Fund Your Utopia Without Me.™

06 August 2011

'Lies' About Social Security and Medicare Pandering Politicians Never Told You



M2RB:   Bob Dylan, live







I been double-crossed now for the very last time and now I'm finally free,
I kissed goodbye the howling beast on the borderline which separated you from me.
You'll never know the hurt I suffered nor the pain I rise above,
And I'll never know the same about you, your holiness or your kind of love,
And it makes me feel so sorry.

Idiot wind, blowing through the buttons of our coats,

Blowing through the letters that we wrote.
Idiot wind, blowing through the dust upon our shelves,
We're idiots, babe.
It's a wonder we can even feed ourselves.









'It is an axiom in the insurance business that insurance is not bought but sold. In 1935 Franklin Roosevelt sold Congress and Congress sold the U. S. the Social Security Act, the biggest, most comprehensive, most expensive mass insurance policy ever written. Since then its purchasers, the nation's taxpayers, have had occasion to read their policy carefully and, if they have detected no outright jokers, their reaction has been such that practically every politician in the U. S. from Franklin Roosevelt down has put revision of Social Security at the top of his must list.'

- "Pie From The Sky," Time Magazine, 13 February 1939 




Fact:  There have NEVER been savings accounts for workers.  Never.   There has never been an account with your name on it and all of your payroll taxes sitting in it earning interest nor is there a Scrooge McDuck-like vault filled with cash.

Fact:   The money has always been paid into the Treasury and is not required to be earmarked in any way.  It can be spent on anything.

Fact: In 2009, the Federal government collected $2.1 trillion in taxes.

Fact: In 2009, the Federal government spent $3.52 trillion.



'We have set up a savings account for the old age of the worker.  [Contributions would be made by employers and employees via payroll taxes, which would be] held by the government solely for the benefit of the worker in his old age.'

- Franklin Delano Roosevelt, 1936
  


Fact: In 2009, the Federal government spent $678 billion on Social Security.

Fact: In 2009, the Federal government spent $676 billion on Medicare.

Fact: In 2009, 38.47% of the entire budget went to Social Security and Medicare and the two programmes consumed 64.48% of all Federal tax revenues.

Fact: The 2009 Social Security and Medicare Trustees Reports show the combined unfunded liability of these two programmes has reached nearly $107 trillion in today's dollars and Laurence Kotlikoff, a well-known professor of economics at Boston University, puts the real figure over $222 trillion dollars!



'The proceeds of both the employee and employer taxes are to be paid into the Treasury like any other internal revenue generally, and are not earmarked in any way.'




Fact: In 2010, the Federal government collected $2.16 trillion in taxes.

Fact: In 2010, the Federal government spent $3.618 trillion.

Fact: In 2010, the Federal government spent $701 billion on Social Security.

Fact: In 2010, the Federal government spent $793 billion on Medicare.

Fact: In 2010, 41.29% of the entire budget went to Social Security and Medicare and the two programmes consumed 69.17% of all Federal tax revenues.



"I guess you’re right on the economics. They are politics all the way through. We put those pay roll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program. Those taxes aren’t a matter of economics, they’re straight politics.”



Fact:  Since the Senate last passed a budget (04.03.09), the nation has spent $8.997 trillion–including almost $1,209,543,390,643.65 interest payments–and racked up $3,550,847,957,266.07 in gross federal debt. 

Fact: Beginning 01.01.11, nearly 10,000 Americans each day will become eligible for Social Security and Medicare benefits.

Fact: 78 million Baby Boomers (1/3rd of the population) will retire within the next 19 years.

Fact: Consider a 65 year-old man, who retired in 2010 and had earned an average wage 43,100 dollars. Over his expected lifetime, he will receive an inflation-adjusted $417,000 in Social Security and Medicare benefits compared to taxes paid of $345,000, estimates an Urban Institute study. 



"First, noncontributory old-age pensions for those who are now too old to build up their own insurance. IT IS, OF COURSE, CLEAR THAT FOR PERHAPS 30 YEARS TO COME funds ll have to be provided by the States and the Federal Government to meet these pensions." 

- Franklin Delano Roosevelt, 1935



Fact:  There were 159.4 workers for each Social Security recipient in 1940.

Fact:  There were 16.5 workers for each Social Security recipient in 1950.

Fact:  There were 5.1 workers for each Social Security recipient in 1960.

Fact:  There were 3.7 workers for each Social Security recipient in 1970.

Fact:  There were 3.2 workers for each Social Security recipient in 1980.

Fact:  There were 3.4 workers for each Social Security recipient in 1990.

