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Runaway TrainLarry LaBorde In 1935 FDR started social security. At the time there were over 40 workers for every retired American citizen eligible for social security benefits. The average life expectancy for a US citizen at the time was 61 years. The aged in the US at the time were also one of the poorest age groups in the country. What hard hearted type of person could refuse pennies (2% total) out of his paycheck to support grandma and grandpa who were starving? Fast forward to today. Our elderly are now the most affluent age group. Spending on our elderly in terms of tax dollars is now 7 times greater than spending on our children on a per capita basis. We now have a little over 3 workers for every retired American citizen eligible for social security benefits. The average life expectancy for a US citizen is now 76 years. The tax is now over 15% up to $90,000 of income. Hold on tight while we fast forward to our future. In 2025, just twenty years from now, we will have 2 1/4 workers for every retired social security recipient. The average life expectancy will most certainly be even greater still which means my generation will receive benefits longer than previous generations. When the system was put in there was more money collected than paid out. A surplus developed and it was to be invested by the social security bureaucrats so that it would be available when the boomer generation retired. As that surplus grew our leaders in Washington DC could not stand it. They were like an alcoholic guarding a liquor store. They added even more benefits such as SSI (crazy pay). They added a disability rider. They even added health care in the mid 1960's. In the early 1970's benefits were bumped up 20% after being increased 25% faster than wages every year since 1967. Will Rogers used to say, "The easiest thing to spend is the other feller's money". And still a surplus existed in the fund. That surplus was invested in US treasuries or IOU's to the federal government. In order to spend the surplus, the government will have to borrow more money from others to pay back the IOU's in the trust fund. The government has already spent the trust fund and will have to borrow money to replace the IOU's that they have invested our surplus funds. What's the difference in that or if there were never any surplus funds and they have to borrow the money to pay the benefits? There is no social security surplus - it has been looted by congress and replaced with IOU's (treasury securities is a much nicer term). Someone call the police, we have been robbed! It is sort of like spending your children's college funds on a new car and putting your own IOU in their account. When they reach college you will have to borrow to pay off your IOU so they can get their tuition money. What kind of trust fund is that? You could have just forgotten about creating the trust fund in the first place and borrowed their tuition money when they went to college! The trust fund with your IOU is worthless. So it the US social security trust fund that is filled with US treasury notes or IOU's from the US treasury. When Enron crashed they were ridiculed for cooking their books. Several laws were passed that said that clear bookkeeping was required or else. Of course like everything else that did not apply to the federal government who operate on a cash basis instead of an accrual system. Under an accrual system the cost of retirement is added yearly as the liability accumulates. Private retirement systems must contribute yearly to make sure they are fully funded to cover their future expenses. In 2003 our unfunded retirement liability including social security and medicare amounted to $45 trillion dollars. That works out to $158,000 for every man woman and child living in the US today. Our official public debt is only $4 trillion dollars. Our national net worth (all private property owned by US citizens) only amounts to $42 trillion dollars. The way the federal government keeps books, however, this outstanding liability never shows up anywhere. Technically on an accrual system we are bankrupt. Any CFO in private industry would go to prison for such accounting gymnastics. How did we get here? Where are our statesmen? The democrats seem to delight is giving out more and more entitlements and raising our taxes. The republicans seem to equally delight in cutting our taxes without cutting any spending programs. Both parties seem to be committed to large deficits. Thomas Jefferson said that no generation has the moral right to leave its debts for the next generation to pay. We seem to be on a runaway train with no one at the controls and one hell of a party in the dining car. Our current conservative president has never vetoed a spending bill - or any other bill for that matter. He has also added prescription drug benefits to an already under funded retirement program. Not only has he done nothing to slow the train - he is adding more speed! I will give him credit for bringing up social security change even though I do not agree with his change. Letting citizens invest a part of their money in a federally controlled investment scheme is better than what we now have but why not go further? Why not allow people to get off the train? Why not allow them to invest part of their social security tax money (maybe half of the current tax of about 15%) in their own IRA's if they elect out of the system forever? They will still have to pay half the current tax for the remaining retirees but how about if they keep just half for themselves if they promise to never take any benefits when they retire. I'm 46 years old and I would jump on that without a moment's hesitation if I could have complete control of my own privatized retirement funds. Yes I might lose it all but I promise I will take full responsibility for my actions. Who said the federal government was supposed to take care of me anyway? Who said they would be able to do so? My boomer generation's retirement will cause an undue hardship on my children that I do not want them to bear. Speaking for the boomer generation - LET MY PEOPLE GO. Let us invest our own money and depart from this ponzi scheme called social security before it is too late. Of course that will never happen. Money is power and tax money is political power. Power is never relinquished voluntarily. Boomers of my generation - forget your social security retirement. It will not be there. If you have not started saving for your retirement then start today. Social Security is just a tax. It will not be a benefit for us when we retire so please do not include it in your retirement plans. No matter how much or how little you make you must save a portion of it for the future. For years experts told us to save at least 10% of our pay. It's not as hard as it seems. Do you really need that new car or maybe try eating at home more often? Live below your means and save a little. Finally remember that in order to pay for these unfunded benefits the federal government is and will continue to borrow money. The borrowing will only get bigger as the bills increase. By 2030 social security, medicare and federal retirement will consume every bit of tax money collected - assuming interest rates do not go up in which case it will be sooner. Everything else we spend will have to be borrowed! Some people say the debt does not matter because we owe it to ourselves. This is not true anymore. We are now depending on the kindness of strangers in foreign lands to loan us more and more money. When they stop loaning to us the inflation train will speed up to warp 9 as the deficit is monetized. Make sure to protect those retirement dollars and invest a portion of your savings in something that will preserve your purchasing power in your retirement years. Remember that it is not about saving dollars but saving purchasing power. For the last 90 years US dollars have lost purchasing power every year. Trust in 5,000 years of history. Invest a part of those retirement funds in silver and gold. ".......................................
it's about as insane Larry LaBorde (Still waving
lanterns at runaway trains) 321gold Inc |
