“Here comes an overweight cat with dollar signs for eyes and a hat that says “Social Security” pouring a bucket that says “Alternative Minimum Tax” over a sad Statue of Liberty holding a “democracy” umbrella.” – Family Guy
There’s this joke I heard about Social Security, but no one will get it.
When I was in junior high, our history class ended up with a long-term substitute teacher, Miss Vargas, for over a month. Most substitute teachers just handed out word-search puzzles where you tried to pick out names of conquistadors, Thanksgiving foods, conquered Mayans, and famous cats that belonged to the Mayflower Pilgrims. Since Miss Vargas had us for weeks, however, she actually had to teach. Thankfully, she had a lesson plan.
Not an original. I could not resist.
She was a nice substitute teacher so our class didn’t beat up on her that much. We could tell, however, that, whatever her degree was in, it wasn’t history. Given the time and place I was going to school, it seemed like she was likely a chemically-damaged refugee from the 1960’s, and likely a former Leftist hippy. Since we had caught her on some (rather) basic mistakes about American history, we weren’t shy about questioning the things she said.
Not to mention when Abraham Lincoln “freed the penguins, dude” after signing the Treaty of Ghent at Woodstock. At least class was interesting.
The lesson (at some point) took us to the New Deal. The format of the homework should be familiar to anyone who was in school when mimeographs were a thing (look it up). There was a term, and then the student was supposed to write down the definition. It was a fancy way to force eighth graders to learn to skim texts for key words written in bold.
But the smell . . .
One of the terms was Social Security. I dutifully looked through the text until I found the boldface words Social Security. In it was the definition that it was (more or less): An insurance program founded to provide benefits to retired and disabled people.
The teacher, not feeling like grading the homework, decided to go through the definitions with us. After Social Security she wrote on the board, A program created to redistribute wealth in the country.
With all of the righteous indignation an 8th grader who had fully consumed the Kool-Aid® of the Official Story™ of the Government-Approved© textbook, I proceeded to correct Miss Vargas.
She didn’t back down, and maintained that was the purpose. Obviously, the event was significant enough that I still remember, and as I grew older I realized that, well, the burned-out hippy was right. Social Security is a wealth redistribution scheme. Heck, you can tell the program is socialist – it’s right there in the name.
The program was started in the depths of the Depression and rewarded those who hadn’t paid in with benefits they hadn’t earned. I’d whine more, but that happened 80 years ago, so it’s like Madonna complaining about her virginity – that ship sailed a LONNNNNNNG time ago – nearly as long ago as when the Japanese bombed the Nina, the Pinta, and the Santa Maria at Pearl Harbor. I know that you’re expecting that this is some sort of rant about how Social Security needs to be taken down because it’ll wreck the economy. It isn’t a rant, and Social Security won’t wreck the economy.
According to the latest data I could find (there’s probably newer, but 2013 was close enough and I’m travelling) but an average couple, making an average wage paid in about $600,000 in Social Security taxes during their career and would receive roughly $600,000 in benefits – the system was in balance. Of note, it’s kind of cute because the graphic assumed it was a man married to a woman and not an immigrant trans-porpoise which I understand is now required in California, as long as the porpoise signs a pledge to drive a Prius® and not to use straws.
Ahh, nostalgia for simpler times.
Social Security was roughly in balance in 2013, and could be put back into balance fairly easily with minimal effort, even though we’re facing a demographic bulge as the boomers retire. As long as we can convince them all to take up chain smoking and they decide that anti-chemo is the new anti-vax, we’re fine. Theoretically, there are the accumulated savings that Social Security has had during all of those years it was in surplus, but the reality is that all of those funds are just IOUs from Congress sitting in a filing cabinet in West Virginia in a converted National Guard Armory behind Buddy’s Chicken and Black Lung Shack®. Doris has the key.
It might look nice, but it still smells like the DMV and low motivation.
Yeah, the money going out of Social Security has already exceeded the money going in to Social Security, but it’s manageable. A few tweaks to the tax, and a few tweaks to the benefit (two-for-one coupons at Burger King™ instead of money every other month) and it will work out. Social Security, despite being a piggy bank continually raided by Congress for my entire life, won’t hurt us, at least not by itself.
That’s the good news. I fully expect that if the only major obligations that the government had were defense, transgender reassignment surgery, and Social Security, we’d be fine. Heck, even welfare for dachshunds that can’t find a job because of terrier privilege wouldn’t break us. Even if Congress approved the Ocasio Cortez Guided Missile©, which is designed to approach every target from the Left, has a warhead that does nothing but make babbling sounds, and costs a billion dollars a missile, we’d be fine.
