Future of social INsecurity?

[1Admin]

How are we going to fix this mess?

Such a ponzi scheme! Going to be pain somewhere and some time.

How do you fix it?

Most Boomers have already milked it for years now, Silent Generation all but gone (I think Mannlicher is the last of them LOL :) ;) Gen X'ers most of us won't get diddly despite paying in. Every year the little expected date of death for SSI moves forward.

How can the country fix this without lumping more crap on Gen X and further generations? Flame suit on, I know the Boomers will be throwing their Ensure drinks and Geritol at the screen yelling at me. But it's true.

This scheme was some of the first starts of socialism in the US, yes you did pay some in, but technically it is gubmint cheese.

We can all beeeeoootcch about it, but solutions?

Maybe a gradual phaseout that affects ALL generations.

I.e, Boomers start getting 10-20% less right now. Yes I know that conjures up images of "Grey Dawn" from Southpark with battalions of AARP parachuting into town and taking over, but the HURT must be felt across all generations.

While Boomers take a little hit, it's publicly announced that by "2080" (or something similar), this program will be no more, period, simply required private retirement accounts.

EVERYONE is immediately given the requirement of putting a certain percentage (based on age group) into a private retirement plan. It can't be everything right off the bat, cause you know their is still cheez to distribute to the Boomers.

For example, say a Gen X'er in his 40's could be required to still pay 80% of his SSI BS but had to put 20% of the total owed into a private retirement account.

"But Rob sees the gubmint likes to control things and they dip into SSI like a crackhead into his Mom's purse..."

Yes I know that. We will probably never get the gubmint FULLY out of the retirement business. Once You let the beast into the room, he's likely never going to leave it.

So the required private retirement accounts could be in a sense gubmint sponsored in that like a 529 plan or certain 401K's, they offer a handful of investment "options" only. Our son's 529 college savings plan only had 4 options, with a "guaranteed" option paying 3% tops over the last 15 or so years, and currently a little less than 2%, but the other options being a mix of stocks and bonds, etc. "Guaranteed", "Balanced", " Semi aggressive" (can't remember this exact name but you get the idea) and finally "Aggressive" with the scale moving up in risk as you go.

The required gubmint retirement account could in a sense use gubmint securities as part of the options- thereby offering an incentive for the gubmint and a way for them to keep a hand in the cookie jar to a small extent- AGAIN, IT'S IMPORTANT TO REMEMBER THAT THE GUBMINT WILL LIKELY NEVER WANT TO GIVE UP FULLY THIS BEAST THEY HAVE CREATED. Hence the need to brainstorm a reasonable plan that does take that fact into consideration.

Essentially the gubmint/Fed would have a new bunch of investors in T Bills, etc. Of course the individual would still drive the account, but some of the options would include gubmint securities.

Wall Street would get a boast, because a lot of money that would have sat in gubmint coffers and be siphoned away for BS, could now be invested in actual functioning money making companies- novel idea I know....

So say Gen X'ers have to still pay 80% of their part of SSI to the standard approach (rob from the working, give to the non working), then they would be required to put 20% in their private retirement fund. With the Boomers take a very modest cut of 10-20% and Gen X (probably largest working age group right now) still ponying up for Boomer cheez, plus other generations still paying in, this could work.

Next Generation Y- they come into it with the understanding that their won't be any or very little gubmint cheeze, so they shouldn't have any surprises like a lot of Gen X seemed to have- or will have one day if they weren't smart enough to figure it out years ago.

Perhaps Gen Y pays in 60% to the gubmint cheez wagon and has to put 40% into a required private account. Since Gen Y would be supporting cheez for the last of the Boomers (now taking a small cut) and Gen X'ers who have taken a large cut (say 50%).

Millennials or whoever is technically next on the generation chart, start off knowing for sure no gubmint cheese for you. 20% goes to the gubmint cheez wagon and 80% goes to a private required retirement fund.

You get the idea, a gradual phaseout, with ALL generations taking a bit of the blunt of it.

