Thursday, June 14, 2012

Yes My Fellow Americans, Congress Really Did Steal Your Social Security

In March, 2008 Senator Jim DeMint (R-SC) attempted in vain to keep Congress from plundering the Social Security Trust Fund.

DeMint to Force Vote to “Stop the Raid” on Social SecurityCongress Raided $2 Trillion in Last 20 Years for Wasteful Washington Spending
Today, U.S. Senator Jim DeMint (R-South Carolina) announced he will force a vote during the budget resolution on an amendment that would allow Congress to “Stop the Raid” on Social Security surpluses. “It’s time for politicians to stop stealing from our seniors to secretly finance trillions in wasteful Washington spending,” said Senator DeMint. “Congress has been raiding the entire Social Security surplus every year to pay for bridges to nowhere, teapot museums, and bloated government agencies. Politicians in Congress are using Enron-styled accounting, but if this were done in the private sector they’d be sent to jail.
It is time to stop spending the Social Security surplus on other government programs and begin saving it for this generation and the next.”
Every year, Congress raids the entire Social Security surplus to pay for wasteful earmarks and other government programs. In the last 20 years, Congress has already raided two trillion dollars from Social Security, including interest. Without Senator DeMint’s “Stop the Raid” amendment, the Social Security Administration estimates that Congress will raid an additional $452 billion from Social Security between 2009 and 2013, which including interest would exceed $1 trillion.
“There is nothing but stacks of IOU’s in the Social Security trust fund because Congress has spent all of the money and will continue to spend it if we don’t take immediate action. Because of this raid by politicians, Social Security will not be able to pay promised benefits to seniors in less than 10 years.”
Fast forward to 2012 and the outright theft of the Social Security Trust Fund is now estimated at $2.5 trillion.

And that's the bitter truth folks.  The Social Security Trust Fund has been nothing but a slush fund for Congress Critters since its inception.  Congress stole the money, left a big pile of worthless IOU's and spent the money on wars, pork, corporate welfare and other slop.  It was a relatively easy heist to accomplish because for decades the SS tax far exceeded the cash outlays to SS recipients.  Now, Congress is in an absolute panic because the SS Trust Fund is fully plundered and the SS taxes collected are not sufficient to pay the benefits. In recent years the government has been using general revenues to cover annual shortfalls in the $30-70 billion range and that number will only explode as the Baby Boomers retire.

Many Congress Critters are rich to extremely rich.  They have their money stashed away in protected trust funds.  How would they feel if the American people raided their trust funds, squandered their money and left a pile of worthless IOU's?  But Congress Critters do to ordinary Americans what we are not allowed to do to them.   For us mere working stiff mortals, stealing is a crime but Congress Critters routinely steal from the poor and middle class with impunity.  Apparently, it's not against the law for Congress to plunder the retirement money of American citizens!

Moreover, Congress Critters have a pension plan that has been dubbed the “Golden Fleece Retirement” because “Congressional pension benefits are 2-3 times more generous than what a similarly-salaried executive could expect to receive upon retiring from the private sector”, according to the National Taxpayers Union. Congressional pensions are so generous that they can collect $5 million or more in benefits. These same Congress Critters who generally average millions in public pension benefits and who are already rich or exceedingly financially comfortable to begin with have no moral qualms whatsoever when it comes to robbing ordinary working stiffs of their Social Security checks.

There are other problems that differentiate the SS nightmare of today from the days when real surpluses accrued in the system. In 1950 there were 16 workers supporting every retiree on SS. These days there are under 3 workers to support every SS collecting retiree. Then, there is Medicare, another substantial entitlement that was never adequately funded but that's an entirely separate issue.

Financial pundit Karl Denninger took the SS issue to new heights when he wrote a piece titled Here Come the Lies (Social Security) and said:
“..a black male has a life expectancy (as of 2007, at birth) of 68.8 years. A white woman has a life expectancy of 81 years.
So a black man could be expected to live 3.8 years post-retirement at 65. A white woman, 16 years. Put another way, if a white woman and a black man have exactly the same earnings history in their lifetime, the white woman will receive 4.21 times the Social Security "income" as will the black man.
(Incidentally, if you're a native-American man you're in worse shape than the black man - the only ethnic group that is.)
Those who want to talk about Social Security's purposes never want to discuss this little bit of rather intentional and institutionalized racism.”
SS is not only broke but also racist!  But it's even worse.  SS is strictly a wage earners tax and trust fund babies and folks with unearned income are exempt from the tax.  The current SS tax is 12.4% and the Medicare Tax is 2.9%.  The government tells folks that 6.2% of the SS tax and 1.45% of Medicare tax is paid by the employer.  It's all paid by the worker because it's a payroll/labor expense and if the tax was abolished, workers would get an immediate 7.65% pay raise.

