August 9, 2010

I Want My Social Security Money Back

About 50 years (or longer) ago anyone with a few working brain cells could see that the Social in-Security System was a Ponzi scheme foisted upon some of the U.S. citizenry. When I saw that Congress exempted itself and railroad unions, I immediately knew I’d never collect money equal to what was stolen from my wages each week. I’ve kept every income tax form I ever filed and have computed FICA contributions I’ve made plus those my employers made. I could’ve retired long ago on only my contributions had I been able to manage my own funds and gotten a minuscule 2% yield. Now, however, I expect to see Wiemar Republic-like hyperinflation before I die. All of my retirement planning will have been for naught because politicians can’t stop spending tax receipts. Socialism in the USA has destroyed self reliance. Responsibility for one’s self should never have gone out of style. - EruditeMan, Social Security Cuts Coming Soon?,, February 21, 2011

Every payday the U.S. government mandates that employees and employers pay FICA taxes for Social Security and Medicare on the first $106,800 of annual wages. The employee and employer 'contributions' where 7.65% each or 15.3% total up until January 1, 2011, when the feds lowered the employee portion by 2%. This 15.3%, temporarily lowered to 13.3% for 2011, is money that employees and employers cannot contribute toward private retirement funds. And now the government tells us the Social Security is going bankrupt and we'll have to work until 70 before when can collect our benefits, while government employees can retire after 30 years, regardless of age, with generous pensions paid for by the taxpayers.

Social Security is Not an 'Entitlement' Program

Social Security is an investor funded program that has also been used to fund the government, it is NOT an entitlement program nor was it intended to be any form of welfare. The “entitlement” the government speaks of would be more aptly applied to them; they feeling they are entitled to avail themselves of our investments and use that money for whatever they choose to.
By Marti Oakley, The PPJ Gazette
February 17, 2011

A long coveted cut to Social Security and Medicare is going to happen. This will occur for reasons none of the politicians in the District of Criminals will ever speak about publicly. There is far more at stake here than what the District terms an “unfunded liability”. When you hear those in the District speak about this liability, you need to understand what they are really saying. This is an intra-governmental debt, meaning; a debt accrued within the government. It is a liability to the federal government because it is owed to “you” and they have no way of paying it back without taxing you more heavily. You are the “full faith and credit” of the United States corporation. That means government runs up the bills and we pay it.

The federal government now includes Social Security in its debt portfolio, not because the program is insolvent or ever was, and not because the Federal government has to fund it in any sense (SS is funded by your investments), but because the Federal government has stolen so much money from the fund, then sold special treasury securities on those stolen funds to countries like China to finance the massive debt accruing across the board. Since there is no chance the national debt can ever be repaid, the Fed is now in the position of finagling the discharge of internal debt from the books. Look at it as a form of back door bankruptcy.

The federal government DOES NOT fund Social Security! Social Security funds the federal government.

Since the Johnson Administration of the 60’s, the S.S. fund has been plundered and the surplus from the fund used to finance wars and the daily operations of the federal government. This came as a result of Johnson declaring that these surplus funds would be added to the general fund. Once there, the funds could be used for anything and everything.

As only one example: The Bush2 Administration had to cover the loss of revenues from the welfare tax cuts to the upper 3%. It was imperative that the administration be able to cover up the loss by showing a presumed increase in revenues that was supposed to have resulted from this preferential treatment of the uber wealthy. Surplus funds were stripped from SS, along with any unused funding from any other program, then added to the general revenue column as though these increases were generated as an actual result of the welfare tax cuts. These stolen funds with their new designation as “revenue” were then used as proof that these welfare tax cuts were beneficial. It's all a lie, and one the middle and working classes are about to pay the bill on.

Every administration has, without exception used the same tactics to hide preferential treatment of their buddies; to cover up expenditures for things most of us would find highly objectionable.

Most of the American public is totally clueless as to the deceptive accounting practices being used to fool them, and most still have no idea that the budget presented to the public is the simplified budget and only includes carefully presented revenues and expenses meant to portray a specific picture of the nations financial dealings. And many more of us are totally unaware that there is another budget referred to as the “unified budget” which shows all revenues from every source and every expense of any kind and a budget which, if we were to view it and understand the true implications, would most likely scare the beetlejuice out of most of us.

Note** Even the unified budget does not itemize, contain or otherwise acknowledge the funds diverted to “black ops”…no one can know that for some reason. Black ops are the clandestine operations performed by various organizations within the government and usually the CIA and are said to cost the country billions each year.