What will break us?
Medicare® and Medicaid™.
Those are the M&M®s that will crater our financial system.
From the 2013 data, the average couple could will pay in about $110,000 in taxes during their lifetime for Medicare, but will take out nearly $400,000 in benefits. Where does that benefit come from? I’d say our tax dollars, but let’s you and I be real – not one dime of deficit spending has ever come out of your pocket or mine directly in taxes. It’s all borrowed into existence at this point.
I was going to save this graph for Halloween, since it’s scarier than most zombie movies.
From this projection, you can see that by 2024 Medicare plus Social Security will make up 12% or so of the GDP. Add in 2% for Medicaid costs, and you’re up to 14% of the GDP. Add in 4% for the projected interest payments due on the national debt, and that’s 18%, folks. That leaves 2% at most for all of the rest of the spending on the economy before we run out of tax dollars. But the rest of the spending (on things like defense) generally runs about 10% of GDP. Through the magic of math, that means that we’ll need another 10% of GDP. Just raise the taxes, right?
Even during the “90% tax rate” 1950’s, the proportion of the GDP taken in taxes wasn’t any higher than today and resulted in more loopholes than there are bacon-wrapped shrimp at a congressional lobbyist’s party.
That means the Federal government spending alone will consume 30% of the GDP, of which at least 10% will be deficit spending. Given a projected GDP of $26 trillion in 2024, that is an annual deficit of $2.6 trillion. The deficit this year is projected to be $1 trillion or so, which is more money than some people make in their entire lifetime, so imagine one 2.5 times larger.
Through some sort of magical incantation worthy of Houdini’s proctologist, money has been pulled out of somewhere (The Worst Economic Idea Since Socialism, Explained Using Bikini Girl Graphs) and hasn’t created massive inflation. Yet. I guess that in Zimbabwe they managed to just print money like we’re doing now to get out of the problem.
See, you too can be a trillionaire!
So, in the end, Miss Vargas was right. Social Security was the start of a program that will do a great job of income redistribution, from a wealthy and prosperous society, to a society where everyone can be a trillionaire, and a good nickel cigar only costs a few hundred billion dollars.
Thankfully Lincoln posed for this after getting back from Woodstock and before he retired to Gettysburg to make movies with George Lucas.
Ross Perot was right.
Agreed. And I was wrong at the time. I drank the Kool-Aid. (sigh)
strange, we are told SS funds will go down the toilet, but $$ for illegal aliens assistance are there forever. also, think back to the Viet Nam war years when congress decided to move the SS $$ to the general fund and not into the SS fund. Curiouser, and Curiouser.
Yes. It’s almost like . . . it’s planned? Remember when California voted to not allow benefits to illegals? Oh, my.
The insurance industry is just another branch of the central bank. The folks who needed $20 trillion to bail us out in 2008 ( invested in a rock solid tripling of the derivatives market ). They are importing Afghan opium as fast as they can to kill off Seniors, but a lot of the ingrates insist on life saving care in the meantime. It won’t be changed, because, central bank. Increased medical costs are a profit center for them. Somehow I think Zimbabwe is too much to hope for. It should be much worse.
It really might be – Zimbabwe didn’t lead to cascading international failures.
Sleep tight, everyone!
It’s a dry read, but I have referred to “When Money Dies” by Adam Ferguson on occasion to see where we are in the cycle by comparison. There aren’t a lot of great hyperinflation texts around. Wish there were as I expect to see hyperinflation eventually. As if we didn’t need more stuff to deal with. But hyperinflations only happen after wars is the mantra. Seems like we’ll kind of meet that criteria unless we collectively calm down.
It seems to me as a country, we’re like the neighbors who are having such loud arguments that everyone on the street can hear us… and the reserve currency is supposed to be based on us?!? How is the dollar supposed to remain trustworthy?
Health expenses are absolutely out of control. An air ambulance for 100 miles, probably about $30K, a ground ambulance for the same distance, about $10K. If you decide you’ve had enough fun with work and wish to break out the popcorn, COBRA can be had for around $1,800 a month.
Maybe I’ll go fishing… or not.
Well, the Venezuelans and the Zimbabweans didn’t have a war, but they went all hyper. As did the Romans.
Fishing sounds like fun. Especially if it’s trout.
Yeah, I guess the mantra isn’t perfect.
Although not sure I agree about Zimbabwe, they had a couple of wars before they went hyper such as the Zimbabwe War of Liberation and the Second Congo War. Rome was a very martial empire, but around 150-200 AD, the empire expansion and maintenance game didn’t work out as well as it had. And then in 476 AD, well, the Western empire called it a day shortly after Alaric and Attila paid a visit.
