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Job losses, early retirements hurt Social Security

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September 28, 2009 – Comments (22)

Here's a shocker, Social Security is a mess. The government now estimates that it will pay out more than it is collecting in taxes over the next two years.  This is the first time that this has happened since the 1980s. Specifically, the program will run a $10 billion deficit in 2010 and $9 billion in 2011. Tack these on to the already massive federal deficit.

The recession is to blame for this large shortfall.  Many people are being forced into retirement because they were laid off and cannot find new jobs. Applications for retirement benefits have risen 23% this year.  Mysteriously the recession has caused more people to become disabled as well (cough fraud, cough).  Disability claims are up 20% this year.  This is just the beginning my friends, the number of Baby Boomers that retire will continue to rise. 

Social Security is projected to begin generating a surplus again that the government can return to wasting rather than actually saving for future retirees again in 2012, but I'll believe that when I see it.

I hate Social Security.  Let's face it, the system is broken.  The government should call it what it is income tax.  At this point the likelihood of me getting all of my promised benefits is so low that it really amounts to nothing more than an additional tax on top of the income tax that I already pay.  Heck, the government already spends every dime of it as soon as it takes it out of my paycheck, despite the fact that it pretends that it has some sort of reserve fund that it use to pay future benefits. 

If anyone in the government had any guts they would pull the plug on the program now and let me save or spend my hard-earned money myself.   I realize that they couldn't just pull the rug out from the millions of people that are currently receiving benefits through the program, but they could at least phase it out.  Heck, the extra money that workers would get in their paychecks would be economically simulative right away.

This is nothing new, I've been blasting Social Security for years, it just get me fired up when I see any article about its problems.

Job losses, early retirements hurt Social Security

Deej

22 Comments – Post Your Own

#1) On September 28, 2009 at 6:49 AM, TMFDeej (99.24) wrote:

This is the point when Alsy chimes in and blabs for the millionth time about his usual carp.  Stay away from here and save your comments for your billion blog posts that you make twenty-four hours per day, seven days a week.  Anyone who wants to read them can head on over there.

Deej

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#2) On September 28, 2009 at 7:41 AM, starbucks4ever (97.89) wrote:

What's so strange about recession causing people to become disabled? Many folks who were technically able to file chose not to as long as they had jobs. Now that jobs are gone they are just choosing to remind the SSA about their very real health problems. There are government programs where fraud is rampant (e.g. Medicare) but Social Security is just not one of them.

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#3) On September 28, 2009 at 8:28 AM, devoish (96.28) wrote:

Social Security is projected to begin generating a surplus again that the government can return to wasting rather than actually saving for future retirees again in 2012, but I'll believe that when I see it.

I would just like to point out that something like 70% of households do not have enough money saved to pay the bills for two months.

My 401k gets a higher percentage of my income than my SSI takes, and recently, SSI is kicking my 401k's butt.

The success of my 401k's investments depend upon someone else having enough money to buy my investments for more than Idid.

The success of some of my investments depends upon lenders not funding my competition until they drive my solvent companies out of business.

When I was a young man I was told that SSI's problems could be solved with a 1/2% increase to my payroll taxes. Nothing was done.

When I was a thirty year old it was 1%.

Today it is 2.2%. I guess the longer you wait the more time you lose.

Of course the same thinkers who argued against raising SSI in 1985 are the same people who promised lowering Federal tax rates would increase Gov't tax revenues.

Since the Federal tax rate was lowered, (alot) surely the SSI investments in Federal "special issue" securities must be safe by now.

If not, then perhaps a tax policy approach that does not concentrate wealth into very few hands should be taken.

Unless you think the promise of "trickle down" is going to arrive in time. (I should point out that I believe "trickle down" doesn't work because the natural flow of money is to "trickle up").

Especially since at least some of those 70% with no savings are showing up to do their jobs every day.

Oh and just to be agreeable "Gov't is the problem".

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#4) On September 28, 2009 at 8:40 AM, Mary953 (79.30) wrote:

Deej,

I understand your pain - really!  I was absolutely positive that there would be no Social Security by the time I got to this point - none.  And in fact, that lovely myth of full benefits at 65 turned into 66 for us Boomers (sorry, make that phasing to 67).

Now that it is within arm's reach for most of my friends, do you suppose we could hold off on 'pulling the rug out' for just a bit longer?  After all, it was just as broken - and broke - 40 years ago.  (Of course, war is expensive and it was Vietnam at that point)

But by all means, go ahead and call it a tax and add in Medicare/caid.  If you earned it and the government took it, that's a tax.

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#5) On September 28, 2009 at 8:47 AM, devoish (96.28) wrote:

Agreed, call it a tax. I always did. SSI taxes. Medicare Taxes.

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#6) On September 28, 2009 at 8:51 AM, XtremeNeoCon (< 20) wrote:

There are government programs where fraud is rampant (e.g. Medicare) but Social Security is just not one of them.

