Tag Archives: Bankrupt

Young workers are paying Social Security taxes but will they ever collect benefits?

What if we had no money for anything except entitlement spending?
What if we had no money for anything except interest and entitlements?

The way Social Security taxes work is that you pay 12.4% of your salary, and another 2.9% for Medicare. That’s 15.3%, before any federal, state and local taxes. So, what are you getting for this 12.4% contribution to the Social Security welfare program? You’re supposed to be able to withdraw that money when you retire, but that money isn’t being stored in an account with your name on it. It’s being spent right now on people who are already retired. Will there be money available for you to withdraw when you retire?

If you’re a young person who retires in 2035 or later, the answer is absolutely not.

The Daily Signal has the numbers:

The American people need to know the state of finances of the Social Security program so they can better understand why reform is not only necessary, but absolutely essential. Here are five takeaways from the most recent financial report:

  • $66 Billion Cash-Flow Deficit in 2016

Social Security is still considered solvent and able to pay full benefits because it has accumulated a $2.8 trillion trust fund, but since the entirety of its trust fund consists of IOUs, cash-flow deficits must be financed by general revenue taxes or new public borrowing.

Since 2010, the Old-Age and Survivors Insurance program has taken in less money from payroll tax revenues and the taxation of benefits than it pays out in benefits, generating cash-flow deficits.

  • $14.3 Trillion in Unfunded Obligations

However, this figure assumes that the $2.8 trillion in trust fund reserves are available to be spent. The problem is that these reserves represent liabilities for the U.S. taxpayer. The payroll revenues have been spent and the trust fund was credited with U.S. bonds, which represent claims on the American taxpayer. This is why the actual unfunded obligation is $14.3 trillion.

The trustees report that Social Security’s unfunded obligation has reached $11.5 trillion. That is the difference between what the program is expected to receive in income and what is expected to spend over the 75-year horizon the program’s actuaries consider for projections.

  • Insolvent by 2035

Based on current projections, the Social Security Old-Age and Survivors Insurance trust fund will be depleted by 2035, reducing Social Security’s expenditures automatically to what the program will receive in revenues, regardless of benefits due at that time.

Social Security is only legally permitted to spend funds in excess of its revenues until its trust fund is depleted.

  • 25 Percent Automatic Benefit Cut

What this means for beneficiaries is that in the absence of congressional action, benefits could be delayed or indiscriminately reduced across the board by 25 percent.

Once the Social Security trust fund is depleted, the program will only be able to pay 75 percent of scheduled benefits, based on payroll and other Social Security tax revenues projected at that time.

  • High Costs to Delaying Reform

The trustees highlight that if Congress waits until the trust funds become exhausted, the cost of making the program solvent will be as much as 40 percent higher, meaning significantly greater benefit cuts and/or tax increases for workers and beneficiaries.

There are several key reforms Congress could pursue to preserve benefits for the most vulnerable beneficiaries without increasing the tax or debt burden on younger generations. However, the longer Congress waits the act, the larger the changes that will be necessary to address Social Security’s combined financing shortfall.

Young people working today who retire in 2035 or later will never see a dime of their Social Security contributions. What’s more likely is that the taxes on their income will go even higher. Take a good look at your paycheck, and you will see money being deducted for this entitlement program. This is money you will never see again. It is being used now, to buy the votes of elderly people who vote against reform when they vote Democrat.

The only person to try to do something about these Social Security problems was George W. Bush – a Republican. But his effort to set up private savings accounts was stopped by Democrats, who depend on the votes of the people who collect from Social Security.

These problems are even worse when you realize that Social Security is only one of the entitlement programs that is going bankrupt. There are others – as well as interest on the $20 trillion debt. ($10 trillion of which was added by Obama in his 8 years as Welfare President). Young people: you are paying taxes for programs that will not be there for you when you need them. Stop voting Democrat, because money matters!

