The Democrat War on our 401(k) Plans

Posted by PITHOCRATES - March 22nd, 2014

Week in Review

Retirees can’t get by on Social Security alone.  And we can’t raise Social Security payments because the program will be insolvent in a few years.  Because of our aging population.  More people are leaving the workforce than are entering it.  So fewer people are paying taxes to support those in retirement.  And those in retirement are living a lot longer into retirement than the Social Security actuaries thought they would.  Which is why Social Security is going bust.  And people need other sources of retirement income.  And a big source of that retirement income has been our 401(k) plans.  Which President Obama wants to take away (see Obama’s budget bad for 401(k) savers by Scott Hanson posted 3/19/2014 on CNBC).

President Obama’s proposed budget for 2015 would be a disaster for the millions of Americans who are underprepared for retirement. This plan would reduce the tax incentives for employers to offer retirement plans to their employees…

Under Obama’s budget plan, higher-income earners would be limited to a tax deduction at the 28 percent level, even if their current income-tax bracket is much higher…

This means they would not only pay taxes on some of their contributions today, they are fully taxed when they withdraw the money in the future. This, of course, is double taxation.

The Social Security Trust Fund doesn’t have any money in it.  All the money we’re paying into Social Security is going right out to pay for someone else’s retirement.  And what’s left over the government spends to buy votes.  Replacing our money in the Social Security Trust Fund with IOUs.  Promises to repay the money when we need it.  How?  By either borrowing more money.  Printing money.  Or taking a portion of our other retirement money we’re setting aside.  Our 401(k) plans.

It’s no secret that the Democrats hate these 401(k) plans.  For that’s a lot of money people are NOT spending.  And money they can’t tax.  The government is full of Keynesians.  They believe the only healthy economy is an economy where people spend everything they earn.  Keynesians see savings as leaks from the economy.  And they don’t like that.  For them consumption is everything.  And saving is for chumps.  They want our 401(k) plans.  Some have even been thinking about just taking that money and replacing it with some government program.  Like Social Security.  So they can get that money now.  And spend it.  For there are so many votes to buy and so little money to buy them with.  So the Democrats will wage their war on our 401(k) plans.  And then move on to something else.  For they have an insatiable appetite to spend.

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Obama’s myRAs are just another way to Transfer Money from the Private Sector to the Government

Posted by PITHOCRATES - February 2nd, 2014

Week in Review

Social Security has failed to provide for our retirement.  So President Obama wants another government retirement program.  So it, too, can fail the American people (see What Americans think about Obama’s myRA retirement accounts by Melanie Hicken posted 1/31/2014 on CNNMoney).

Obama’s new ‘myRA’ retirement accounts aim to help millions of workers begin saving for retirement. The accounts will be backed by the government, charge no fees and you’ll be able to contribute directly from each paycheck…

“Why would anyone consider giving a broke and bankrupt government any more of your money? That’s foolish,” said 62-year-old reader Steve Keller…

[Kathryn Riss] and her husband keep the modest savings they do have in money market accounts, which earn less than 1%. The myRA, on the other hand, will invest in government savings bonds and provide returns of around 2% to 3%, depending on interest rates.

Why can’t people earn more than 1% on their retirement savings in a bank?  Because of the Federal Reserve.  And Keynesian economics.  That focuses on consumer spending with tunnel vision.  It’s the only thing that counts as far as they are concerned.  And keeping interest rates near zero is supposed to encourage people to borrow and spend money.  For they will only lose purchasing power if they don’t.  What with banks only offering something less than 1% interest.  Thanks to the Federal Reserve printing money.  Making it so plentiful that people can borrow it practically for free.  And if they are paying the banks practically nothing to borrow it that’s all the banks can afford to pay their depositors.  Practically nothing.

The government will invest those myRAs into government savings bonds?  Yeah, right.  The government is going to take that money and spend it.  Because they have a voracious appetite to spend.  Which is why the Social Security Trust Fund has nothing but IOUs in it.  Government bonds that the government can’t afford to redeem without printing more money.  The Keynesian source of all our woes to begin with.  Which will only get worse the more ways the government thinks of to transfer money from the private sector to the government.  Taxes.  Service charges, surcharges, fees, etc.  Regulatory fines and penalties.  Treasury bonds and bills.  Medicaid.  Medicare.  Obamacare.  And now myRAs.