Fact:  There were 3.4 workers for each Social Security recipient in 2000.

Fact:  There were 3.3 workers for each Social Security recipient in 2005.

Fact:  There were only 2.9 full-time private-sector workers in the United States last year for each person receiving benefits from Social Security, according to data from the Bureau of Labor Statistics and the Social Security Board of Trustees.  

Fact: Social Security entered permanent deficit mode in 2010 and the CBO reported that Social Security will effectively run a $45-billion deficit in 2011 and continue to run deficits totaling $547 billion over the coming decade.

Fact:  The Social Security "Trust Fund" will go bankrupt in 2013.



"Obviously the government cannot pay adequate pensions if it insists on 'borrowing' most of the old age taxes and spending them to support the government. The whole thing is a disguised tax levied upon the lowest income groups under the pretense of old age pension premiums. No government would dare support itself out of a payroll tax if it honestly proclaimed its purpose . ."



Fact:  The average senior receives in Social Security about a third of what the average worker makes.

Fact:  In 1940, the average worker had to pay only 0.2% of his salary to sustain the seniors of his time.

Fact:  In 1950, the average worker had to pay only 2% of his salary to sustain the seniors of his time.

Fact:  In 2011, the average worker has to pay 11% of his salary to sustain the seniors of his time.

Fact:  In 2031, the average worker will have to pay 17% of his salary to sustain the seniors of his time.  This is a staggering sum, considering that it is apart from all the other taxes he pays to sustain other functions of government, such as Medicare, whose costs are exploding.
 
Fact:  The Court ruled in Flemming v. Nestor,  363 U.S. 603 (1960), that a person covered by the Social Security Act has "not such a right in old-age benefit payments as would make every defeasance of "accrued" interests violative of the Due Process Clause of the Fifth Amendment," pp. 606-08, and "the noncontractual interest of an employee covered by the Act cannot be soundly analogised to that of the holder of an annuity, whose right to benefits are based on his contractual premium payments," 608-10, and "to engraft upon the Social Security System a concept of "accrued property rights" would deprive it of the flexibility and boldness in adjustment to ever-changing conditions which it demands and which Congress probably had in mind when it expressly reserved the right to alter, amend or repeal any provision of the Act," pp. 610-611.

Fact:  There is no "right" to Medicare.

Fact: On our current path there will be "actual" cuts to Medicare of 17% and Medicare would "end as we know it" in 2024, according to the Social Security and Medicare Trustees May 2011 report.

Fact: Medicare hospitalisation, as we know it will end in 2024, absent some change in policy or some change in moving forward.


"The beauty of Social Insurance is that it is actuarially unsound and a growing nation is the greatest Ponzi scheme ever devised. And that is a fact, not a paradox."

 -Nobel Laureate Paul A. Samuelson, Keynesian Economist, "Something for Nothing?"



Fact: For the first time in history, the chief Medicare actuary has disavowed the projections and report made by an administration.

Fact: Cuts to Medicare would average 17% on average annual basis over 75 years.

Projection: In 2024, specifically, cuts would amount to about 10% and that increases, then it becomes 25% by the 2040s.

Fact:  The average American household spends 50 times more today on Medicare than it did in 1960. 


"When the government issues a bond to one of its own accounts, it hasn't purchased anything or established a claim against another entity or person. It is simply creating a form of IOU from one of its accounts to another."



Fact:  Health care spending now equals 17.6% of our economy — a full 11 points higher than the 5.6% it represented in 1960.

Fact:  Since 1970, "health costs apart from Medicare and Medicaid have grown 41%  per patient in relation to GDP, while Medicare's and Medicaid's costs have grown 89% and 91% -- nearly doubling -- as a share of GDP." 

Fact:  "In Medicare, if providers get it right the first time, they get paid once. If it takes them four or five times -- at seniors' inconvenience and sometimes at their peril -- they get paid four or five times as much."


"In short, Social Security is a Ponzi game, a pyramid scheme, a chain letter."

 - Ben Wattenberg, The Birth Dearth, US News & World Report, December 1995 



Fact: There has never been a "lockbox." All payroll taxes have gone into "trust funds" in name only. In truth, they go into the general fund and can be used for anything.   

Fact:  Contrary to rumours and assertions, all LBJ did in 1968 was to make Social Security taxes and spending part of a "unified budget," which is just budget gimmickry that allows politicians like Clinton and Gingrich to be able to claim that they generated a budget "surplus." LBJ's changes had no affect on the actual operations of the Social Security Trust Fund" itself.


"[Social Security] is, in important ways, like a massive Ponzi scheme in which early participants are paid off with money put up by later ones [then he asks if Social Security will collapse] as Ponzi schemes inevitably do." 

