Thursday, January 12, 2012

The Awful Truth About Social Security

Folks at the Cafe have asked me to post the Social Security piece to distract from the fools that are showing their complete ignorance of FREE ENTERPRISE. Those idiots of course would be our own governor, Rick Perry, and of course, the Newt. Perry appears to be consistent in his stupidity. Newt is 90% brilliant and 10% way stupid. Right now he is caught up in his stupid phase. So here is the distraction. It also provides facts we should all know about how Washington is COMPLETELY MISMANAGING OUR RETIREMENT CONTRIBUTIONS. It clearly points up the well know fact that retirement is not a service the federal government should be involved in much less should it have access to our retirement funds. It is none of their business.

What if you went down to your local bank to check on your retirement fund? You have been paying into this fund for many years and this money should be in a very secure position to fund your future retirement. Your visit doesn't go so well. Your bank informs you they have taken the money from all retirement accounts, "The Fund", and have transferred it to the bank's general account. Not only that, they have spent all the money to cover other bank expenses. However, your friendly banker assures you that there was no need to worry, and so far they are making good on their commitments to retirees having never missed a payment.

You have several pesky little questions. First, you ask how are they paying those who are retiring? The banker says they have people like you who are paying into "The Fund", and they are using your and other folks payments into "The Fund" to pay retirees.

My next question is do you have enough payments coming in to meet your obligations to those retiring? The banker says up until this past year they had sufficient payments coming in to meet their obligations, however this year because of lower birth rates and longer life expectancies they had more demand than income, but assured me again I shouldn't worry.

Logically I asked why I shouldn't worry. The answer was the bank was calling the money they had taken and spent from "The Fund" and classified it as a loan. Their intentions and practice, so far, was to pay interest on this loan. These interest payments were making up the difference enabling them to pay the retirees.

OK, but where are you getting the money to pay the interest on "The Fund" that you took? The banker answered," but of course, we are borrowing the money to make the interest payments".

I summarized. So you have "borrowed" all the money from "The Fund" and spent the money on things other than your retirement customers. Your outflow of retirement payments are now, have been for some time, exceeding your income from retirement payments and will continue to do so in the future. At the present time, you are making up the difference by borrowing additional money from unnamed sources (like maybe in China). Correct?

One last question, how long do you think this can continue? If we can continue to borrow money to make our interest payments we see no disruption to making our promised payments to retirees for as much as 25 years.

My comment was, " that seemed like a big IF".

Folks, this is exactly the PONZI scheme (remember Bernie Madoff who is now in prison?) that the Federal Government has sneaked by the American taxpayer:

1. The Social Security Fund is non-existent. The government has loaned the money to themselves and used it to pay other expenses.

2. Current Social Security payments exceeded current receipts by $46 billion in 2010 and $43 billion in 2011.

4. The government is theoretically accruing interest on the money they took from the fund.

5. Even if the government can continue to borrow money to make up for shortfalls in revenue the theoretical fund reserves go negative in 2022 and are exhausted by 2036. These are best case numbers.

6. Unless the federal budget and deficit spending is brought under control we clearly will not be able to continue borrowing money to keep things afloat. Under current spending practices the 2036 date is a pipe dream.

And what does Obama and our current Congress do as they face these facts? They give taxpayers a Social Security Payroll tax holiday by cutting their deductions by about 1/3, and then extend this so called holiday for a second year. Of all the many places federal spending and/or taxes could be cut, these geniuses picked Social Security. Oh well if they had collected the payroll taxes, they would have just spent them for other expenses anyway.

So what do we do? How about these steps? Get Obama out. Vote in a Solid Red Congress. Reform Social Security by separating the funds from the general funds. Make intelligent changes to future retirees that would include giving them a choice to manage their own retirement funds (young people would be very smart to opt out). Make government run retirement funds in the future a safety net welfare program only. Bottom line, you just can't trust politicians with the a large complex operation like Social Security. They are not qualified, nor honest enough, to accept this kind of responsibility. Let's face it. The Social Security system has been a political scam to fund politicians spending to buy votes. They have deceived the American people, BIG TIME.

Think about it,