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Paul Krugman says there is no Problem with Social Security showing why we shouldn’t listen to Keynesians

Posted by PITHOCRATES - March 16th, 2013

Week in Review

Paul Krugman is a Keynesian economist.  He even won a Nobel Prize.  And the Left loves him.  Because he says it’s okay for the government to spend money it doesn’t have.  In fact, government should be spending more.  The reason why the stimulus failed according to Krugman is that the $800 billion wasn’t enough.  Which is why the Left loves this guy.  Because he says things like spending $800 billion is not spending enough.  Giving them moral authority to spend more.  For, after all, this guy is a Nobel Prize winning economist.  So he must know what he’s talking about.

Then there are real economists. People who actually understand how business and the economy as a whole works.  People of the classical school of economics.  The Austrian School.  And the Chicago school.  Who don’t think much of Mr. Krugman.  Or Keynesian economics.  For all they see is a historical record littered with failure.  They know why those in government only listen to Keynesian economists.  Because they simply want to expand government spending.  For they like having all of that money flow through their hands.  While reputable economists want that money where it benefits the economy most.  In the private sector.

Krugman gets a lot of air time.  Because he advances the government’s agenda.  Which the mainstream media is helping the president pass.  So you see him on television a lot.  And sometimes someone with a real understanding of the economy will have a little dustup with him.  As someone did recently on ABC.  The topic was Social Security and the Social Security Trust Fund (SSTF).  Senator Ron Johnson (R, WI) said Social Security was going bankrupt.  Krugman said Johnson’s facts were all wrong.  That Social Security had a dedicated revenue stream.  And the SSTF was fat with investments not only earning interest but can be used to pay benefits.  Bruce Krasting does a little fact checking.  Here are some excerpts (note: this article appears to have missed the editing process and contains quite a few typos some of which we corrected) (see Paul Krugman Has Got His Social Security Facts Wrong by Bruce Krasting posted 3/11/2013 on Business Insider).

CR[S] [Congressional Research Service] had this to say about the TF for FERS [Federal Employees’ Retirement Service]

The assets in private-sector pension funds represent a “store of wealth” that firms can use to meet pension obligations as they come due. The CSRDF [Civil Service Retirement and Disability Fund], however, is not a store of wealth for the federal government.

Got that PK [Paul Krugman]? The CR[S] says there is no wealth (aka money) in the TF:

The OMB [Office and Management and Budget] provides more clarity on TFs. From the Budget of the United States Government, Fiscal Year 2010: Analytical Perspectives

Balances in the trust fund are available for future benefit payments and other trust fund expenditures, but only in a bookkeeping sense.

Ah! There is no money in the TFs. They are bookkeeping entries. OMB concurs with CR[S] – TFs are not a store of wealth. More:

The holdings of the trust funds are not assets of the Government as a whole that can be drawn down in the future to fund benefits.

How many ways does OMB have to say this to convince PK? Another:

The existence of large trust fund balances, therefore, does not, by itself, increase the Government’s ability to pay benefits.

Is this getting through to progressives like PK? This is not the tin hats talking PK. This is your “guys”.

Senator Johnson made the statement that the SSTF accounting was similar to a person who writes themselves an IOU for $20, and then somehow believes he actually has an asset. PK objected. This is what the OMB has to say about it; no wiggle room for PK with this:

These trust fund balances are assets of the program agencies and corresponding liabilities of the Treasury, netting to zero for the Government as a whole.

Got that PK? The Senator was correct. Writing an IOU to oneself nets to zero. If the OMB was the arbiter of the TV debate, it would have said that the Senator had the facts, and Krugman was blowing smoke.