- Pulitzer Prize-winning Washington Post columnist, William Raspberry, "Numbers That Won't Go Away," January 1996



Fact: The Federal government has given the "trust funds" IOUs. The Federal government does not have this money. All IOUs represent future borrowing and taxes. If the Federal government were somehow forced to repay all IOUs, it wouldn't be nor can it be, it would have to go to the bond market - in other words, China.

Fact: The IOUs in the "trust funds" can best be looked as a kind of "gift card" from a store. The gift card is only worth anything as long as the store is not bankrupt.


Projection: By 2020, every penny in tax revenues taken in by the US Treasury will be consumed by Social Security, Medicare, Medicaid, and debt service, the latter of which will amount to $1 trillion alone.

Projection: When today's college students reach retirement (about 2054), Social Security alone will require a 16.6% payroll tax, one-third greater than today's rate, according to the non-partisan Peterson-Pew Commission on Budget Reform. 



 "These [Trust Fund] balances are available to finance future benefit payments and other trust fund expenditures-but only in a bookkeeping sense. These funds are not set up to be pension funds, like the funds of private pension plans. They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury, that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. The existence of large trust fund balances, therefore, does not, by itself, make it easier for the government to pay benefits."



Projection: When Medicare Part A is included, the payroll tax burden will rise to 25.7% - more than one of every four dollars workers will earn that year.

Projection: If Medicare Part B (physician services) and Part D are included, the total Social Security/Medicare burden will climb to 37% of payroll by 2054 - one in three dollars of taxable payroll, and twice the size of today's payroll tax burden, according to the non-partisan Peterson-Pew Commission on Budget Reform.

Projection: More than one-third of the wages workers earn in 2054 will need to be committed to pay benefits promised under current law. That is before any bridges or highways are built and before any teachers' or police officers' salaries are paid.

Projection: By 2030, about the midpoint of the baby boomer retirement years, the Medicare will require nearly half of all income tax dollars, according to the non-partisan Peterson-Pew Commission on Budget Reform.

Projection: By 2060, Social Security and Medicare will require nearly three out of four income tax dollars.



"Ponzi Game Needs Equitable Solution"

- Stanford University economists,Victor Fuchs and John Shoven, Los Angeles Times, April 1999



Fact: On average, every year since 1970, Medicare and Medicaid spending per beneficiary has grown 2.5% points faster than per capita GDP.

Fact: In 1966, the House Ways and Means Committee projected that the total amount spent on Medicare in 1990 would be $12 billion dollars. Actual expenditures were $107 BILLION.


"Social Security has become less and less attractive as the number of current recipients has grown relative to the number of workers paying taxes, an imbalance that will only get bigger. That explains the widespread support for individual investment accounts. Younger workers, in particular, are skeptical that they will get anything like their money’s worth for the Social Security taxes that they and their employers pay."


- Nobel Laureate Milton Friedman, The Biggest Ponzi Scheme on Earth, Hoover Digest, 30 April 1999





Projection: By 2052, Medicare spending alone would consume nearly the entire federal budget...if it were still in existence.  It won't be.

Fact: The CBO also found that if federal income tax rates are adjusted to allow the government to continue its current level of activity and balance its budget, the lowest marginal income tax rate of 10% would have to rise to 26%. 



"So by all means, let's have a vigorous national debate about reforming Social Security; it can't be sustained in its present form."

- Paul Krugman, "Two Cheers For The Welfare State," Fortune, 1 May 1995



Fact: The CBO also found that if federal income tax rates are adjusted to allow the government to continue its current level of activity and balance its budget, the 25% marginal tax rate would increase to 66%.

Fact: The CBO also found that if federal income tax rates are adjusted to allow the government to continue its current level of activity and balance its budget, the current highest marginal tax rate on 250,000 dollars (35%) would rise to 92%.

Fact: "In the fall of 1995, Robert J. Shapiro published an article called "Rethinking Social Security: The New Deal's Crowning Achievement Has Fallen and It Can't Get Up," in The New Democrat, a forum for the centrist Democratic Leadership Council. Shapiro was a co-founder and vice president of the Progressive Policy Institute, an undersecretary of commerce in the Clinton administration, and the principal economic adviser to Bill Clinton's 1991-92 presidential campaign. Shapiro was also a senior economic adviser to the presidential campaigns of Al Gore and John Kerry, and advised the presidential campaign and transition of Barack Obama as well."