Boomers will cry- "we paid in"- yep, so did X'ers, your reaping now, X'ers won't probably at all. Any smart person under 50 would be well to assume no SSI at this point.

How else can this mess be fixed?

[Bill Foster]

1994 was the first time I heard someone talk about the government taking possession of personal retirement accounts like 401ks to be “invested” in worthwhile (to them) programs. It was Robert Reich Sec. of Labor for Pres. Clinton. At that time there was 4.6 trillion just sitting around that government could spend and they would pay you “as you need it” https://www.dol.gov/oasam/programs/h...s/062294rr.htm

The idea was suggested again during the Obama administration. Imagine allowing the same incompetent boobs that spent SS money access to your 401k or IRA.

[Patriotic Sheepdog]

You know that "someone" in the guberment has been hawking about changing the SS rules for many years, right? They always talk but do nothing. What I have figured out is the America has plenty of money, as well as plenty of debt and a whole bunch of taxation. We have too many guberment programs to keep people in the poor and relying on social programs and to give the politicians something to campaign for or against. We have health care monopolies that are out of control. And, we have a lack of integrity in our politicians, and corporate leaders.

I know this isn't an answer to your question, but it is an answer to your question by pointing out some failure, that i see, is worsening the problem you/we are trying to fix...I will post more when I get a chance and give you my opinion on how to "fix" this issue.

[1Admin]

@Bill Foster-

I agree. I was postulating on the taxed part of what we all pay for SSI. Screw the gubmint having access to your 401K, Roth, etc. Smart people would still have these as well as (being forced to) paying into the gubmint old folks cheez program.

So your PRIVATE retirement accounts would remain your own. All I was suggesting was the SSI debacle that we are all required to participate in (yes sovereign citizen types I know taxes are voluntary, argued the hell out of that with a Federal Income Tax accounting instructor twice in college- he finally conceded! LOL) could be overhauled over time to give people more control over their own money, whilst still paying into granny's gubmint cheez fund to see the Boomer's off and gradually taper down till that bastion of socialism starts to go away and people have to be adults and start managing their own affairs to a degree.

Basically, if you love your 401K, you can keep your 401K (Only actually true this time!!!) LMAO

[Patriotic Sheepdog]

As long as CONgress has access to SS, then they can rob, er borrow, from it for other programs. So what is killing us now?...Medicare and Medicaid. I read this article a couple years ago, so it took me a while to find and post.

2016-04-04 05:00 by Karl Denninger
in Health Reform , 2298 references Ignore this thread
Our Impending Failure As A Nation*

This is an interesting piece, but not because of the root numbers in it.

In 1940, entitlement payments, which include everything from disability payments to Social Security to Medicare, amounted to just over 20% of annual government spending in the United States.

Today, entitlement spending has swelled to nearly 70% of the annual federal budget.

Things are about to get a whole lot more complicated. The 20-year baby boom that took place after World War II is now beginning to result in a retiree boom.


For context, Druckenmiller points out that in 2030, the average age of an American citizen will be older than the average age of a resident of Florida today.

This demographic trend is going to create an entitlement spending catastrophe.

It doesn't have to, and the root of it isn't "entitlement spending", in the main.

Let's think this one through.

Social Security is funded by a "one in 8" tax, basically. That is, about one dollar of every $8 you earn up to a given cap is confiscated before you ever see it. You think it's half that, but it's not because the other half is paid "by your employer" and this fiction is maintained so you don't revolt.

However, your offered wage is reduced by that amount -- guaranteed.

So let's assume that we have a 2.5:1 ratio as is put forward. That sounds horrifying, except that it's a temporary problem (it lasts 20 years, roughly), and then everyone involved in "causing" it is dead. Further, there will be some that will "file late" for Social Security in an attempt to get more -- a strategy that only works if you live a very long time in terms of total funds, and lose their bet because they will die before the break-even is reached. In fact, actuaries don't care if you make this bet because they know that on balance while some will win, some will also lose and it will all even out.