The stolen SS funds are now approaching 3 trillion. That is 3 trillion dollars of FICA taxes gleaned from generations of workers for a specific purpose that the federal government stole and then sold special treasury notes on. This is a debt owed by the federal government (USA Corp) to the investors (all you workers) that they never had any intention of paying back and is why it is referred to as an “unfunded liability”. It is a massive cash liability for a debt owed to generations of working Americans. As the amount stolen from the investments of workers grows so does the unfunded liability incurred.

At this point, one or more things must happen to protect the thieves.

In what can only be described as a another case of nationalizing the losses and privatizing the profits, we have the District career criminals calling for raising the age of retirement as one option to curtail the number of people able to access their investments in Social Security. This means fewer people leaving the job market and conversely, fewer jobs available to those entering the job market. A really crappy idea considering the millions out of work now and only one job available for every five applicants.

Another option proffered is cutting the amount of benefits. This one is really sneaky! You are supposed to think that by cutting benefits this will somehow offset any future shortfalls in Social Security. Here’s what it really does: It increases the amount of SS surpluses accrued because it lowers the amount being paid out of the fund and increases the funds available to the ongoing theft of your investment. While millions are out of work and not investing in Social Security, this scam will reduce payouts while maintaining virtually the same level of surplus the Federal government is going to steal.

The favorite of course is to collapse Social Security altogether.
“Therefore, Obama’s commission may recommend a variety of tactics to strip the program: instituting benefit cuts, increasing the age in which benefits are received, and introducing a limited option for personal accounts. Also possible is the implementation of a tiny, ineffectual tax on the rich to give the illusion that everybody is making sacrifices.”
I am always amazed at the hyperventilating of those who scream “It’s a ponzi scheme!”. I have news for you; so is the stock market and so are your insurance policies. You invest in each of these with full expectation of reaping more than you sowed. In each of these situations, a system of perpetual funding is devised with a promise of future profitable expectations by you. The difference is this: Social Security is not operated with the intent to profit, but the insurance company and stock market is.

Social Security is NOT an unfunded liability. Social Security is very well funded by American workers. The federal government is the unfunded liability but covers this liability by stealing the retirement investments of workers. Yet there are those out there who are now trying to reframe this issue by claiming that there never was a Social Security trust fund, and, that FICA taxes collected to cover your investment in that fund aren’t really investment taxes...this is just an additional tax levied on you for some vague reason and therefore its quite alright for the federal government to seize these funds for other purposes.

Many people believe that Supplemental Security Income (SSI) is the same as Social Security. Supplemental Security Income (SSI) is a Federal income supplement program funded by general tax revenues (not Social Security taxes). The program is administered by the Social Security administration so that the costs of administration are shifted to SS, but the funding for claims is not from your investment in Social Security.

Those who are beating the drums for ending social security as they allow themselves to be consumed by political rhetoric that bears little resemblance to the truth, need to do some real research on the actual benefits of this program as opposed to allowing those doing the talking to paint this program as an “entitlement” and some form of welfare that was unearned.

Social Security is an investor funded program that has also been used to fund the government; it is NOT an entitlement program nor was it intended to be any form of welfare. The “entitlement” the government speaks of would be more aptly applied to them; they feeling they are entitled to avail themselves of our investments and use that money for whatever they choose to. This amounts to a second and third round of taxes as many of our payees are forced to pay taxes on their benefits each year after being taxed over their working lifetime to fund their investment. The third tax is exemplified in the theft of surplus funds the government can’t pay back.

Extra demands are put on Social Security as illegal aliens are granted access to the fund without actually having contributed to it to any degree. An illegal alien from Mexico, can come here, work under an admitted assumed name, work as little as three quarters and return to Mexico and make a claim against Social Security. The summary of the GAO report contained this statement:

GAO report
“Under the Social Security Act, all earnings from employment in the United States count towards earning social security benefits, regardless of the lawful presence of the worker, his or her citizenship status, or country of residence. Immigrants [both legal and otherwise] become entitled to benefits from unauthorized work if they can prove that the earnings and related contributions belong to them. However, they cannot collect such benefits unless [or until] they are either legally present in the United States [hence the Administration's Guest Worker Program], or living in a country where SSA is authorized to pay them their benefits. [Hence an SSA office in Mexico City] Mexico is such a country.”
The upshot of all of this is: Social Security is not only paying for wars, government expenses, and other non-related purposes, it is also covering the loss of revenues resulting from the welfare tax rates given to the uber wealthy and to fund illegal immigration, an activity that is bankrupting communities across the country. At the same time it is still producing a surplus above and beyond all claims of any kind made against it, although if a real effort isn’t made soon to create and secure jobs here in the US, many things along with Social Security are going to disappear.