Let me explain this in another way.  Remember the movie Dumb And Dumber with Jim Carrey and Jeff Daniels?  Where they drive to Colorado to return a women’s briefcase?  That briefcase was full of money and was supposed to pay a ransom to get that woman’s husband back.  Jim Carrey’s character picked it up before the kidnappers could because he had just driven the woman to the airport and was smitten with her and wanted to return it to her.  So she would marry him and they could live happily ever after.  And hence the road-trip to Colorado to return it.  Much hilarity ensued.  But then that briefcase opened.  And the boys saw all of that money.  These guys who had no money and no place to sleep.  In a cold Colorado winter.  And there was all that money.  So they did the only responsible thing.  They borrowed from that briefcase.  Leaving an IOU each time they did.  Then they bought some bare necessities.  The finest hotel suite.  A Lamborghini sports car.  New designer clothes.  Etc.  You know, bare necessities.  Near the end of the movie the briefcase is opened by the kidnapper who only sees slips of papers.  Their IOUs.  The kidnapper is enraged.  And Jim Carrey’s character reassures him that those IOUs are as good as gold.  Because they intend on repaying all of that money.  Even though each of them is dirt poor and unlikely to earn that amount of money in their remaining lifetime.

That briefcase is the Social Security Trust Fund.  All of that money poured into the Trust Fund.  While all those politicians looked at it.  And then thought about all the spending they wanted to do.  So they did the only responsible thing.  They spent the money in the Trust Fund and left IOUs in its place.  IOUs that they never will repay.  And everyone knows this.  Except, perhaps, Paul Krugman.  All rational people know how the government will replace those IOUs.  They will print money as they need it to pay benefits.  Causing even more inflation.  Raising prices further.  Forcing our retirees who paid into the Trust Fund to get by on less in their retirement.  Basically like what is happening right now.  And will only get worse.

You can’t loan money to yourself.  You can’t spend your personal savings and replace it with an IOU.  Because it nets out.  For if you borrow money you owe money.  Which means you’re doing stuff on both sides of the ledger.  And when you figure out your net worth (subtracting what you owe from what you have) you find there is little there.  The balance of your savings less the sum total of your IOUs is what you have to live on in retirement.  Nothing more.  For once you spent your savings they’re gone forever.  Just like that money in the Social Security Trust Fund.  They spent it.  And it’s gone forever.

Paul Krugman apparently doesn’t understand this.  As do few Keynesians.  For they keep spending money.  And running up more debt.  But never see any problem.  Unlike real economists.  Who, sadly, are not advising the government.  For they refuse to tell the government what they want to hear.  Like Paul Krugman and his fellow Keynesians.  Who say things like they’re just not spending enough.  Which is what every politician wants to hear.  No matter how ridiculous or asinine it may be.

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Great Britain is trying to Privatize their State Pensions

Posted by PITHOCRATES - January 26th, 2013

Week in Review

Britain is a social democracy.  Not as much as they were before Margaret Thatcher.  But still a social democracy.  They have national health care.  And state pensions.  Something the American Left always wanted in the United States.  They got the state pensions—Social Security—a long time ago.  But they’ve been waiting a very long time for their national health care.  Now they’ve got something like it in Obamacare.  And now the Left can follow in the footsteps of that social democracy they so admire.  Who has no problem whatsoever in providing those lavish benefits onto their people (see Start retirement saving now or the government may make you by Sarah Mortimer posted 1/25/2013 on Reuters).

Britain may soon have to force workers to start saving for retirement to cut a soaring pensions bill set to reach 120 billion pounds in 20 years…

The government’s current pension legislation is an attempt to tackle the country’s ballooning pensions bill, set to hit 8.5 percent of economic output by 2060, from 6.9 percent now…

Britain lags behind countries including Denmark, the Netherlands and Australia in global pension rankings. Its pension system ranks seventh out of 16 countries in a global comparison of national schemes, according to data from consulting firm Mercer. Its lowly ranking reflects an ageing population, low investment returns and large government debt…

“One way or another, long-term pension contributions will increase,” Paul Macro, defined contribution retirement leader at Mercer said. “The government are trying to stop people relying on the state to support them in retirement.”

An aging population, low investment returns and large government debt?  Sounds like they’re talking about Social Security.