Young workers pay into entitlements that will be bankrupt when they retire

Payroll taxes for Social Security and Medicare
Payroll taxes for Social Security and Medicare

Doug Ross from Director Blue has a public service announcement for young people. Even if they are able to find jobs, they can look forward to paying a large chunk of their income to the government for retirement programs, Social Security and Medicare, that will be bankrupt by the time they are ready to retire.

Excerpt:

Ever seen these numbers on your pay stub? The numbers I’ve highlighted?

That money is being taken from you — or, more properly, it’s being stolen from you — to fund a myth. A mirage.

You’re never going to see a dime of that “Social Security Retirement Insurance” you’re paying for.

You’ll never a see a nickel of that “Medicare Health Care Insurance” either.

That money is being taken from your pay — your livelihood — to fund a system that will be bankrupt in less than a dozen years.

Oh, and it’s not me saying that: Medicare’s own actuary, Richard Foster, is. Social Security is in a similar situation, according to Treasury Secretary Timothy F. Geithner, who serves as the system’s senior trustee.

Suffice it to say that these systems will actually go broke far sooner than anyone’s really admitting because the economy remains poor and appears to be slowing down even further.

My public service message is this: this money is being taken from your pay in exchange for a promise that will be broken in just a few years. You’ll never see that money again. And it is the government — the government, not “the rich”, not the Koch brothers, not the oil companies — that is ripping you off.

It is the government, not corporations, spending untold billions on “green energy” scams like Solyndra. It is the government, not “the rich”, slathering EBT-welfare cards around like confetti. And it is the government, not “the Tea Party”, that is promoting illegal immigration and offering huge financial benefits to those in the country illegally. All with your money.

Medicare is the one that is really in trouble, as Forbes magazine explains:

The Trustees of the Medicare program have released their annual report on the solvency of the program. They calculate that the program is “expected to remain solvent until 2024, the same as last year’s estimate.” But what that headline obfuscates is that Obamacare’s tax increases and spending cuts are counted towards the program’s alleged “deficit-neutrality,” Medicare is to go bankrupt in 2016. And if you listen to Medicare’s own actuary, Richard Foster, the program’s bankruptcy could come even sooner than that.

See, the funny, funny thing about young people is that they are almost complete uninformed about basic economics. They don’t know where jobs come from. They don’t know where the money that the government spends come from. They don’t know how much the government spends. They don’t know about our debt-to-gdp ratio. Their view of economics is all determined by socialist public schools and socialist Hollywood and socialist mainstream media. It’s all emotional for them. They have feelings that the rich are greedy, and must be taxed, and that the government is Santa Claus, helping the poor with money from the rich. It’s the ultimate system of slavery, except the slaves want to be enslaved.

Romney wins first debate: spanks dazed and confused Obama like a foolish child

The debate was the worst ass-kicking in a Presidential debate that I have ever seen.

The transcript is here. And here’s the story on what went down.

Excerpt:

GOP presidential challenger Mitt Romney tonight charged that President Barack Obama’s jobs plan is a failure, with millions out of work and looking for help.

“My plan is to put people back to work in America,” Romney said tonight at the first of three presidential debates scheduled for the 2012 presidential election season.

“Look at the history of the past four years. We have 23 million people unemployed. Keeping with the status quo is not going to work for the American people.”

Obama returned to his oft-repeated theme of blaming George W. Bush, asserting the taxation approach Romney was proposing was nothing more than a return to the “trickle-down” economy of the Republican plan.

Obama began the debate by reciting familiar campaign themes, suggesting once again that his administration inherited from Bush one of the worst economies in the history of the United States.

But Romney struck a theme of energy independence and advancing small business as keys to getting the U.S. economy growing again. He accused Obama of proposing “trickle-down government,” represented by more government regulation and more taxation.

Romney disputed Obama’s assertion he was locked into a tax cut, charging that under the Obama administration the middle class has been pressed by reduced income, diminished job opportunities and increased food and energy costs.