I think hyperinflation is really about loss of capability while continuing to pay for unaffordable stuff. War is a shorthand for this. The Germans post WW I certainly lost capability.
Venezuela lost capability when they thought Socialism was the way to go. The expertise to run the oil facilities ran away.
We lost capability when we outsourced too much because we had magical paper disconnected from gold called the reserve currency. That’s a major oversimplification but it works in a blog response.
We lost capability just as much as if we lost a major war. It is sad.
It isn’t any one thing but it is a bunch of things and they are all coming to a head at once, probably in about 8-10 years unless something calamitous happens which is quite possible. When Trump loses in 2020, and thanks to his speech on Monday that looks a lot more certain, and some loon from the Dem primary field takes over with a majority in the House and a possible majority in the Senate, coupled with the cucks in the GOP, and spending is going to explode. M&M now is bad, but Medicare for all and the Green New Deal and who the heck knows what else are going to push the accelerator on a car already going over the cliff. But hey, let’s worry more about “white supremacists” because that is absolutely the most significant problem we face.
Yeah – my early timeline is 5 years. Late is 2040.
Oh Brother you are forgetting about Social Security Disability which will break SS long before Retirement Payments will…The illegals scamming the system right now are on the rise and will continue to do so until they have drained the system dry…I wonder if the boomers will be concerned about the illegal invasion then???
I didn’t have that figure (SSDI). After the system is dry and the general public cares, we’ll be so deep into crisis that it’ll be . . . interesting.
Oh yeah you could say that…I’m guessing a lot of older folks will start caring about immigration then but by that time it will be to late…They are going to realize that maybe they should of spent a little of their retirement on movements that were going to help them out in the long term instead of on another round of golf or buying a sports car so they can feel good about themselves…Makes me sick to see all the money wasted on pleasures of the flesh as everything good and decent is stripped from us…
John, John, John. Such a worrywart about things like Medicare that you don’t need to worry about at all.
http://sultanknish.blogspot.com/2019/08/medicare-for-all-destroys-medicare.html?m=1
Heh! I like it!!
I have been fighting cancer for ten years. I have never taken a single cent from any government program. I never will. I will not fill my belly or heal my sickness, with what is stolen from others.
God bless you, Ray!
You should win an award for “Houdini’s proctologist.”
I’m ready for my close up.
One forgotten incident of hyperinflation was the Hungarian pengo in 1946. And there is no need to print FRNs anymore as it is mostly electronic ones and zeros in the banking system.
Wasn’t aware of the pengo. Thanks!
Americans scream that the US fought the British, Hitler, and Saddam because Americans love tyranny, but what if the USA fought wars because Americans loved freedom?
Americans insist Cuba is a paradise, but why do Cubans try to escape if tyranny is so wonderful?
Americans say North Korea is fantastic because North Korea has closed borders, but North Korea is poor. Americans do not understand that North Korea is a police state where everyone must wear the same clothes, have the same beliefs, and are not allowed to excel.
Americans today think that the only possible solution to any problem is force.
Instead of ending regulations, working hard, moving, starting a business, or learning a skill, Americans swear that the only way to get rich is to have a government decree that increases the minimum wage. Americans are simply unable to comprehend that laws have unintended consequences. Americans do not have the mental capacity now to realize that a higher minimum wage will increase prices and kill businesses.
Americans scream that the government must force airlines to have large airplane seats, but Americans cannot understand that decrees increase costs. Americans do not realize that Americans could take some personal responsibility and choose to buy 1st class plane tickets to get larger seats, use a better airline, or lose weight.
Americans insist that the only possible solution to fake news is to close newspapers and allow the government to tell you what to believe, but couldn’t Americans boycott lying media companies?
Americans say a trade war is the only way to help the economy, but wouldn’t tariffs drive up costs and kill exports? Couldn’t Americans boycott imports? Don’t US tariffs fund wars, welfare, debt, tyranny, and illegal aliens? Did a trade war help the USA recover from the Great Depression or did trade wars make the economy worse?
Americans swear guns must banned for safety, but didn’t the US used to have a Bill of Rights? How can you protect yourself without a gun?
Americans say that the US must bomb Iran because Iran might make nuclear weapons, but doesn’t the USA have nuclear bombs? Do wars lead to refugees, debt, tyranny, and terrorism?
Americans scream that the US debt doesn’t need to be paid back, but how did debt work out for Rome?
Are Americans really this stupid?