Archive for the ‘Social Security’ Category

Don’t blame me !

June 6, 2018

This year: Social Security’s first deficit.
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Let me get this straight …

On Monday, I announce my retirement.

On Tuesday, the Social Security Trust Fund – the lockbox that doesn’t have a lock – announces that Social Security will run a deficit this year… 3 years ahead of last year’s future projection.

According to the WSJ:

The Social Security program’s costs will exceed its income this year for the first time since 1982, forcing the program to dip into its nearly $3 trillion trust fund to cover benefits.

That is, outflows (payments to 61.5 million people like me) – will exceed inflows (taxes collected from current workers and their employers … and, interest earned on the trust’s assets).

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I know there may be a temptation to accuse me of being the straw that broke the camel’s back, but ….

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Gov’t @ Work: A lesson in cost-benefit analysis.

July 10, 2015

The Inspector General for the Social Security Administration released a report on the SSA’s track record for detecting and collecting overpayments – amounts paid to people in excess of what they’re entitled to receive.

Here’s the good news …

“Generally, SSA attempts to collect overpayments regardless of the amount.”

 

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Here’s the bad news …

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$$$: The Federal budget on the head of a pin …

January 15, 2013

Nice recap courtesy of JP Morgan Wealth Management …

Easy facts to remember:

  • Feds take in about $2.5 trillion in taxes
  • Deficit is just over $1.1 trillion
  • Spending is over $3.6 trillion

Note that Social Security & Medicare spending is about twice what’s taken in via “Social Insurance” … aka. “payroll taxes”.

Also note how big that dashed Borrowing box is.

We don’t have a spending problem.

Yeah, right.

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Chart Tip: Being picky, but they should have put Social Insurance at the bottom of the sources’ stack so that it lined up with Social Security and Medicare.

Every list should have a logical order … and that order is rarely the order that you thought of things.

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Ouch: America’s disability epidemic.

December 31, 2012

According to the Social Security Administration, the number of (former) workers collecting disability benefits hit a record 8,827,795 in December.

I’ll stipulate that the vast majority of the 8.8 million are honest folks who really can’t work because they’re disabled … and, I realize that an aging work force has a higher propensity for disablement.

But c’mon, man … this is starting to smell pretty fishy..

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The Feds are dishing out over $135 billion annually in disability payments.

How much of the $135 billion do you imagine is going to the folks that Dateline keeps exposing as frauds?

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Here are some more interesting Social Security factoids …

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Background: Here’s a way to raise tax revenues & create jobs.

December 20, 2012

In the fiscal cliff talks, I think that the Feds – both Obama & Congress – are demonstrating “no brain” thinking – working ineffectively on the wrong stuff.

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Specifically, in the fiscal cliff talks, practically all of the focus has been on jacking up the marginal tax rates for millionaires and billionaires making more than $250,000
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Payroll taxes – for Social Security & Medicare – have been largely pushed off-stage.

That’s because both Dems & the GOP seem to agree that the 2% payroll “tax holiday” should be allowed to expire.

That may be true, but I think the payroll tax structure may be the key to hitting the seemingly conflicting objectives of raising tax revenues and creating jobs.

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Let’s lay out some basics:

What happens to whom if the current payroll tax holiday expires?

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Back to the Clinton years? … Dems: Be careful what you wish for.

September 27, 2012

Lots of articles have been written about how the the bottom 50% pays no Federal income taxes and the very top tiers pay vast shares.

The usual cry from the Dems: what about payroll taxes?

Then, they holler: go back to the rates in effect during the glorious Clinton years.

Well, the Independent Review pulled together Federal tax burdens back to 1980 … including payroll taxes

The key findings:

Since 1980, the bottom 40%’s share of total Federal taxes has almost halved … from about 9% to to 5%.

The top 10%’s share has grown about 15% … from 40% to almost 55%.

Most of the top 10%’s share  increase has landed where?

You guessed it … among the evil 1-percenters.

Geez.

If we could only get the wealthy to pay their fair share, we’d be out of this fiscal mess, right?

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Debit Social Security, credit healthcare costs …

June 8, 2012

According to Fidelity, a 65-year-old couple retiring this year on a $75,000 annual household income, will be getting  about $29,970 in annual Social Security payments.