Note how Britain is trying to make their people less dependent on government while the U.S. is trying to make their people more dependent on government.  Even though both countries face the same problems.  An aging population, low investment returns and large government debt.  So it would appear one country—Britain—is trying to be responsible.  While that other country—the United States—isn’t.  Why?  Because Social Security, Medicare and Obamacare are not about taking care of people.  They’re about increasing the power of government.  Which is why the U.S. continues to increase their spending obligations no matter how much they can’t afford to.  Because spending money buys votes.  And winning elections give them power.  Which is what they want.  So they will ignore the responsible governing Britain is doing.  While implementing the kind of programs that caused Britain’s financial problems in the first place.

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Abortion and Birth Control are Bankrupting Social Security and Medicare

Posted by PITHOCRATES - January 20th, 2013

Week in Review

For the first time in history a credit reporting agency (Standard and Poor’s) downgraded the U.S bond rating in 2011.  Why?  The agency said they needed to see $4 trillion in spending cuts over 10 years.  The best Congress could do was $917 billion in spending cuts over 10 years.  And the creation of a super-committee to find another $1.5 trillion.  For a total of $2.417 trillion in spending cuts.  At least, on paper.  That never happened.  After winning reelection the president held out for and got increases in tax rates.  So he could increase spending.

So how did the U.S. get to where they needed to cut $4 trillion in spending?  Well, a large part of it has to do with abortion (see 55,772,015 Abortions in America Since Roe vs. Wade in 1973 by Steven Ertelt posted 1/18/2013 on LifeNews.com).

The United States marks 40 years of legalized abortion in all fifty states at any time for any reason throughout pregnancy on January 22nd, the anniversary of the Roe v. Wade Supreme Court decision. Since that time, there have been approximately 55,772,015 abortions that have destroyed the lives of unborn children.

Taxpayers pay taxes.  And how do we get taxpayers?  By having babies.  So when we aborted over 55 million babies the effect on tax revenue was profound.  We can see how by making some assumptions.  And doing a little math.

First of all, 55,772,015 abortions over 39 years come to on average 1,430,052 abortions a year.  Dividing this number by two to pair off couples for baby-making that comes to 715,026 couples.  Without abortion available we’ll assume about 80% of these couples will have children.

The first babies of the 715,026 enter the workforce 20 years later.  So in that year the number of additional workers paying taxes equals 2,002,072 (1,430,052 + (0.8 X 715,026)).  The following year the second child of this couple enters the workforce while another couple’s first child enters the workforce.  This brings the additional workers paying taxes equal 3,146,114.  And so on until each couple brings in three new taxpayers into the workforce. Over a decade the number of new workers paying taxes equals 110,685,999.

Assuming a median income of $50,000 these 110,685,999 taxpayers earn a total of $5.5 trillion over ten years.  Assuming an effective federal income tax rate of 18% the total federal income tax these people would have paid equals approximately $996 billion.

Using the 12.4% Social Security tax rate (both employer and employee) the amount of Social Security taxes these people would have provided over 10 years equals approximately $686 billion.

Using the 2.9% Medicare tax rate the amount of Medicare taxes these people would have provided over 10 years equals approximately $160 billion.

Adding these taxes together (Social Security and Medicare) they add up to $847 billion.  Adding this to the amount of federal income taxes brings the amount of taxes these people would have provided over ten years to about $1.8 trillion.

When they wrote Social Security and Medicare into law the average family size had fallen from around 5 to about 3.5 over a decade or so.  If you take that $1.8 trillion and adjust it for 3.5 children (1.8/3 X 3.5) the lost tax revenue equals $2.15 trillion.  At 4 children that lost tax revenue comes to $2.5 trillion.  At 5 children that lost tax revenue comes to $3.1 trillion.  At 6 children it’s $3.7 trillion.

Today’s seniors entered child-bearing age long before women’s liberation, birth control and abortion.  So most women got married and had children.  It is not uncommon for today’s seniors to come from families of 10 children or more.  This is significant because when the actuaries set up Social Security and Medicare they assumed these trends would continue.  But they didn’t.  The birth rate (and the population growth rate) declined since Social Security and Medicare became law.  Causing the population to age.  More people are now leaving the workforce and collecting Social Security and Medicare benefits than there are workers entering the workforce to pay for them.