And many of you think this would be just great as long as long as you are left untouched by it all, and many of you for some reason believe you will somehow be exempt; that your life will be unaltered or unaffected. I have news for you: No one will be spared.

Where Do Payroll Deductions for Social Security Go?

In theory, they're held in trust by the government. But it's not as if your money sits there in the Social Security trust fund waiting for you to retire. After current beneficiaries are paid, surplus dollars are used to buy bonds from the U.S. Treasury. So the trust has the bonds, but the money is now in the Treasury, where Congress can use it for any purpose.
"The Social Security trust fund is ... a piggybank holding paper IOUs from Congress," Stumpf says.
This is the first year that Social Security has had to cash in one of those bonds in order to meet its payroll, says Stumpf.
"From this point forward, an increasing number of those bonds will have to be pulled out every year -- and Congress is going to have to find a way to come up with all that money," he says.

Social Security Wants Its Money Back

From the start of the program in 1936 till 2005, an estimated $8.9 trillion have been paid out as social security benefits. In the same period, the program has received $10.7 trillion in income. - Interesting Facts About Social Security Numbers, Money, Matter and More Musings, March 5, 2007
March 17, 2010

Everyone knew this day had to come eventually.

The government, way back in the nineties, needed to balance its budget, and seeing that raising taxes is a political move akin to volunteering to drink bleach, decided that the best way to get access to quick cash was to incorporate Social Security's funds into the general budget. The government, for its part, took this new obligation seriously and, as such, issued a huge pile of bonds to denote that it did indeed owe Social Security a whole potload of cash. About two trillion dollars worth, in fact.

This was generally taken as okay because Social Security was taking in more cash through tax receipts than it was putting out via payments, but now, that ratio is changing. So Social Security's got to cash in some of those IOUs that the Feds left behind. The problem is that the government's actually more broke now than it was then.

What does that mean, you wonder? It means about what we were figuring it means--Social Security's in wicked bad shape, because it's counting on IOUs issued by an organization that's already maxed out virtually every credit card in its wallet. But Social Security's response to this is what will be interesting--hiked minimum ages to enter? Reduced payouts to those already in the system? How will they react?

The key thing here is, there's a cash shortage. How will they get around that? Chances are this is going to mean pain for somebody--but just who gets the sharp end remains to be seen.

Social Security Handling a Rush of Early Retirees

The Associated Press
August 9, 2010

Paul Skidmore’s office is shuttered, his job gone, his 18-month job search fruitless and his unemployment benefits exhausted. So at 63, he plans to file this week for Social Security benefits, three years earlier than planned.
“All I want to do is work,” said Skidmore, of Finksburg, Md., who was an insurance claims adjuster for 37 years before his company downsized and closed his office last year. “And nobody will hire me.”
It is one of the most striking fallouts from the bad economy: Social Security is facing a rare shortfall this year as a wave of people like Skidmore opt to collect payments before their full retirement age. Adding to the strain on the trust are reduced tax collections sapped by the country’s historic unemployment — still at 9.5 percent.

More people filed for Social Security in 2009 — 2.74 million — than any year in history, and there was a marked increase in the number receiving reduced benefits because they filed ahead of their full retirement age. The increase came as the full Social Security retirement age rose last year from 65 to 66.

Nearly 72 percent of men who filed opted for early benefits in 2009, up from 58 percent the previous year. More women also filed — 74.7 percent in 2009 compared with 64.2 percent the previous year.

Jason Fichtner, an associate commissioner at the Social Security Administration, said the weak economy has led more people who lost their jobs to retire early. However, it also has forced some people hard-hit by the recession and in need of a bigger paycheck to push back retirement and stay in the work force longer.
“But we’re seeing more people taking early benefits than staying in the workforce longer,” Fichtner said.
Like Skidmore, 63-year-old Jan Gissel of Tustin, Calif., also was forced into retirement early. She turned to unemployment benefits when her technical support business failed and filed for Social Security last September. Together, the checks are keeping her afloat.
“I knew I had to have an income from somewhere, and my business wasn’t giving it to me,” she said. “I just went online and, boom, three weeks later I had the check.”
Gissel wants to continue working but still hasn’t found a job. Although she didn’t expect to be cashing Social Security checks so soon, she’s grateful for the support it has provided.
“I needed it way earlier than I thought,” she said.
In the annual report of the Social Security program released Thursday, the trustees said that pension and disability payments will exceed revenues for this year and 2011, reflecting the deep recession.