You're kidding right? People by the thousands end up on the SS disability dole for a variety of reasons that are NOT disabled. Some qualify simply because they're fat.Look at how many commercials there are on TV of law firms coaxing people to file lawsuits to GET ON SS. Its a racket, pure and simple, just like Medicare and Medicaid.  Narrator: "Call Binder and Binder - Nobody intimidates our clients, NOBODY!" Guy in the goofy hat: "We'll worry about the government; you have enough to worry about"

My wife and I are RVers. For the record, I have a full time job and own a small business. (I paid over $40,000 in tax last year) My job allows me 7 consecutive days off every month + vacation time. We stay in RV parks all around the country 6-8 times a year. You wouldn't believe how many RVers we meet that are "Disabled" Guys fishing in hip waders in fast water, kayaking, plitting fire wood, dancing... We see it all the time.

Go to Wal-Mart and watch who parks in the Disabled parking spots. Fat People! I know almost everyone in the town where I live. I know most of the people who park in the disabled parking areas. Most, (not all) refuse to work because they have found a way around it. They leach from the rest of us. SS has THOUSANDS of such leaches. My older brother is one of them. Perfectly healthy, and can teach you every possible angle to recieving gov benefits to keep from working. He is an expert at 1 thing -- Being a LEACH!

Bottom line: SS doesn't do what it was supposed to do. The whole program has turned into just another Goverment Scam.

Oh yea, nothing against fat people, I'm carrying a little extra myself. I just don't see it as a disability. Why should hard working tax PAYERS fund lazy fat losers who don't feel like working?

 

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#7) On September 28, 2009 at 9:20 AM, dickseacup (66.79) wrote:

Why should hard working tax PAYERS fund lazy fat losers who don't feel like working?

From each according to his ability, to each according to his need. Clearly, people like your older brother have a greater need to receive than to give. Consider, too, that people like your older brother are giving the rest of us the opportunity to derive meaning from our work. You should be proud that your hard work enables him to give you the opportunity to support him in the fashion his needs dictate.

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#8) On September 28, 2009 at 9:41 AM, drgroup (69.07) wrote:

I realy can not understand how SS can be allowed to fail. This program provides aid directley to those who meet the eligibity requirements. The recipients are, in most cases, the hard working stiffs of this country who have paid into the system as long as they can remember. If hundreds of billions of dollars can be thrown at the banks and auto industry, which are littered with corruption and mismanagentment, then we should not hesitate to give a few billion more to help people exist. This money is theirs. All the treasury has to do is print the cash like they do for the other bailouts.

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#9) On September 28, 2009 at 9:47 AM, alstry (36.32) wrote:

Oh my Deej,

There is a LOT NEW!!!!!!

There are now 52% of Americans age 16-24(looking for jobs not in school) unemployed.  6x the number of workers looking for jobs as jobs available.

What you fail to apprciate is money is evaporating across America.  It is a mathematical certainty based on current Zombulation policies and the effect of Concentric Contraction.

Each time a person is fired, it is one less person paying into Social Security.  Each time a self employed person loses his or her income, the effect is the same...wage loss and furloughs also has an impact.

Based on current trends, we should reach 30%-50% general unemployment in the relatively near future as more and more get fired as revenues continue to evaporate at unprecedented rates.

When government is forced to cut back on health care spending, you are going to see contraction like you have never seen before.....

Again my little friend, this difference between you and I is I am trained to not let emotion get in the way of the facts, you on the other hand live your life by emotion......it is why within the next six months.....your perspective to the future will likely mimick mine.

MOAP is here...The FDIC is broke, The FHA is broke, The Pension Guaranty is broke, Social Security is cash flow negative years before plan....and the interesting part is we are still at the beginning of the cycle.

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#10) On September 28, 2009 at 10:03 AM, bigcat1969 (89.06) wrote:

You are right is it a tax and it will always be a tax.  It would be political suicide to cut it off, so no one will.  There is already a lot of grumbling about not getting cost of living increases in a year that saw deflation and possible cuts to medicare because of the new health care program.  If someone actually made cuts to SS they and the party they represent would be out of power in 2.5 heartbeats.  Our political system is based on giving people money and that cannot be reversed.

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#11) On September 28, 2009 at 10:36 AM, TMFDeej (99.24) wrote:

Blah, blah, blah.  I knew that you couldn't resist making an unwanted comment.

No, my "little friend", the difference between you and I is that you're an annoying, self-absorbed stalker who has seen his score in this game (and you seem to forget that is exactly what this is...a game about how to invest) collapse from over 7,000 to near 2,000 in the span of only a few months while I actually pick stocks and try to make constructive posts about investing.

Deej

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#12) On September 28, 2009 at 10:55 AM, bigcat1969 (89.06) wrote:

I resent that! ;)

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#13) On September 28, 2009 at 11:13 AM, AvianFlu (21.31) wrote:

post #7: Thanks for posting...that was hilarious!

As for myself, I do not worry about SS. I am confident our trusted representatives have been squirreling away the money they remove from my paychecks. I am sure they are earning a respectable rate of interest on the money, so there will be a nice nest egg waiting for me when I retire. If not, I'm sure their high speed Heidelberg printing presses will come to the rescue with some new clean and crisp federal reserve notes. What a wonderful thing to own printing presses... I notice that a certain printing company refused to print any more bills for Zimbabwae. The country should have bought their own printing presses like us...