Abortion has been a part of this decline.  In a current 10-year projection we are seeing anywhere from $1.8 trillion to $3.7 trillion in lost tax revenue due to abortion.  If Roe v. Wade didn’t legalize abortion and the Left didn’t assault the family (encouraging women NOT to get married or have children) during the Seventies as radical feminism took off there would have been a lot more births.  Perhaps as many as those actuaries thought there would be when they calculated the costs of Social Security and Medicare.

If normal family patterns had continued not only would these abortions not have happened families may have had more children.  Producing more taxpayers.  There were 3,136,965 live births in 1973.  The average family size then was about 2.5.  If you divide the number of births by average family size you get about 1,254,786 families having children.  If each of these families had one additional child that additional 1,254,786 children would be approximately 87.7% of the average number of abortions.  If these children grew up to have three children of their own we can calculate this additional tax revenue the same way we did for the loss revenue from abortion.  Or we can multiply the loss revenue from abortion ($1.8 trillion) by 87.7% to approximate what those additional children in 1973 would contribute in a ten-year projection today.  Approximately $1.9 trillion.  Adding the losses from abortion and families having one less child brings the total of loss tax revenue to $4.04 trillion.  Which equals the $4 trillion S&P was looking for in spending cuts.

So what is the cause for America’s deficits?   Is it because the rich aren’t paying their fair share in taxes?  No.  It’s because of abortion and birth control.  And radical feminism.  That attacked the family and encouraged women to do anything but get married and have children.  Something FDR and his New Dealers never designed Social Security and Medicare to take into account.  For FDR and his New Dealers were sexists.  As are Social Security and Medicare.  These programs require women to marry and have children to stay solvent.

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AARP’s Endorsement of Obamacare puts pressure on Social Security Benefits

Posted by PITHOCRATES - December 29th, 2012

Week in Review

AARP endorsed and helped pass Obamacare into law.  In exchange for an exemption from the very law they supported so they can sell their “Medigap” insurance policies easier than their competitor Medicare Advantage could sell theirs (see AARP latest to receive Obamacare break by Matthew Boyle posted 5/19/2011 on The Daily Caller).  Good for AARP.  But not for the senior citizens they represent.  For Obamacare will lower the quality of US health care.  And increase health care costs.  Especially for seniors.  So whenever AARP starts quoting Ronald Reagan one should be suspect as they are no friend of Ronald Reagan.  For Ronald Reagan would not have approved of what AARP did to help pass Obamacare into law.  Even if he and Tip O’Neill worked together to pull Social Security back from the brink of insolvency (see Ronald Reagan’s 9 Wisest Words About Social Security by Alejandra Owens posted 12/19/2012 on AARP).

That legislation, negotiated by President Reagan and Democratic House Speaker Tip O’Neill, focused on what was needed protect Social Security for the long term. Reagan understood that Social Security is a separately funded program unrelated to problems in the rest of the budget, and he clearly stated that: “Social Security has nothing to do with the deficit.”

Indeed, today the Social Security trust funds hold $2.8 trillion in government bonds. These reserves have been built up with the contributions that workers and employers have paid into the system for the dedicated purpose of paying Social Security benefits. These funds are held in legally established trusts and cannot be used for any purpose other than paying benefits. According to the latest Trustees’ report, Social Security can pay full benefits through 2033, and roughly 75 percent of benefits beyond that time.

The Social Security Trust Fund?  There’s no trust fund.  The government raided it long ago and replaced it with IOUs.  Government bonds.  Current Social Security taxes go to pay for current benefits.  There is no pile of cash earning interest anywhere.  No personalized savings accounts for individual Social Security contributors.  If there were then there would be no Social Security crisis.  No, that money is gone.  Spent by the government to fund their current spending obligations.  Which are so great that even by raiding the Social Security Trust Fund they still can’t find enough cash to prevent a deficit.