For many workers, the SS tax is the highest tax they pay.  But many working class Americans also pay federal income taxes, state income taxes, sales taxes, property taxes, gas taxes and a slew of other direct and indirect taxes.  That tax code is such an inequitable disaster that Warren Buffet, one of the richest men on the planet, paid an effective federal tax rate of 17.4% while his secretary paid a federal income tax rate of 35.8%, here (and she doesn't make anywhere near the money that her famous boss earns).  The year John Kerry ran for president, his very wealthy Heinz ketchup heiress wife paid an effective federal tax rate of about 12% on unearned income of over $5 million.

Several other astute economists and pundits have chirped in the SS mess. Economist Walter Williams took on the issue in a piece titled What Handouts to Cut.
According to the Census, around 80 percent of Americans 65 and older own their own homes compared to 43 percent under 35. Twenty-three million households, or 37 percent of all homeowners, own their homes free and clear, and most of these are seniors aged 65 and older. According to the Federal Reserve Board's 2007 "Survey of Consumer Finances," the median net worth of people 65 and over is $232,000, those under 35 years have a net worth of $12,000 and for those 35–44, it's $87,000.
For good reason, older people have accumulated more wealth than younger people; the primary reason is that they've had more time to do it. There is no logical case that can be made for using the tax system to force Americans with less wealth to subsidize those with more wealth. But it's not clear who is subsidizing whom. Consider an elderly widow, say 70-years-old, with a modest retirement income of $18,000 living in a $300,000 house that's fully paid for. She might receive local property tax forgiveness, medical and prescription drug subsidies and other federal, state and local subsidies based upon her age and income….. Only 50 percent of young people vote, but up to 70 percent of seniors vote.
Williams raises perfectly valid issues and he also got a ton of hate mail for the crime of speaking the truth. In fact, depending on medical issues and how long a person lives, a SS/Medicare recipient will collect 3-5 times what they paid into the system and what they get comes off of the backs of the young and economically struggling. America is facing a horror wherein the young will be forced into acute impoverishment just to support the old. The fact that our economy doesn’t offer much in the way of economic prospects for the young to earn and build wealth, America as a nation will collapse under the weight of such financial burdens.

Financial guru John Hussman caught a lot of attention when he recommended “Drop the rate substantially, but include all income – wage and non-wage. Three-quarters of Americans pay more in payroll taxes than in income taxes. By reducing the wedge between the hourly amount earned by employees and the hourly cost paid by employers, this strategy would create immediate incentives for employment. Moreover, it would raise more revenue because at present, even Warren Buffett only pays Social Security taxes on the first $106,800 of income.”

Hussman’s solution would work wonders for raising SS revenues, help the economy recover and put more disposable income into the hands of ordinary Americans. However, so long as the thieving and grubby fingers of Congress Critters insist on pilfering SS, there are no reforms that will ever work to render it financially sound and/or solvent.

4 solutions for fixing Social security

1.  Mean test the system and get the wealthy off of welfare.
2.  Everybody pays a low fixed percentage right off the top and before any deductions.
3.  Abolish the fraudulent system of employer contributions.
3.  Ban Congress from touching Social Security - it's not there money.

Personally, I totally support the American people filing a class action suit against every Congress Critter who voted to steal their Social Security and to go after their trust funds and fat pensions.  Why not?  That would constitute an event of mass social justice.  Why shouldn't the people have a legal claim on those who literally stole from them?

However, the best possible retirement system is for Americans to have control over their own money to build their own retirement nest egg, a nest egg that they outright own and isn’t subject to government plunder. Many financial planners and organizations have calculated how much one would receive in pension benefits if the same amount of money a person is forced to dump into SS was invested in private retirement accounts, here. The government doesn’t want anybody to know that if a person prudently invested their retirement saving in privately owned and controlled investment accounts, they would have retirement checks that are 2-3 times what they get from Social Security.

Then again, in the age of thieving Banksters Gone Wild and thieving Government Gone Wild, the American people sure as heck don't have much in the way of honest options.  No matter what we do, the probability of being 'Corzined' is quite high, here.

Life on the government plantation is sheer hell. 

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