From the first moments of the debate, Romney looked Obama directly in the eye, took exception to president’s assertions about Romney’s policies, and gave more precise answers.

Obama pressed that Romney’s economic plan called for $5 trillion in tax cuts and $2 trillion in military budget increases, a program Obama asserted would demand tax increases on middle-income earners.

“Look, I’ve got five boys and I’m used to somebody saying something that’s not true and hoping that by repeating it I’m going to believe it,” Romney countered, asserting that everything Obama said about his tax program was inaccurate.

Obama insisted Romney’s tax-reduction plan of necessity would either increase the deficit or demand tax increases for the middle class, charging that under Romney’s definition Donald Trump would be a small business.

Objecting to Jim Lehrer’s interruption that the first segment was exceeding the 15-minute limit, Romney charged that Obama would increase taxes on small businesses at the cost of 700,000 jobs.

As the discussion advanced to the nation’s deficit, Obama reiterated his statement that he inherited a massive deficit, and appeared on the defensive.

“You have been president for four years, you said you would cut the deficit in half and you have run $1 trillion in deficits each of the four years,” Romney attacked. “That does not get the job done.”

Romney pointed out that when the economy was growing as slowly as it is now, more slowly than when Obama took office, this is no time to increase taxes.

“You never balance the budget by increasing taxes,” Romney insisted. “I don’t want to go down the path of Spain.”

And:

Romney said “ignoring the 10th Amendment is not the way to have a vibrant economy.”

Romney said the key to education is great teachers, and he raised a reference to the U.S. Constitution regarding citizen rights.

“I interpret our founding documents as providing a responsibility for religious freedom – to pursue happiness by taking care of the less fortunate – but massive government involvement limits freedom – the path we are taking is not working with 23 million Americans unemployed and 50 million on food stamps.”

Obama said the responsibility of the federal government was important in improving the educational system in America.

“Budgets reflect choices. If we cut taxes to benefit people like Gov. Romney and me, it makes a difference,” Obama. He again demanded specifics of the GOP plans.

“When it comes to making college affordable, whether it be two years or four years, we cut out the middleman and eliminated banks from making a profit in student loans. Gov. Romney believes in education but he tells kids to borrow from their parents to go to college.”

Romney responded, “Mr. President, you are entitled to your own airplane and your own house – but not to your own facts.”

Romney said Obama put $90 billion into green jobs, but half of the recipients went bankrupt and others were owned by contributors to your campaign, and questioned the number of teachers that would have hired.

Romney proposed grading schools to know which were succeeding and which were failing.

“Massachusetts schools are ranked No. 1 in education because I care for education for all our children,” Romney said.

It was so bad that even gay activist and radical leftist Andrew Sullivan called it for Romney: (H/T Hot Air)

Look: you know how much I love the guy, and you know how much of a high information viewer I am, and I can see the logic of some of Obama’s meandering, weak, professorial arguments. But this was a disaster for the president for the key people he needs to reach, and his effete, wonkish lectures may have jolted a lot of independents into giving Romney a second look…

The person with authority on that stage was Romney – offered it by one of the lamest moderators ever, and seized with relish. This was Romney the salesman. And my gut tells me he sold a few voters on a change tonight. It’s beyond depressing. But it’s true.

A post-debate poll from left-wing CNN found that an astonishing 67% of registered voters thought that Romney won the debate.

Even the radically left-wing National Journal says:

Call it the curse of incumbency. Like many of his predecessors, President Obama fell victim Wednesday night to high expectations, a short fuse, and a hungry challenger.

If Republican presidential candidate Mitt Romney didn’t win the first of three presidential debates outright, he more than covered the spread. He was personable, funny, and relentlessly on the attack against a heavily favored Obama.

The president looked peeved and flat as he carried a conversation, for the first time in four years, with somebody telling him he’s wrong.

This debate was a blowout – and that’s just the reaction of the left.