"National Ponzi Scheme"

 - The New Democrat, Democratic Leadership Council, September 1995



Fact:  Shapiro's 1995 article complains that Social Security, as currently structured, is crowding out funding for young children, who suffer poverty at twice the rates of the elderly. Shapiro proposes reforms including mandatory private savings accounts, and calls on Americans to "end our long collective silence about the character and problems of Social Security." The first section-heading in Shapiro's piece reads "National Ponzi Scheme."



"A Ponzi scheme is a fraud where in the end the whole pyramid goes bust a bunch of people wind up with no money at all." 

- Matthew Ygelsias, Think Progress, 8 September 2011 



Fact:   In June, Mr Ygelsias and Think Progress were highlighting a report by the "bipartisan" Policy Center, which purported to have studied the Treasury Department receipts and expenditures from August 2009 and 2010 and determined that the government likely would not have enough revenue to pay the full $23 billion payment to Social Security recipients due on 3 August 2011.


"On that day, according to the analysis, the government would take in about $12 billion in taxes and other revenue but would owe $32 billion, creating a $20 billion shortfall. It happens to be the first Wednesday of the month — the day a majority of Social Security recipients get their checks."


Question:  Isn’t that a scenario where “a bunch of people wind up with no money at all," Mr Y?

Fact: If you raised taxes to 90% on the wealthiest Americans, you would still not be able to eliminate the budget deficit.



"Only a grinch could grumble about the most effective anti-poverty program in history; but only a fool would fail to ask whether the Ponzi scheme is sustainable, and at what price...[Social Security's actuarial tables are] Ponzi's Revenge."

- Matthew Miller, a senior writer for The New Republic, 1996



Fact: IF YOU CONFISCATED EVERY PENNY OWNED BY THE 400 WEALTHIEST AMERICANS – 1.36825 TRILLION DOLLARSYOU WOULD STILL HAVE A 300 BILLION DOLLAR BUDGET DEFICIT IN FY 2011.

Fact: IF YOU CONFISCATED EVERY PENNY OWNED BY THE 400 WEALTHIEST AMERICANS – 1.36825 TRILLION DOLLARSYOU WOULD STILL NOT HAVE ENOUGH MONEY TO FUND SOCIAL SECURITY, MEDICARE AND MEDICAID FOR ONE YEAR.




"Social Security: From Ponzi Scheme to Shell Game"

 - Michael Kinsley, Slate Magazine, 14 December 1996



Fact: The federal government spends about 6.85 million dollars per minute.

Fact: The United States borrows 5 billion dollars per day.

Fact: In April, while the WH & Congress were negotiating budget cuts in the amount of 38.5 billion dollars, the United States added $54 billion to its national debt.




"Critics of the system call it a giant Ponzi scheme. But as long as the economy and its tax base keep growing, there is nothing wrong with taxing current workers to finance current retirement." 

- Robert Kuttner, The Washington Post, January 1997



Fact: Bush added $4,899,100,310,609 dollars to the national debt (including off-budget items) or deficit spent $1,677,199,695.52 dollars per day.

Fact: As of 3.13.12, Obama has added to the national debt: $4,901,104,747,205.59 or, in other words, deficit spends $4,264,553,856.29 per day.  



“In the public debate, ‘solvency’ means keeping the trust funds from exhausting their balances.  Federal trust funds, however, are merely accounting mechanisms established to link receipts that the government collects or assigns to specific uses with the expenditures of those resources; the balances of the funds are not assets of the government.   And there is no relationship between the balances in a trust fund and its future obligations.   In other words, the government will face claims whether or not the fund has sufficient balances, and it will need to acquire actual resources from the economy to meet those obligations when they come due.” 

- Congressional Budget Office, April 2000




Projection: According to the IMF, US PUBLIC debt will equal 100% of GDP in 2015.  

Fact:  As of 3.13.12, the Debt-to-GDP ration was 102.23%.

Fact:  The US PUBLIC is now more than $10 trillion and has risen from 40% to 71% and will continue to rise.  US public debt is a critical national security issue.





Years
GDP (trillions)
Public Debt (trillions)
Public Debt as % GDP
Pre-Obama
2001
32%

2002
33%

2003
35%

2004
36%

2005
36%

2006
36%

2007
36%

2008
40%
Obama
2009
53%

2010
62%

2011E
71%


Fact: Social Security, Medicare and Medicaid are unsustainable. It will take a country of rational grown-ups to understand that very hard choices must be made to address what will be the death knell of the United States, if ignored.

If you are interested in learning why Social Security was always a Ponzi scheme, read "Sorry, But You're No Aunt Ida."



"...turned out to be strongly redistributionist, but only because of its Ponzi game aspect, in which each generation takes more out than it put in. Well, the Ponzi game will soon be over, thanks to changing demographics."

