements were the result of promised cuts in payments to doctors & hospitals - the very people & institutions we rely on when we are sick & need medical treatment - how preposterous a premise for a calculation.

Please refer to "Your Social Security Statement" that you receive every year from the federal government who counts on you not reading the front page which says that "at this point (when the fictitious, non-existent, & misnamed Social Security Trust Fund is theoretically exhausted), there will be enough money to pay only about 74 cents for each dollar of scheduled benefits." This means that the government is telling you that if you are collecting or counting on collecting $1000 per month your payment will be reduced to $740 per month (until the finances get even worse) once the Trust Fund is not able to be financed sufficiently by other government sources.

Just look how scarce money is all over America right now - like in your household - & wonder where funds for a VAT addition to the income tax system or additional taxes to pay for Social Security benefits will come from in just a few short years.

To put all of this into perspective please consider my letter below published in The Reporter on August 4, 2005. Not much has changed except doomsday for our entitlements is closer than 2018 as indicated in the trustees report projecting shortfalls in Social Security funding the next two years for starters.

Dear Editor,

In Martin C. Stark’s letter to the editor in the June 16, 2005 Reporter he relies on the Social Security Trust Fund to fund any shortfalls between incoming FICA taxes & the outgoing beneficiary payments after 2018.

We should understand that this trust fund is nothing more than a stack of IOUs that is not backed by real assets.

Tracking the current Social Security surplus you will find that the money is received in a Social Security surplus account, from which it buys the government bonds that make up the trust fund. From there it is moved to the general treasury from which it all has already been spent financing roads, foreign aid, & other current government consumption.

There is no real money in the trust fund so that when 2018 comes & we call on the trust fund to support the actuarial shortfall we will have to sell the bonds (but to whom?) or print more money thereby causing inflation. The other choices are to raise taxes or lower benefits. Social Security cannot continue under the current system based on this information.

The Social Security solvency problem can very easily and fairly be solved by replacing the wage index formula for calculating benefits with the CPI formula – see Susan Lee’s Wall Street Journal article dated November 23, 2004.

Mr. Stark claims that benefits are guaranteed for life – this too is not true. Quoting from the aforementioned Susan Lee article – “Social Security benefits are not guaranteed. Just like all entitlement programs, they can - & have been – changed by Congress. The Social Security administration itself says so & so did the Supreme Court when it ruled, in Fleming v. Nestor, that workers & retirees have no legal claim to benefits. Regardless of how much in taxes they have paid into the system.”

For example, people who found their benefits taxed in 1983 & those who had those taxes raised in 1994 can not feel that there is a guaranteed benefit amount.

Mr. Stark asks, “What type of social security insurance system do we want…?” My answer is that we want a system of me taking care of my retirement & him taking care of his. FDR created Social Security to help the elderly after the Great Depression because the elderly had no time to recoup their loses from that terrible economy.

We should not have private accounts because of any Social Security system solvency problem but quite simply because they are a better idea in a free enterprise capitalistic country. Young people should be learning to take care of themselves since they are the only ones they can really count on anyway, as they will find out as they go through life. In every plan presented to date each person has the option to remain in the current system.

However, someone with a personal account will have real assets in an actual account with their name on it for retirement & also will have the ability to leave these assets to their heirs - both unlike in the current system. Personal responsibility is the virtue - not looking for government guarantees in a system that is just a Ponzi scheme waiting to tumble as described before.

Finally, Mr. Stark is correct when he states “If it (personal accounts) runs out, its your problem” – and that is exactly as it should be. When people realize that they are responsible for themselves & will not be taken care of by some government program, they will work, save, & invest to make sure that they do not run out & they & the country will be much better off for their efforts. Social Security should be there only for the needy as FDR intended.

The incentive should be to not want to be one of the needy but rather one of the self-sufficient. I believe that this is where President Bush is trying to lead us on the Social Security issue.

No comments:

Post a Comment