Left-wing reactions on Twitter

Bill Maher: (HBO)

Bill Maher says Romney defeated Obama
Bill Maher says Romney defeated Obama

Peter Beinart (The New Republic)

Peter Beinart says Romney defeated Obama
Peter Beinart says Romney defeated Obama

Piers Morgan: (CNN)

Piers Morgan says Romney defeated Obama
Piers Morgan says Romney defeated Obama

And CHRIS MATTHEWS too:

Something else ran down his leg tonight, and it wasn’t a tingle, it was a tinkle.

Romney leading by 4 points in swing states

The latest poll of swings states from the left-wing Politico shows Romney leading Obama by 4 points, even with a 2 point oversampling of Democrats.

Breitbart explains: (links removed)

This week, Politico released its latest Battleground pollof the presidential race. Despite coming from the left-wing news site, the poll is one of my favorites. Its put together by respected pollsters from both parties, makes available its full cross-tabs and uses a very modest and reasonable turnout model for its sample. Including leaners, the sample in the poll is D+2. Nationally, Obama leads by 2-3 points, but, in the critical swing states, Romney now has the edge.

Each candidate leads in states considered “safe” for their party. In safe GOP states, Romney leads by 8. In safe Democrat states, Obama leads by a massive 22 points. But, in the more numerous and more important “toss up” states, Romney leads by 4, hitting the critical 50% threshold.

In the slightly different category of “battleground” states identified by Politico, Romney leads by 2, 49-47. Romney’s lead over Obama is powered primarily by his edge with independents. Romney leads Obama by 4 among the important swing voters. By 11 points, these voters think Romney would do better on the economy than Obama, 51-40.

Romney also has a big edge with middle class families, who prefer him over Obama by 15 points, 56-41.

My prediction for this election remains Romney 52, Obama 47.

Related posts

A closer look at the Obama administration’s $525 million loan to Solyndra

From the Manhattan Institute. (H/T Tom)

Here’s the first thing to note about this story:

Both Republican and Democratic administrations have practiced a “green” industrial policy by supporting ventures that promised to pursue renewable, non-carbon-based energy production or energy conservation.

The DOE’s authority to issue loan guarantees for innovative, clean energy technologies, the Energy Policy Act of 2005, was passed by a Republican House and Senate and signed into law by George W. Bush. Under the law, Congress authorized the issuance of $4 billion in loan guarantees in 2007, and $47 billion in 2009 with the objective of encouraging the development of new technologies. [2] [3]

However, no DOE loan guarantees were made during the Bush administration. The DOE wanted to make a loan to Solyndra, but career officials at the Office of Management and Budget (OMB) did not approve it, on the grounds that the project was not financially sound.

The Section 1705 Loan Program was created by the 2009 American Reinvestment and Recovery Act, which amended the Energy Policy Act of 2005.[4] The 2009 stimulus bill gave the DOE an additional $3.95 billion for loan guarantees.[5]

So that’s where the money came from. It was “stimulus” money. And now the shocking part:

By November 2008, Solyndra had raised $450 million from investors and was applying for a loan guarantee from the DOE under the Energy Policy Act of 2005. But the loan was turned down in January 2009 in the waning days of the Bush administration, on the grounds that “there is presently not an independent market study addressing long term prospects for this company” and “there is concern regarding the scale-up of production assumed in the plan for Fab 2,” a second factory.[7]

On January 13, 2009, Lachlan Seward, director of the loan program at the DOE, wrote, “After canvassing the Committee it was the unanimous decision not to engage in further discussions with Solyndra at this time.”[8] Lachlan was referring to the DOE Credit Committee, which was composed of DOE officials.

When President Obama took office days later, the DOE’s tone changed. In a March 10, 2009, e-mail to an unnamed official, a senior adviser to Energy Secretary Steven Chu wrote, “The solar co [sic] board approved the terms of the loan guarantee last night, setting us up for the first loan guarantee conditional commitment for the president’s visit to California on the 19th.”[9] As events soon revealed, March 19, 2009, was a wildly premature target date for a presidential visit. In fact, President Obama didn’t visit Solyndra until May 2010.