The government spends our Social Security contributions for every other purpose they want to other than paying our benefits.  They just launder the money first through the Treasury Department.  Exchange IOUs (i.e., government bonds) for that cash.  Then they go and spend that cash.  And when it comes time to redeem those government bonds they’ll probably just print money.  Inflating the money supply.  And depreciate the dollar.  Making it ever harder for a senior to live on their retirement savings.  And because of what AARP did to help pass Obamacare into law there will even be less money available for Social Security benefits.  Requiring more printing of money.  And more devaluing of the dollar.  Making life a living hell for the retirees they supposedly represent.  At least according to that article in The Daily Caller.

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Thanks to Advances in Medical Care People are Living long enough to Bankrupt Social Security and Medicare

Posted by PITHOCRATES - December 16th, 2012

Week in Review

People talk a lot about an aging population.  The cost impact on Social Security.  Medicare.  And pensions.  Something the actuaries are experts at doing.  Calculating costs.  The only problem for Social Security, Medicare and pensions is that when the experts calculated these costs medical care wasn’t as good as it is today.  And people were dying a lot earlier than they are today.  And this is the cost impact of an aging population.  People that are NOT dying as early as the actuaries originally calculated (see A sick world: We live longer, with more pain and illness by Kate Kelland posted 12/13/2012 on Reuters).

The world has made huge progress fighting killer infectious diseases, but as a result we now lead longer and sicker lives, with health problems that cause us years of pain, disability and mental distress…

The Global Burden of Disease study, led by the Institute for Health Metrics and Evaluation (IHME) at Washington University, finds that countries face a wave of financial and social costs from rising numbers of people living with disease and injury.

Social Security, Medicare and pensions are going broke because people stopped having babies during the Sixties and Seventies like they used to have before then.  As birth control and abortion came into vogue.  This became a big problem because it followed the baby boom.  The rate of older sicker people leaving the workforce who no longer paid income taxes grew at a greater rate than younger healthier people entering the workforce who paid income taxes.  And the older people are living longer.  So long that they can get sicker and become more costly to care for.  All because they’re living 10-20 years longer than the actuaries originally calculated.  Thanks to advances in medical care.

Things will get worse before they get better until the last of the baby boomers die.  And these two growth rates approach each other.  And pass.  Going from an aging population to one that grows younger.  So the number of taxpayers once again grows at a greater rate than tax consumers.  Which Obamacare will help speed along with their quasi death panels.

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Birth Control and Abortion have reduced Tax Revenue and House Values for Seniors

Posted by PITHOCRATES - August 26th, 2012

Week in Review

Birth control and abortion will bankrupt Social Security and Medicare.  And they will bring down Obamacare, too.  When Social Security became law we had a growing birth rate.  More people were being born each year.  So the population was expanding.  And the Roosevelt administration thought it would keep expanding.  So they created a Ponzi scheme.  Social Security.  Where more young people (i.e., taxpayers) pay into the system than retirees (i.e., tax consumers) collect from the system.  A foolproof system.  As long as the population continues to expand.  Keeping the base of the pyramid growing larger than the top of the pyramid.

Well their assumptions didn’t hold.  Women stopped having babies beginning in the Sixties.  Just as the Johnson administration gave us the Great Society and Medicare.  Based on the previous assumption that women would keep having babies.  So the funding mechanism was a flawed as it was for Social Security.  And now Obamacare is going to expand the Medicare model.  In the face of what is now a declining population growth rate.  Meaning the number of taxpayers will dwindle as the number of tax consumers retiring will explode.  Causing the aforementioned bankruptcies.  And that declining birth rate is causing even more financial damage (see Is Our Aging Population Partly to Blame for the Slow Recovery? by Philip Moeller posted 8/21/2012 on U.S. News & World Report).

As the unusually weak economic recovery continues, you’ve at least got to wonder if future studies of what ails us will include our aging population as a material cause. Simply stated, older people tend to liquidate assets to fund their retirements. Younger people tend to acquire financial assets as their personal wealth rises and they build their own nest eggs.

The United States has enjoyed nearly 40 years where the number of people acquiring assets was greater than the number of people disposing of them. This condition is being turned on its head. We now face roughly 40 years where there will be more people in this country wanting to sell financial assets than buy them. This supply-demand shift could put a lid on asset values and depress overall economic growth.

