Pajamas TV describes the coming Social Security train wreck. “The friendly folks who in Washington, DC who dole out the entitlement checks delivered some bad news for everybody under 38 years old. There won’t be money for them when they turn 65. But the government still expects them to pay taxes.” Enlarging on the same theme, the Washington Examiner talks about the “gathering storm on Social Security and Medicare”.
Medicare ran out of cash to pay for hospital benefits last year and now these costs are covered by the U.S. Treasury. By 2017, according to the trustees, Medicare will have exhausted all of its trust funds. Social Security will run dry in 2016. The approach of these doomsdays has accelerated in the past year because of the slow economy and the refusal of Washington politicians in both parties to face reality.
No need to worry. What’s the problem? Just cut “unnecessary defense spending” and raise taxes. And fund cap and trade to save the earth, spend trillions for the stimulus package, provide aid to Hamas in Gaza, help Pakistan solve its basic problems and pay the past due obligations to the UN. The future is bright. The reviewers of the recently released movie Star Trek at the Times Online wrote: “gone is the gloom of the last Star Trek film, Nemesis (2002), which seemed cast in the depressing shadow of George Bush’s post-9/11 America. The prequel, though conceived before the rise of Barack Obama, taps into the optimism of his presidency.” Maybe this movie was closer to the mark.
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“It was reasonable to struggle, to suffer, perhaps even to die, for a more just, a more compassionate society, but not in a world with no future where, all too soon, the very words ‘justice,’ ‘compassion,’ ‘society,’ ‘struggle,’ ‘evil,’ would be unheard echoes on an empty air.”
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Over at ‘First Things,’ David P. Goldman, a.k.a. ‘Spengler,’ has an essay on ‘Demographics and Depression.’ It’s depressing, all right.
His argument is that people with savings and wealth require a market with reliable borrowers (i.e. new families) and the rule of law that will generate and secure economic growth and prosperity. We have declining numbers of traditional families; and small, non-tradtional families do not need all those empty three-bedroom houses. We have an aging population. Third-world countries have young families but no rule of law (ahoy, Hugo!) This is not a good recipe for long-term recovery, prosperity, and social security.
In some ways the One’s appearance at Notre Dame is a grand convergence of themes. Obama represents a cultural trend that is not opposed to the demise of marriage, traditional families, and multiple-child families. His policies are undermining the growth of wealth that would provide long-term prospects to the new graduates. If I were a graduate in the stands, I would not be a happy one.
Since there’s been an Orwell/1984 trend in comments, here’s the nursery rhyme that takes on an ominous significance in 1984:
‘Oranges and lemons,
Say the bells of St. Clement’s
‘You owe me five farthings,
Say the bells of St. Martin’s
‘When will you pay me?
Say the bells of Old Bailey.
‘When I grow rich,
Say the bells of Shoreditch.
‘When will that be?
Say the bells of Stepney
‘I do not know,
Says the great bell of Bow
‘Here comes a candle to light you to bed
And here comes a chopper to chop off your head!’
When will it occur to those in power that offering people a future devoid of happiness or even a chance of hope is unlikely to motivate them to do anything at all. If there is no chance of collecting on a deposit why would one make the deposit at all?
On the other side of the mirror, when will it occur to the people less than 38 years of age that they are being ridden like a rented horse. And if that realization occurs, what will they do about it? Or has the academy so programmed them that they will mindlessly march along giving their all for the “common good”?
A dark future indeed.
Hope is the only candle lighting the way and it is a windy night.
The flaw in the original Social Security scheme is purely demographics. Most intelligent people recognize the demographic flaw, but they do not explore the why.
Put simply: Attack on the family.
1. Contraception
2. Divorce
3. Abortion
4. Enablement/Endorsement of single lifestyle
5. Enablement/Endorsement of gay lifestyle
6. Discouragement of large families
Sadly, the breakdown of the traditional family structure affects more than Social Security. Economic growth and cultural stability require traditional families, too.
That sort of talk makes a lot of libertine and fiscal “conservatives” uncomfortable, because it plays right into the court of social conservatives.
But like charity, good economics begins at home. It can’t be neatly separated from a person’s social upbringing.
The way you cash up the economy is to collapse the cost of oil–and kill US imported oil demand. The way you collapse the cost of oil and collapse oil imports is to collapse demand. The fastest way to collapse demand may well be T Boone Picken’s idea of shifting over US trucks to natural gas as the Indians did. Because of new extraction processes the USA now has 100 years or more supply of natural gas.