With an average life expectancy of about 80 years, that grosses up to about $450,000 in lifetime Social Security benefits.

Not bad,

Except …

Many retirees rely on Social Security benefits as their primary source of income, and …

Fidelity estimates that a 65-year-old couple retiring this year is will need $240,000 to cover medical expenses throughout retirement.

So, for most retiring couples, the majority of Social Security payments could go toward health care costs.

Bottom line: Start saving …

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Tipping point: half of households getting gov’t checks … half paying income taxes.

May 29, 2012

Frequently reported is the stat that only about half of the adults in the U.S. pay any Federal income taxes.

That’s the “revenue” side”.

Now, the WSJ reports that according to recent Census Bureau data, nearly half of the people in the U.S. live in a household that receives at least one government benefit, and many likely received more than one.

The 49.1% of the population in a household that gets benefits is up from 30% in the early 1980s and 44.4% as recently as the third quarter of 2008.

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First, there are the senior citizens who anted into the pot during their working years:

  • 16% of the population lives in a household where at least one member receives Social Security
  • 15% receive or live with someone who gets Medicare.

Then, there are the poor:

  • 26% had someone enrolled in Medicaid
  • 15% of people lived in a household that received food stamps,
  • 2% had a member receiving unemployment benefits.

Most interesting to me is the low percentage getting unemployment benefits … only about 25% of the unemployed.

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The USPS is needed .. to deliver all of those gov’t checks.

October 7, 2011

Punch line: According to the  WSJ, nearly half of all U.S. households now receive some type of government benefit.

  • Over 1/3 of Americans lived in a household that received benefits such as food stamps, subsidized housing, cash welfare or Medicaid.
  • Almost 15% lived in homes where someone was on Medicare or Social Security, or both.

Reminder: Some 46.4% of households will pay no federal income tax this year, according to the nonpartisan Tax Policy Center. That’s up from 39.9% in 2007

My bet: All of these households think spending cuts are a bad idea …
and tax hikes on other folks are strokes of brilliance.

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Social Security is going bust … so, cut he amount of money coming in … huh?

December 13, 2010

I’m surprised that it took over a week for this obvious uh-oh to get publicized …

The Deficit Reduction Commission concluded that Social Security (and Medicare) were going bankrupt and needed to be modified to get the Fed debt down.  Their idea: start retirement later.

Within hours of the published recommendation, the crack Obama and GOP negotiators agreed to cut payroll taxes to stimulate the economy.  In case they don’t know it, “payroll taxes” are the contributions that are supposed to fund SS and MediCare.

With a time delay, some folks are figuring out that putting less money into a program that’s going bankrupt means that it’ll go bankrupt faster.

President Barack Obama’s plan to cut payroll taxes by 1/3 for a year would provide big savings for many workers but …  could jeopardize the retirement program’s finances.

Social Security is funded by a 6.2 percent payroll tax on the first $106,800 earned by a worker. The tax is matched by employers. The package negotiated by Obama would reduce the tax paid by workers to 4.2 percent for 2011. Employer rates would stay unchanged.

Obama administration officials say that a payroll tax cut is an efficient way to stimulate the economy by immediately increasing take home pay for about 155 million workers.

The government would borrow about $112 billion to make Social Security whole.

Advocates and some lawmakers worry that relying on borrowed money to fund Social Security could eventually force it to compete with other federal programs for scarce dollars, leading to cuts.

Associated Press, Social Security advocates fear payroll tax cut, Dec 12, 2010
http://news.yahoo.com/s/ap/20101212/ap_on_bi_ge/us_payroll_tax_holiday

No kidding …

Uh-oh … Burn rate on Social Security and Medicare Programs accelerates.

May 13, 2009

Ken’s Take: It was widely report yesterday that updated projections show that the Social Security Trust Fund will run out by 2037, and that the Medicare Trust Fund will be insolvent by 2017. 

Note that the emphasis is on the recession’s lost jobs (fewer workers chipping in payroll taxes) and the need for heathcare reform (which I thought was going to increase the budget).