No, the problem here is not the "one in 7.5" tax for Social Security. It is the one in 34 rate assessed for Medicare.

To put not too fine a point on it, Medicare and Medicaid (combined) are roughly double the outlay of Social Security and yet they are funded at a rate of less than 1/4 that of Social Security via taxation.

Further, Social Security outlays are indexed to alleged inflation, which is intentionally machined to show smaller than real figures, and thus there is a built in depression of Social Security obligations in real terms, especially over long (20, 30, 40+ year) timeframes.

Social Security itself is unlikely to go broke. If it does "run out of money" 30 years hence there will be some reduction in benefits, but remember that even a 1% inflation "miss" against reality over 30 years turns into a 35% reduction in real expense. In other words the "you'll only get 70% of your promised amounts" out of Social Security claims are probably dead wrong; you'll get the entire amount but it will be short in purchasing power by 30%.

The disability fund is another matter; that's bankrupt now and politicians have been stealing from the retirement fund for a while to cover it up.

On the other hand Medicare and Medicaid spending is going up at a radical rate compared to inflation, government-stated or not. How bad is this?

Fiscal Year 2005, for example, spent a total of $652 billion.

Fiscal Year 2015 spent a total of $1,297 billion, or close to a clean double in 10 years.

This was not mostly-centered in Medicare -- that is, retirees. Medicaid went from $182 billion to $349 billion, damn close to a double standing alone. In other words it was across-the-board in all age groups served.

That's a 7.2% growth rate which far exceeds alleged inflation -- inflation allegedly was up 20% over the same 10 years, or an annual rate of about 1.8%.

In other words that segment of the economy as spent by the government went up at a rate four times that of general prices.

Need I remind you what happens any time two exponential growth curves have a different growth rate? Go look at Leverage; there's a damn good reason that this is covered in the front of the book because if you don't understand and deal with it nothing else matters.

This, and only this, is the cause of all of the federal debt expansion, pension fund problems both private and public and the detonation that will occur in the federal budget and forward liabilities unless it is stopped and reversed.

Note carefully that we spend as a nation roughly double as a percentage of GDP what other developed, G20 nations spend on health care -- and virtually all of those other nations have socialized medical systems.

Socialism is always less-efficient than capitalism because there is no reward for innovation in a socialist system; you cannot take market share from someone else since market share is not a function of market success or failure.

This, in turn, means we're definitely overpaying by more than twice for medical care; we are in fact probably overpaying by as much as 80% across-the-board.

It is not hard at all to find examples of people being billed 10 or even 100x a price in another nation for a given thing. It is cheaper for me to fly to Narita, Japan, round-trip, and have an MRI done there by more than 50% than the average amount charged for the same scan here in the United States.

While you can in some cases get that scan done for a few hundred bucks here they're all $200 or so in Japan, and most people grossly overpay here in the US. Why? Because of various practices that all amount to consumer deception, extortion, price-fixing or all of the above -- all acts that are supposed to be crimes.

Let's say you go to the ER "in-network" on your alleged health insurance. While there some doctor sees you. He isn't in your network and you get a bill for hundreds or thousands from him. The hospital administrator should be imprisoned for allowing this along with the doctor who did it; you neither consented to such a bill nor in many cases had any ability to refuse, but the administrator could have required that said doctor be "in network" to be there or if not that he take the same reimbursement rate as if he was. He didn't and thus they both took advantage of your "in extremis" situation to bilk you. That's supposed to be illegal as a matter of general consumer protection yet not one person has gone to prison for it -- ever -- that I can find a record of.

Drug companies set prices by nation based on various things, including GDP and what they think their drug is "worth" in terms of your life or health. It's illegal to restrain trade (15 USC, Sherman, Clayton and Robinson-Patman) yet that's exactly what they do, with the help of the Federal Government, in that if you get on a plane and buy a suitcase full of some drug at a much cheaper price to try to bring it back and both make a profit while dropping the cost here in the United States it is you rather than they who will go to prison.