I once thought–ie a couple weeks ago–that this idea might be too disruptive–but we may have run out of time.
Boone’s idea is that gas would serve as a transitional energy source — but it has to be implemented now because the USA is smack out of time.
I read this and go back and re-read once more
Kipling: ‘Gods of Copybook Headings’.
..No, Pel, the flaw in the original SS plan was not demographics, it was that it was conceived as an unfunded mandate, a ponzi sceme, from the beginning. Both my grandmothers got SS and never paid a dime into it. My 16 year old grand daughter will pay into it her whole life and get nothing. It was debt based and fatally flawed from the start, just as Madoff’s fraud was. There are never enough folks to save a ponzi sceme from collapse. It is only a matter of time, and SS’s time has arrived. It can’t be foxed. The time when it could be extended is past. The wreck is just starting, but wrecked it will be.
Hopefully it will last at least until my Dad passes. Without it, he’d have to move in with me. And he’s resisting that with all his strength.
I’m 45. I wonder if they’ll be anything for me to draw.
Bill
I’ll gladly pay you someday for a $3,600,000,000,000 federal budget today.
I read this and go back and re-read once more
Kipling: ‘Gods of Copybook Headings’.
And aren’t all those disillusioned Obama voters looking like burnt fools with bandaged fingers.
Bill McNutt #7:
Don’t kid yourself sir! It’ll all be gone by the time you or I might be ready to retire.
I hope you have a trade, profession or marketable skill you will be able to earn a living doing as an octogenarian, because we’re going to need to support ourselves until we finish work one afternoon, and die that evening.
The boomers were the lucky ones, who’s parents, children, and grandchildren paid, are paying, and will pay for a lavish lifestyle for the average boomer undreamed of by 99.9% of humanity throughout history, and unattainable to 99.9% of us now, or for any future generation until we’ve successfully colonized space, opened the new frontier, and brought in vast new resources.
..No, Pel, the flaw in the original SS plan was not demographics, it was that it was conceived as an unfunded mandate, a ponzi sceme, from the beginning.
Agree 100%. If the Exit Ramp Chapeau’s who created it had been honest and called it a welfare program for indigent elderly, it would’ve been fine. But then it would’ve required a tax increase sold as a tax increase, not sold as contributions to a pension fund. I think this is yet another example of the evil of special purpose taxes. They’re inherently corrupting because they allow the government to collect money under one premise and spend it on another.
When I got out of college in 1980, there were two things that were very clear:
1) Chrysler was a dead man walking
2) Social Security was right behind.
I have never for one moment thought of FICA as anything other than a supplement Federal Income tax that would have zero value to me in retirement. As I get closer to that time, I am at least relieved that I was never deceived into counting on Social Security as any store of value. While I feel for those who do, anyone who is my age or younger has simply been kidding themselves if they expected to see any value come back to them.
There is a story that the press loves to run about an animal escaping from a slaughterhouse and being granted a life on a farm or petting zoo. Today we have Mollie the cow who choose life. Human Interest stories are never about humans.
People may decide they do not want to go quietly either. Unlike Mollie they may start decorating lamp-posts. That is not something I look forward to with pleasure. How can there not be enough adults in Washington to see this and step back from the brink?
“Put simply: Attack on the family.”
Good points, may I add “Ridicule of the stay at home mom” which I think you have generally alluded to.
@ Pel #3: “But like charity, good economics begins at home.”
How true. And it is not by accident that the words economy, economics, economist, etc. come from “the Middle English yconomye, management of a household, from Latin oeconomia, from Greek oikonomi, from oikonomos, manager of a household : oikos, house.”
http://www.bartleby.com/61/19/E0031900.html
Wonder if there will be any money when you get to the age to be eligible for it?
I have always assumed that there won’t be, because you can be sure that at some point means testing will occur, and I plan to be in a position to fail that test.
Of course, that means you have to live your entire life in a certain way, not only deferring gratification to when you can afford it and changing the oil yourself in your 12 year old car, but, ultimately, figuring out how to avoid getting soaked. That is what the great advocate of the poor, Sen John Edwards, did, taking all of the income from his corporation in the form of capital gains and dividends – and thereby not paying an SS or Medicare taxes on it. I really wonder what will happen when those who won’t get any of the SS money figure out that they can’t win at the game but there are ways to quit playing it.
Odd, isn’t it, that when Pres Bush proposed a very modest alternative of SS the Democrats guffawed, saying the problem was decades away at worst.