The report forecast that the program would return to the black in 2012 through 2014, but that benefit payments will again exceed tax collections in 2015. For every year after 2015, the report projects that Social Security will be paying out more than it receives in tax collections as 78 million baby boomers begin retiring.

The trustees did not focus on the growth of early retirees in their report, as they don’t expect the early retirees to significantly drain funds over the long-term. Early opt-ins receive smaller monthly checks so that they aren’t projected to receive any more money over a lifetime than they would if they had waited to collect Social Security until their full retirement age.

People entitled to full benefits at 66 would receive 75 percent of their check if they began collecting four years early. Conversely, if they waited until they turned 70 they would earn 32 percent more.

How Much Could You Have If Social Security Was YOUR Money?

The amount subject to Social Security tax has had an average annual increase of 5.85% through 2007, while the maximum tax itself has increased 6.58% over the same time period. If you were 22 when you started working 30 years ago [which would now make you 52 years old] and you continued to work and pay the maximum amount into Social Security, how much could you have by the time you were 62? For 2008, the maximum Social Security tax is $6,324. If we increase that amount by the average annual increase of 6.58% for the following 9 years, you could have over $789,000 by age 62 [the forward-looking numbers are adjusted for inflation and assume a conservative 8% ROR minus a 3% inflation rate]. A 4% withdrawal rate would give you a first-year income of over $31,584 or $2,632 per month [I left out the employer’s portion of the Social Security tax, which is equal to the amount the employee pays].

Originally Published on May 16, 2008

Imagine you were 22 when you started working back in 1978. Do you know how much money you would have if, instead of paying in the maximum Social Security tax over the last 30 years, you were allowed to keep it? It’s probably more than you think. Take a look at the chart below, which shows a 30-year history of Social Security:

30-Year History or Social Security

If you could have kept the maximum amount withheld for Social Security over the last 30 years and invested it at a 10% ROR it would have grown to over $418,000. Of course I used straight-line appreciation, so the actual amount would be quite different but this will work for comparison’s sake.

According to my calculations, the amount subject to Social Security tax has had an average annual increase of 5.85% through 2007, while the maximum tax itself has increased 6.58% over the same time period. The difference between the two numbers is due to the increase in the tax rate over the years.

30-Year History or Social Security

As I stated in the first sentence of this post, you were 22 when you started working 30 years ago, which would now make you 52 years old. If you continued to work and paid in the maximum amount into Social Security, how much could you have by the time you were 62? For 2008, the maximum Social Security tax is $6,324. If we increase that amount by the average annual increase of 6.58% for the following 9 years, it would look something like this:

30-Year History or Social Security

The forward-looking numbers are adjusted for inflation and assume a more conservative 8% ROR minus a 3% inflation rate. So, IF the money were yours to do with as you please, you could have over $789,000 by age 62. A 4% withdrawal rate would give you a first-year income of over $31,584 or $2,632 per month. I haven’t done enough research to know how that number would compare with a Social Security payout (that’s the topic of a future post).

An Observation

I think the past 30 years of Social Security history is NOTHING compared to what the future will be. I can only see more and more income being subject to Social Security tax because of the fact that we have the Baby Boomer generation retiring and fewer numbers of current workers to support them. So, the amount that my generation and the following generations will have to pay into the system will most likely be greater than the benefits received at retirement.

That’s why I get so irritated everytime I see how much money is being sucked out of my paycheck to go into the blackhole we call Social Security. I know there’s not a snowball’s chance in hell that my wife and I will see the bulk of that money.

It’s really sad when you think about it. The program could have been so much better had we used to provide a safety net rather than giving it to everyone. It should have been based on need. Instead, everyone got benefits whether they needed them or not. Politicians didn’t care because there was an ample supply of Baby Boomers to fund current retirees’ needs.

Eventually our politicians are going to have to make some tough decisions.

NOTE: I left out the employer’s portion of the Social Security tax, which is equal to the amount the employee pays. When the employer’s portion is factored in, it really makes Social Security security look bad.

No comments:

Post a Comment

Go to The Lamb Slain Home Page