It is virtually impossible to get a binding quote on a procedure from nearly all medical facilities in advance. The notable exception are places like The Surgery Center of Oklahoma, which posts "all-in" prices. I note that said prices are typically one third to one fifth of what is charged in hospitals that don't post prices, including hospitals in the same general area of the country. Gee, I wonder why, and then one wonders why there haven't been thousands of criminal indictments and lawsuits alleging racketeering and extortion filed against the administrators and doctors in all the other hospitals.

Here's the reality folks, and it's a matter of arithmetic, not politics:

If we stop this right now the Federal Government would immediately and permanently run a roughly $400 billion a year surplus. In other words your purchasing power would go up rather than down every year and the federal debt would slowly be retired at a rate of about a trillion dollars every three years.

In addition the "entitlement bomb" being discussed in the linked article would instantly and permanently disappear. It simply would not exist; the short-term stress on Social Security would be manageable without material changes to the program due to the inherent understatement of inflation in the CPI used to link benefits and over the longer, indefinite time horizon the program remains stable.

Finally, were we to stop this keeping the Medicare impact on Seniors as it is today would allow Medicare to almost entirely disappear. The reason is that Medicare is an 80/20 program; if the base cost of medical care decreases by 80% (and if we only equal the socialist nations it would fall by 50%; we can do better than that with capitalism) then exactly zero needs to be spent for the cost to an actual Senior to remain the same. However, since we did promise such an 80/20 program keeping that promise is not an irrational act and thus some spending (about 1/8th to 1/5th of what it is now) would remain. Likewise, Medicaid is currently basically-zero cost for beneficiaries; if the cost of care drops by the expected amount we might well be able to get rid of many of the beneficiaries entirely since they would be able to afford to pay cash.

FISCALLY SPEAKING THE ENTIRE PROBLEM RESTS HERE -- AND NOWHERE ELSE. IF WE FIX THIS WE NOT ONLY ARE OK AS A NATION FROM A FISCAL PERSPECTIVE WE PROSPER. IF WE DO NOT FIX THIS AS A NATION WE FISCALLY (AND PROBABLY POLITICALLY) DIE.

THIS IS NOT POLITICS, IT IS ARITHMETIC. ARGUING OVER OTHER MATTERS WHEN IT COMES TO OUR POLITICAL SYSTEM, UNTIL THIS IS ADDRESSED, IS STUPID AND SERVES ONLY TO PROTECT THOSE WHO ARE CURRENTLY ROBBING YOU BLIND -- LITERALLY.

INSTEAD WE SHOULD BE DRAWING UP LISTS OF PEOPLE AND FIRMS TO BE INDICTED AND IMPRISONED. AFTER JUST THE FIRST FEW WERE SERVED THIS ENTIRE EDIFICE OF FRAUD WOULD COLLAPSE IN UPON ITSELF AND PRICES WOULD FALL LIKE A STONE.

WE EITHER DEMAND AND ENFORCE THIS NOW OR NOTHING ELSE MATTERS.

Full article here: https://market-ticker.org/akcs-www?singlepost=3405347

So who gets Medicaid? Well anyone that is indigent and disabled. Or in some cases illegal....(so here is another $18.5b (2016 money) that is being paid by "we the people").

[rockriver]

step 1. stop any cost of living raises...

not just for soc. sec.. but for every gov't program.

and i'm collecting... started at 62... decided that i'd get me some of this before it went bust..

increase the requirements for folks to collect and to "start"

step 2... no more new disability payments... folks are getting fat on purpose so that they can "get a check."

parents are coming up with all sorts of things to prove that their kids are crazy therefore they need to "get a check."

yes. there are many who will break a back and be bedridden... that is the job of their family. their church. their community...
and the reason they should be buying a disability policy from an insurance company... i worked with all kinds of folks in my job...
way too many houses with a porch full of folks on disability just sitting there...

if you, and you means anyone anywhere thinks that billy bob is disabled and needs some groceries or rent money,... great give him some!
then if you see him on the basketball court or staying drunk you can decide, yourself whether to keep giving billy bob money.