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Live Stock Quotes Google! Again, for I know. Ready to share new things that are useful. You and your friends.Social Security's financial situation was in the news recently even if it did not get any big headlines. According to an description in the Washington Post on October 29, 2011, written by Lori Montgomery, the public safety agenda turned cash flow negative in 2011. In other words, for the first time in decades, the agenda will take in less wealth and wage in public safety payroll taxes than it will pay out in benefits.
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The amount of 2011 shortfall is estimated to be about billion. The current payroll tax holiday in effect will add another 5 billion in negative cash flow and if Obama gets his way to increase the tax holiday, that will add another 7 billion to the public safety cash flow problem. Thus, the short term hit on the Federal government's cash flow is about 8 billion. This shortfall would place an supplementary tax burden of about ,600 on every American household.
As more and more Baby Boomers enter their relinquishment years, the ratio of retirees to working Americans, those that finance public Security, will increase, placing supplementary financial burdens on the system. Despite this reality, the political class continues to either not act responsibly to find a financially viable explication to the ever growing question or has no clue on how to fix the problem. In either case, the question is likely to get bigger and bigger as the political class gets more and more afraid to make the courageous decisions to remedy the situation.
From this point forward, until and if the political class fixes this drive towards insolvency, public safety will add billions and billions of dollars to the country's Trillion national debt. It will need the Treasury group to sell more T-bills to citizen and countries like China to finance this cash flow shortfall.
Social safety Pitfalls
Most Americans think that they have a type of "retirement savings account" with the Federal government. This imaginary savings list supposedly contains all of the money and wealth that has been taken from each American and given to the Federal government to hold "in trust" until each American retires, at which point all of us can live happily ever after.
Americans have this impression of wealth since the government sends them a statement of their "savings account" on a quarterly basis. This statement implies that each of us is entitled to the monthly amount printed on the statements once they retire.
But the money that was taken from us while our working years has been spent long ago by the American political class, often on special programs and earmarks that did nothing but keep these politicians in office. There is no mountain of gold, millions of stock shares of shares, or other real wealth in the public safety trust fund. The .6 Trillion trust fund is nothing more than accounting Ious from the Treasury group to the public safety Administration.
But this pitfall of understanding, is only one that could have dire consequences on our perceptions and expectations of public Security. Consider:
The public safety official website clearly states that "Congress can turn the rules." Thus, your monthly statement is no more than a statement of the rules and laws today, Congress can turn the rules and laws, and how much an American receives each month, anytime it wants to. Given the declining financial stability and shortfalls of the program, changes are extremely unlikely to include increased benefits in the future. Thus, you can probably assume that your latest statement is a best case scenario.
In 1970, the consummate Court ruled there are no "accrued property rights" potential in the process. In other words, public safety payroll taxes collected while your working years don't grant on you a contractual right to any level of benefits when you retire so don't even think about suing for the benefits that may have been promised to you in the past. The consummate Court has already ruled on the topic.
The consummate Court has also ruled, back in 1937, that public safety taxes "are to be placed into the Treasury like internal wage taxes generally, and are not earmarked in any way." Thus, don't think about suing over the "held in trust" propaganda, the consummate Court back in 1937 had already ruled that the political class can co-mingle and waste public safety funds just like it does with quarterly wage tax funds.
Lots of pitfalls before we each get our "savings held in trust" by the Federal government and the American political class. The Washington politicians, the consummate Court, and reality will keep the pitfalls deep and numerous.
Political Class Pratfalls
The biggest pratfall recently came out of Harry Reid's mouth when he declared that public safety was in fine shape, having .6 Trillion in assets. But most sensible and arresting Americans know that the .6 Trillion is an accounting trick illusion. Jeff Jacoby, writing for Townhall on September 7, 2011, said it best:
"But the trust fund's assets are an illusion. public safety doesn't own .6 Trillion in gold bars or real estate or shares of Google. All it owns is Treasury Ious. Those Ious report .6 Trillion that the government has already spent and promises to spend again. But in order to redeem it again - to redeem those Ious - Congress will have to raise taxes, cut spending, or go deeper into debt. Which is exactly what Congress would have to do if the public safety trust fund doesn't exist."
Consider what the Congressional budget Office recently stated:
"The assets of the public safety trust fund do not report any real stock of resources set aside for benefits in the future. The trust fund is a ledger entry, nothing more."
The unmistakably scary part of the above two quotes is that Harry Reid apparently does not understand the uncomplicated accounting of the public safety system. He thinks there is .6 Trillion laying nearby in the Federal government somewhere that we can just naturally tap into.
If you do not identify that a question even exists or cannot understand the root causes of the problem, like Harry Reid's inability, it is next to impossible to solve the problem. That is the biggest pratfall of all, a supposed leader of the country cannot understand an issue that is uncomplicated to understand and will sway just about every American's life.
Shortfalls, pitfalls, and pratfalls. It should be apparent that the American taxpayer and retiree will come to be the biggest fall guys in the biggest Ponzi scheme of all time, the public safety Administration.
Three uncomplicated steps would go a long way to fixing the problem:
Raise the relinquishment age to 70, with hardship exceptions.
Lower the public safety tax rate but apply it to all forms of income, not just wages, without a cap in order to make the tax more equitable across all wage groups, regardless of the source of that income.
Deny benefits and checks to any American with a a net asset value over million in order to preserve resources for those in true of need of public safety support.
Mr. Reid, take note of how uncomplicated and fair it is to fix the process without any more pratfalls.
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