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#14) On September 28, 2009 at 12:35 PM, davejh23 (< 20) wrote:

I agree 100%...phase it out.  Social Security wasn't designed to support retirees for 20 years of retirement, and it should have been phased out decades ago.  It was designed as a forced retirement plan...a job creation plan...and if maintained in its original form the current eligibility age would be somewhere around 80...above the average life expectancy.  If the gov't can't maintain a SS fund where the taxes are invested for future payouts, they have no business promising benefits to any retirees...tell the boomers the truth..."We screwed you...you should have been better savers...hopefully you have kids that are willing to care for you."

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#15) On September 28, 2009 at 12:45 PM, russiangambit (29.40) wrote:

> I agree 100%...phase it out.  Social Security wasn't designed to support retirees for 20 years of retirement, and it should have been phased out decades ago.

You know, Chinese save quite a bit, and the reason most ofteb brought up is the lack of social secuirty nets. Now the rest of the world is pushing China to increase domestic consumption. And the way to do that is to make people feel more secure about their future so that they spend more in the present.

Do you think if SSN is eliminated (which is completely not-feasible politically) americans will save more? That will be bad for the stock market, but it will be much healthier long-term for the society as a whole. And it will be exactly the opposite of what we are advising Chinese to do. Hmmm.

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#16) On September 28, 2009 at 3:32 PM, vriguy (79.74) wrote:

You cannot just end it. People have paid into it and they want something back. My preferred solution is to offer everyone who paid in a 5% return of the money they put in - collect the money as a lump sum or as an annuity from the Treasury when you quit working. 5% is probably better than the average person would have got had they invested the money themselves.  As a taxpayer, I know this will be a lot less money than the Trust fund would have to shell out otherwise.

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#17) On September 28, 2009 at 4:03 PM, XtremeNeoCon (< 20) wrote:

There's no way the gov could (or would) just end it.

One thing we could to do to TRY and claw our way back to where we started is by booting lazy bums like my older brother OFF the gov nipple. If your too fat to work, fast a while -- till you CAN work.

Also: Law firms like Binder and Binder need to be held accountable for promoting fraud, but that'll never happen either. Conspiracy to commit fraud USED TO BE a Crime. Of course, so did treason...

 

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#18) On September 28, 2009 at 4:31 PM, dickseacup (66.79) wrote:

My preferred solution is to offer everyone who paid in a 5% return of the money they put in

Hrmm. Generally speaking, I think I would rather have a 5% return on my money instead of a 5% return of my money. ;)

I've been working for thirty years (from the time I first had payroll taxes withheld). In that time I have done my own saving and planning. I have no hope that the government will ever give me back a dime, let alone a return on, the money they have stolen from me over the years to perpetuate the Social Security pyramid scheme.

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#19) On September 28, 2009 at 4:49 PM, starbucks4ever (97.89) wrote:

Phasing out, schmazing out... We can eliminate the program, but that wouldn't eliminate the need for the product itself. So you will still wind up paying the same amount of "taxes", this time to a private life insurance company. Although, when I said "the same amount", that might be a tad too optimistic. Any comparison between life insurance industry and the Evil Big Government will clearly be in the favor of the latter.

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#20) On September 28, 2009 at 5:04 PM, Mary953 (79.30) wrote:

I'll take the refund plus 5% (probably better than anything else I am likely to get back from the government).  Now would be good so I can invest it and actually retire on it.  And Deej, if you just hadn't left comment 11, I could have resisted the impulse to leave my own comment on your "little friend's" latest blog.  (sorry, A, once in a while I just can't resist)

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#21) On September 28, 2009 at 6:13 PM, AbstractMotion (53.32) wrote:

Personally I wish they would phase it out, despite what devoish seems to think social security pays it's bills by constantly collecting more money from the people paying into it now then it did for the people paying into it before.  It has absolutely no mechanism to actually "save" money at the moment and the politicians have been spending the surplus for over 20 years in plain sight.  All the while the scope and benefits of the program have been voted higher and higher, a trend which is likely to continue.  By the time the boomers retired the bulk of the voters in this country will be over age 50 and worried about self preservation, but a surprising of them have abysmal (if any) savings.  

 Just about anyone eligible to receive payments will draw more money from it then they ever put in to it and the bill will be passed on to the next generation.  There's simply no money to take back or pay out, every cent of it will have to be borrowed or taxed out of the currently employed.  So whatever your views on the subject, it's essentially too late, your children or grand children will be paying for whatever comes out of it.  Politicians probably won't touch it either as doing so would be political suicide (AARP is the largest lobby in the country ladies and gentlemen).  Age polarization is here to stay.

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#22) On September 28, 2009 at 8:37 PM, awallejr (77.67) wrote:

"At this point the likelihood of me getting all of my promised benefits is so low that it really amounts to nothing more than an additional tax on top of the income tax that I already pay.

 Actually increased longevity might prove otherwise.

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