Also note that Bush tried to address these entitlements and was repulsed by Congress — which doesn’t want to tackle this “3rd rail” issue … and Obama’s “Make Work Pay” refundable tax credit is justified as a credit against payroll taxes which fund SS and Medicare.  Let’s see, if you’ve got a shortfall and you pay less in, wouldn’t you expect the shortfall to get bigger ?

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From ABC News:

The forecasts for Social Security and Medicare trust funds have worsened this past year under the weight of the recession … the Social Security trust fund will run out by 2037, four years earlier than last year’s report had predicted, while the Medicare hospital trust fund will be insolvent by 2017, two years earlier than projected last year.

Both entitlement programs are suffering due to rising unemployment,…  beginning in 2011, a “demographic tsunami”of nearly 80 million retiring baby boomers only exacerbates the problems.

Social Security Commissioner Michael Astrue … said now was not time to panic, describing the reports as “some disappointing but not unexpected news.”

“We should be neither casual nor hysterical about the revised insolvency dates,” Astrue said. “The Social Security system is sound and will weather this recession.”

Ken says: Sounds like DIck Fuld right before the Lehman collapse, doesn’t it?.

http://abcnews.go.com/Business/Politics/story?id=7571108&page=1

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Did the Social Security crisis just go away ?

February 4, 2009

A couple of years ago, the hot socio-economic topic was the projected insolvency of Social Security. 

Remember how Al Gore wanted a “lock box” to insulate FICA contributions from Congressional money grabbers?  Or, how Bush wanted to privatize Social Security so folks could earn higher returns?

Now, pundits (e.g. Robert Reich, Larry Lindsay) are calling for payroll tax holidays.

President Obama is bound and determined to give payroll tax rebates to low income folks who don’t pay income taxes.  That is, to reduce their Social Security contributions … by about $135 billion annually.

Does that mean that Social Security has miraculously found strong financial footing?

Hardly.

Social Security is a trust fund (currently over $2 trillion).  Workers make contributions to the trust and draw benefits from it when they retire or become disabled.  In concept, the contributed inflows and trust earnings (i.e. interest) are supposed to cover the benefit outflows. (Think Ponzi and Bernie Madoff … see excerpted article “Social Security: National Ponzi Scheme ” below)

Currently, about $785 billion in Social Security taxes are collected annually  from about 163 million workers and $585 billion in benefit checks are sent out  to 50 million Social Security recipients.

Well, according to the Social Security trustees, because of demographic shifts (i.e. more retirees, fewer workers), outflows will exceed inflows somewhere around 2020 — a little earlier if interest on the trust isn’t counted, a little later if it is.  And, they project that the trust fund will be completely exhausted by around 2040.

With t-bill rates now hovering slightly over zero, earnings on the Social Security trust must be minimal (and less than considered in the projections).

So, if the Feds cut contribution inflows to the trust by over $100 billion annually, won’t Social Security be in a world of hurt — sooner rather than later?

I haven’t heard any of Obama’s smart guys in the room talking about this part of the problem … and it’s a big part !

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Excerpted from IBD, “Social Security: National Ponzi Scheme”, Williams, February 02, 2009

Congress collects about $785 billion in Social Security taxes from about 163 million workers to send out $585 billion to 50 million Social Security recipients.

Social Security’s trustees tell us that the surplus goes into a $2.2 trillion trust fund to meet future obligations.

The problem is that whatever the difference between Social Security taxes taken in and benefits paid out, Congress spends it.

What the Treasury Department does is give the Social Security Trust Fund non-marketable “special issue government securities” that are simply bookkeeping entries that are IOUs.

According to Social Security trustee estimates, around 2016 the amount of Social Security benefits paid will exceed taxes collected.

That means one of two things, or both, must happen: Congress will raise taxes and/or slash promised Social Security benefits.

Each year the situation will get worse since the number of retirees is predicted to increase relative to the number in the work force paying taxes.

In 1940, there were 42 workers per retiree, in 1950 there were 16, today there are three and in 20 or 30 years there will be two or fewer workers per retiree.

Full article:
http://www.ibdeditorials.com/IBDArticles.aspx?id=318470763456742

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