Bad Investment

August 16, 2012

Turns out Social Security may not only be an unwise investment for new and future retirees, it may not be an investment at all. A recent Associated Press report noted that today’s new retirees are part of the first generation that has paid more into the Social Security system than they will actually receive after retirement.

One such example from a 2011 Urban Institute study was given in the AP article:

“A married couple retiring last year after both spouses earned average lifetime wages paid about $598,000 in Social Security taxes during their careers. They can expect to collect about $556,000 in benefits, if the man lives to 82 and the woman lives to 85 …”

Though Medicare has come back into the spotlight with the media attention toward Mitt Romney’s new VP pick and his now infamous proposal of remaking the single-payer healthcare system into a “premium support” system (something Romney also supports), reform of the other big entitlement elephant in the room, Social Security, has rarely been discussed since the failed attempts by the last presidential administration to partially “privatize” it.

Perhaps Social Security reform deserves new attention. After all, the program’s own trustees state in their latest annual report that after 2033, “tax income would be sufficient to pay only about three-quarters of scheduled benefits…”  At that point, one could just as well literally hide their money under their mattress and guarantee a more secure retirement. Assuming they remember where they hid it, they at least would not lose any of their money. Not to even mention the problem of inflation.

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Downgrade

August 5, 2011

It’s official. Ratings agency Standard & Poor’s has downgraded their long-term credit rating for the U.S., noting in their report the following reasons:

… we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade.

Hard to argue with.  Even the party dubbed as deficit hawks, Republicans, have voiced skittishness over the possibility of defense spending cuts should the plan potentially emanating from the so-called “super” committee not pass.

The sad reality is that very few politicians are willing to make the cuts that are necessary to correct our ever-increasing path toward staggering debt (not that we aren’t already there). And if they’re not willing to make those cuts, the only other option is to “increase revenues,” which is code for raising taxes – something that is even less politically palatable. Yet even raising taxes on the “rich” isn’t enough to put the government in the black.

It’s easy to point the finger at our politicians. But they are just doing what they think will get them reelected, which means in most cases avoiding making tough decisions that might offend their constituents. Truth be told, it’s the electorate that is to blame for our mounting debt and near refusal to seriously deal with it (note: part of the S&P reasoning was that the amounts agreed on in the recent debt-ceiling deal are not anywhere near enough to tackle our long-term debt problems). As long as we the voters are unwilling to give up our particular piece(s) of the pie the government spending-machine cooks up, we will continue to face mounting debt and further credit worries.

“But what about cutting waste, fraud and abuse?” you might ask. One man’s “waste” is another man’s “investment.” One man’s “fraud” is another man’s “tax credit.” And one man’s “abuse” is another man’s “grant” or “entitlement” or whatever other euphemism he may choose at any given moment to justify his looting of other people’s money.

We are all part of the problem. The sooner we realize that the better.


‘Entitled’ Students Protest in the U.K.

November 11, 2010

More outcries from the ‘entitled’ in Europe:

This time it is students lamenting the fact that they may have to actually pay for more of their own college tuition instead of relying on the government for support. The horror!


The Upside to Gridlock

November 7, 2010

With the House of Representatives soon to be under Republican control, the government will be divided. The two parties, divergent as they are on ideological grounds, will likely not compromise on much. Such leads to a situation often derided as “gridlock.”

Those on the left, right and in the middle opposed to such gridlock say it is not good for our country. They argue that it means nothing will get done. But given the amount of things done over the years that have added to our massive debt, there may be something to be said for government not doing anything.

Republicans may argue that this gridlock is not acceptable. Their argument is that they must gain the Senate and the presidency in 2012. Then, they can go through with their agenda. It’s an agenda they claim, as they have done before with no significant results, will mean an end to wasteful government spending and a reduction in both the size of our government and its debt. But many of those same Republicans, when asked over the last week since the elections, have been hard pressed to spell out what they specifically would cut to make a significant dent in the debt. All too often they have resorted to the old “cut discretionary spending” mantra. The problem with that is, discretionary spending only makes up a small portion of overall federal spending.

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Outcry from the ‘Entitled’

October 27, 2010

Part of a report on the French parliament’s decision to up their retirement age in order to address budgetary problems:

In an attempt to revive a protest movement that has lost momentum, unions plan a new nationwide day of street demonstrations and strikes Thursday that are expected to cause travel problems. France’s civil aviation authority says Thursday’s strikes mean airlines must cancel a third of their flights at Charles de Gaulle, Paris’ main airport, and half their flights at the smaller Orly airport south of the capital. Airlines generally try to spare long-haul flights in such cancellations. A two-week train strike has been tapering off, and only a small number of trains were to be canceled Thursday … Striking dock workers have exacerbated the fuel shortages. Oil tankers are lined up in the Mediterranean as far as the eye can see off the port of Marseille, waiting to unload. The Normandy port of Le Havre faces a similar situation.

[picapp align=”left” wrap=”true” link=”term=france+retirement+age&iid=9988247″ src=”http://view2.picapp.com/pictures.photo/image/9988247/gallery/national-union-led.jpg?size=500&imageId=9988247″ width=”234″ height=”155″ /]All of this is over a decision to raise the retirement age from 60 to 62. Perhaps a disturbing effect of an engrained entitlement culture?

If (and that’s a big “if”) American politicians attempt to meaningfully address our country’s looming debt problem by tackling our entitlement programs, Social Security and Medicare, will the opposition behave just as childish? There’s something ironic about acting immature about retirement benefits.


France Tackles Retirement Age

June 22, 2010

The government in France is actually making a sensible move to improve their finances. They’re targeting their pension system by raising the retirement age to 62.

Naturally, the socialists and unions are decrying the move. But, fortunately for the financial strength of that country, more sane minds have apparently prevailed.

Now, if only the United States could learn from this move and, barring real and comprehensive reform, at least seek to raise the Social Security retirement age. But that’s not likely given the outcry politicians would likely here.

Meanwhile, our country’s fiscal health continues to be threatened by our bloated entitlement programs.


Projected Spending

May 24, 2010

Here is a graphic from the Congressional Budget Office showing what areas are estimated to make up the bulk of federal spending 10 years from now:

Note the amount entitlement spending will make up — proof that the answer to fixing our budgetary issues is not just to cut earmarks. Reining in deficit spending is going to require looking at popular programs like Medicare and Social Security.