E-mails dated 2009 depict White House and DOE officials rushing to sign off on the project so that Vice President Joe Biden could appear at the Fremont plant in September 2009 to trumpet the administration’s support for green jobs. There was confusion about who would go and when, as well as a palpable sense of urgency. Within the OMB—historically the most fiscally conservative agency in any administration—there was anxiety about premature planning and precedent.

On March 10, 2009, an OMB official whose name was blacked out by the administration before the e-mails were released to Congress wrote, “DOE is trying to deliver the first loan guarantee within 60 days from inauguration (the prior administration could not get it done in four years). This deal is NOT [sic] ready for prime time.”[10]

[…]On August 31, 2009, an unidentified OMB official wrote to Terrell McSweeny, domestic policy adviser to Vice President Biden, saying “We have ended up in the situation of having to do rushed approvals on a couple of occasions (and we are worried about Solyndra at the end of this week). We would prefer to have sufficient time to do our due diligence reviews and have the approval set the date for the announcement rather than the other way around.”[12] Regardless of these concerns, the loan was approved on September 3, and Biden announced it via satellite at Solyndra’s plant on September 4.

[…]On May 24, 2010, Valerie Jarrett, senior adviser to the president, forwarded a Cleantech Blog post by Philip Smith to Ron Klain, chief of staff to Vice President Biden. The post outlined the doubts of Pricewaterhouse Coopers, Solyndra’s auditors, about the company. It stated, “On a pure business analysis you have to agree with the auditors—they are not a going concern.”[14] Jarrett said to Klain in an e-mail, “As you know, a Going Concern letter is not good. Thoughts?”[15]

Although Jarrett and Klain knew that Solyndra would go under, two days later, on May 26, 2010, the president visited the newly built Solyndra manufacturing plant in Fremont, California, and declared, “It is here that companies like Solyndra are leading the way toward a brighter, more prosperous future …. We can see the positive impacts right here at Solyndra.”

Fascinating. This is what the government does with the money that it is borrowing from your children. This is what the “stimulus” efforts of the Obama administration amounted to. Not only was the Solyndra loan an opportunity to pay back a Democrat campaign fundraiser, but we now learn that it was also rushed through to provide Obama with a publicity opportunity. Is that the main job of the President of the United States? To waste money on photo opportunities?

Entitlements programs are going bankrupt: how can we fix them?

From the American Enterprise Institute, a post that explains in brief how to reform each of the three largest entitlement programs so that they will not go bankrupt by the time today’s younger workers need them.

Here are the programs:

  1. Social Security (a social program to redistribute wealth from current workers to current retirees)
  2. Medicaid (a social program to provide health care to low income/low wealth Americans)
  3. Medicare (a social program to provide health care and prescription drugs to older Americans)

And here’s one of the solutions (for Social Security):

Social Security is the easiest entitlement program to reform and can be done without raising taxes.

  • The age should be gradually raised to 70 by 2065.
  • Benefits should be indexed to price inflation, not wage inflation, as the program’s purpose is to keep the elderly out of poverty.
  • Benefits should gradually be reduced for earners with high incomes. The system should be a way to keep individuals out of poverty, not create a dependent upper- and middle-class.

Together these three reforms would ensure Social Security stays solvent. The entire system, however, could be easily replaced with a new program designed to keep seniors out of poverty and empower them throughout their retirement. People should be given the incentive to work longer by eliminating the Social Security payroll tax for individuals over 62, and a basic income supplement should be provided to impoverished senior citizens. Workers should then be given ownership of their retirement savings by enrolling all workers 55 and younger into a retirement savings account funded by 5 percent of the worker’s earnings (2.5 percent from the individual and 2.5 percent from the employer). These simple reforms would create a system that  actually provides a safety net for needy citizens — all for 60 percent of what the U.S. currently spends on Social Security.

Click through for the other two problems and solutions.