I still wonder about AARP. Was their opposition to SS reform rooted in fear that an alternative would cut their power base, concern that the politicians they already bought would come out looking bad, or simply based on envy that later generations would get a better deal than they had.
The argument open borders people use is that:
1. Jobs Americans won’t do is reproduction.
2. We need poor Mexicans to reproduce and support Social Security.
3. Magically once they cross the border, poor Mexicans have the sort of cultural capital, attitudes, education, and cooperative, law abiding behavior and adherence to American traditions that makes them no different than Americans in the 1950′s.
But related to this, is what Spengler refuses to address. We are running out of young people because women don’t want to have children. When women DO want to have children, they want them as single mothers.
TFR rates are dropping WHEREVER you have urbanization, increase in women’s earnings, and increases in female literacy. I believe Spengler has a graph on this somewhere on Asian Times. It happens even in Tunisia, Algeria, and Iran, not noted for their devotion to feminist ideology.
Meanwhile the CDC reports that globally, most births are to single mothers, and the rate in the Scandi nations is around 75% while in the US around 40%. It is about 40% for Middle Class Blacks, and over 90% for the Black Urban Core (Blacks are 40% Middle Class, 60% Urban Core). The Single mother rate is either 41% or 28%, depending on how you define it (the Census Bureau does not define single motherhood as a woman with a “partner” in the house regardless if he is the biological father), and illegitimacy is over 50% for Hispanics (mainly Mexican origin women).
These are marked increases. Black rates were 24% in 1965, White rates 4% (what Japan’s is today), that year, and the Hispanic rate was only 17% in 1980.
What we are looking at is a cultural shift. Women don’t need or WANT men, in any form but sexy bad boy. When they do have kids they have ONE, in their mid or late thirties, after they can no longer chase after a sexy bad boy. The only significant deviation from this model are Hispanic and Black women of poor socio-economic backgrounds, who often have 3-4 kids, each with different fathers, or the White British Underclass who do the same. [Clearly there is no innate racial component, rather a strong economic/cultural one.]
Needless to say these children merely become consumers of Welfare rather than creators of Welfare resources.
And this problem CANNOT by definition be addressed by gradual reforms because of the built-in gender advantages.
Women find it advantageous, even if in the long run it’s ruinous. As I’ve blogged most recently, Men find Obama’s Welfare State a bad deal. Bad economically, they pay taxes and are excluded from benefits (well, White men anyway), and bad for them sexually (they must now have a GREATER level of status/power/social dominance than women) and this leaves out most men.
What the Welfare State (supported politically and economically by women) has done is transfered social and economic and cultural and political power to women from men. This benefits women, but because women don’t need men anymore as husbands and fathers, leaves men out in the cold with no interest in the system at all.
This to me suggests politics will be a sharp break, akin to the fall of Louis Phillipe or the Second Empire. Ugly, chaotic, and quite different from what came before.
Interesting points.
Re: pel #3, whiskey #17 and destruction of the family.
Since Roe v Wade, the number of abortions in the U.S. is nearly 50,000,000 souls…
http://tinyurl.com/cr2dk4
16. RWE: “I still wonder about AARP?” Why wonder, the organization is a fraud, imo, and nothing more than a socialist front meant to control the groupspeak of seniors.
17. whiskey Not to pick an argument with your basic meme, because in many ways you make sense. However, I believe you somehow gobsmacked this: “But related to this, is what Spengler refuses to address.” You may have skimmed through Spengler too fast, because my takeaway from his efforts differs from yours. You seem to be saying mostly single women want children. Common sense says that’s not the case. What he and I say is that there are more single women having children now than a few decades ago. Together with a slightly lower percentage of married women choosing childbirth. This has created a major change in our culture. If you meant to say something like this I withdraw my criticism. Regardless, the net result of so many millions of women choosing not to have children – and not even throwing in the after-conception “choice” issue – will probably create a tragic shortage of family members healthy enough to see to the womens’ needs as they reach dodderage. Talk about ironic. Their decisions decades earlier directly contributes to their suffering and demise later.
“I read this and go back and re-read once more
Kipling: ‘Gods of Copybook Headings’.
And aren’t all those disillusioned Obama voters looking like burnt fools with bandaged fingers.”
Or like dogs returning to their vomit.
I don’t see any way to force change than “starving the beast” (I put in quotes becasue I read it recently, can’t remember where). Set withholding to zero and make them come after you for taxes. Do it as legally as possible to avoid penalties (file extension upon extension). If enough taxpayers do this it will send a clear message. Yes there is risk but the benefits, if successful, could be 10x more. Any tax law experts out there to advise on this?