 - Paul Krugman, What Consensus?, Boston Review, December 1996 - January 1997





In 1939, Harper's Magasine published an article that, essentially, called Social Security a "swindle.."

I could be wrong. Maybe, Santa Clause, Tinkerbell, and the Easter Bunny will bring universal health care, universal education through grad school, universal housing, minimum income guarantees, high-speed rail from Bumfuckus, Alaska to Thongsareus, Florida, 100% green energy, "renewable" meat (Don't ask me! I have a legal background, not a scientific or governmental bio. To me, meat by definition is not renewable, but there are those in Britain that claim it is possible), an Aishwarya Rai for every straight man, Cristiano Ronaldos in every Cougar's bed, a Ricky Martin for every gay man, a Portia de Rossi for every lesbian, fully-electric Maybachs in every garage, David Beckhams on every kid's soccer field, Anthony Bourdains in every kitchen with geese that can continue to lay golden eggs even after the pot, silver bullet diet pills that melt 2 stone off overnight, and a closet-full of Chanel and Christian Louboutins for every fashionista in the morning, but I doubt it.

As Sir Alan Greenspan said before the Senate Budget Committee on 21 April 2005:
 



“I fear that we may have already committed more physical resources to the baby boom generation in its retirement years than our economy has the capacity to deliver…[Regarding Social Security and Medicare], I do not see how we can avoid significant curtailment of the benefits currently promised.”





One question for "Sir Alan":  Ya think?




Idiot Wind - Bob Dylan

Someone's got it in for me, they're planting stories in the press
Whoever it is I wish they'd cut it out but when they will I can only guess.
They say I shot a man named Gray and took his wife to Italy,
She inherited a million bucks and when she died it came to me.
I can't help it if I'm lucky.

People see me all the time and they just can't remember how to act
Their minds are filled with big ideas, images and distorted facts.
Even you, yesterday you had to ask me where it was at,
I couldn't believe after all these years, you didn't know me better than that
Sweet lady.

Idiot wind, blowing every time you move your mouth,
Blowing down the backroads headin' south.
Idiot wind, blowing every time you move your teeth,
You're an idiot, babe.
It's a wonder that you still know how to breathe.

I ran into the fortune-teller, who said beware of lightning that might strike
I haven't known peace and quiet for so long I can't remember what it's like.
There's a lone soldier on the cross, smoke pourin' out of a boxcar door,
You didn't know it, you didn't think it could be done, in the final end he won the wars
After losin' every battle.

I woke up on the roadside, daydreamin' 'bout the way things sometimes are
Visions of your chestnut mare shoot through my head and are makin' me see stars.
You hurt the ones that I love best and cover up the truth with lies.
One day you'll be in the ditch, flies buzzin' around your eyes,
Blood on your saddle.

Idiot wind, blowing through the flowers on your tomb,
Blowing through the curtains in your room.
Idiot wind, blowing every time you move your teeth,
You're an idiot, babe.
It's a wonder that you still know how to breathe.

It was gravity which pulled us down and destiny which broke us apart
You tamed the lion in my cage but it just wasn't enough to change my heart.
Now everything's a little upside down, as a matter of fact the wheels have stopped,
What's good is bad, what's bad is good, you'll find out when you reach the top
You're on the bottom.

I noticed at the ceremony, your corrupt ways had finally made you blind
I can't remember your face anymore, your mouth has changed, your eyes
don't look into mine.
The priest wore black on the seventh day and sat stone-faced while the building
burned.
I waited for you on the running boards, near the cypress trees, while the springtime
turned Slowly into autumn.

Idiot wind, blowing like a circle around my skull,
From the Grand Coulee Dam to the Capitol.
Idiot wind, blowing every time you move your teeth,
You're an idiot, babe.
It's a wonder that you still know how to breathe.

I can't feel you anymore, I can't even touch the books you've read
Every time I crawl past your door, I been wishin' I was somebody else instead.
Down the highway, down the tracks, down the road to ecstasy,
I followed you beneath the stars, hounded by your memory
And all your ragin' glory.

I been double-crossed now for the very last time and now I'm finally free,
I kissed goodbye the howling beast on the borderline which separated you from me.
You'll never know the hurt I suffered nor the pain I rise above,
And I'll never know the same about you, your holiness or your kind of love,
And it makes me feel so sorry.

Idiot wind, blowing through the buttons of our coats,
Blowing through the letters that we wrote.
Idiot wind, blowing through the dust upon our shelves,
We're idiots, babe.
It's a wonder we can even feed ourselves.



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