So on top of the government failing us in our retirement even our own retirement savings are going to fail us.  It will be like being on the far side of a housing bubble after the bust.  Where seniors want to sell their houses to finance their retirement.  Only to get tens of thousands of dollars less than they had planned.  For just as there are fewer taxpayers to pay the taxes to support an aging population there are fewer homebuyers (as well as other asset buyers) to buy the houses of an aging population.  Lower demand means lower selling price.  And a less comfortable retirement.  All because of that generation of greed and selfishness.  The baby boomers.  Who were all about sex, drugs, rock & roll, birth control and abortion.  And not so much about raising children.  Of course they, too, will suffer the effects of their selfish ways.  As there will be fewer taxpayers to support them in their retirement.  Or to buy their houses.

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Social Security is a Ponzi Scheme according to Economist Paul Samuelson who wrote the Book on Economics

Posted by PITHOCRATES - August 19th, 2012

Week in Review

While the Europeans, the Japanese and the Americans all struggle with an aging population and pension and health care systems approaching insolvency Singaporeans are enjoying comfortable retirements.  How?  Because they did something crazy.  They acted responsibly and saved for their retirement and their health care.  Instead of depending on the state (see Singapore’s got some good ideas posted 5/17/2012 on ctpost.com).

…Singapore makes no promises but instead requires all citizens to save up to 36 percent of their income for their own retirement and health care. The government invests the savings in stocks and bonds; the money is not used for current expenditures.

The result? Singaporeans have comfortable retirements. Their health-care system delivers better outcomes while costing 80 percent less than ours, according to 2010 findings from the World Health Organization, and all of it is financed without imposing debt on the next generation. Singapore even reported an uptick in medical tourism last year.

Now, compare Singapore’s system to our own. When Medicare was debated and enacted, Paul Samuelson was America’s most influential economist. He was an adviser to presidents Kennedy and Johnson, author of the nation’s best-selling economics textbook and a soon-to-be Nobel laureate. In 1967, Samuelson wrote in Newsweek about the funding mechanism for Medicare and Social Security: “The beauty about social insurance is that it is actuarially unsound. Everyone who reaches retirement age is given benefit privileges that far exceed anything he has paid in. . . . Always there are more youths than old folks in a growing population. More important, with real incomes growing at some 3 per cent per year, the taxable base upon which benefits rest in any period are much greater than the taxes paid historically by the generation now retired. . . . A growing nation is the greatest Ponzi game ever contrived.”

Samuelson was right about social insurance being a Ponzi scheme even though he was wrong on his economics.  He was a Keynesian.  And it was Keynesian economics that is responsible for so many of our problems today.  Encouraging governments to intervene into the private economy.  And to tax, borrow and print money to spend.  Which has given Japan their Lost Decade.  Gave the U.S. (and the world) the subprime mortgage crisis.  And gave the Europeans their sovereign debt crisis.

So here is one of the Keynesians’ greatest and most admired economists admitting that social spending is what it is.  A Ponzi scheme.  Of course the fatal flaw in the Keynesian model was women’s liberation.  The world changed.  Women stopped having babies.  And when they did we went from having a young population (more people entering the workforce) to having an aging population (more people leaving the workforce).  A baby bust followed the baby boom.  Which smashed apart the Ponzi scheme.  Because there are now more old folks drawing benefits than there are youths entering the workforce to pay for them.  So governments are spending more than they collect in taxes.  And the rate of spending is growing greater than its population growth rate.  Which is a big problem.  As Mr. Samuelson pointed out in Newsweek.

Meanwhile those who are saving for retirement are not having the same problems as they are in Keynesian economies with state pensions and national health care.  Of course a Keynesian would never approve of this.  For savings is to a Keynesian what sunshine is to a vampire.  And they will do everything within their power to prevent people from saving.  Despite their incredible record of failure.  But they keep plugging along.  Why?  Because governments love them.  They keep hiring them.  And they keep listening to their advice.  For they give legitimacy to their irresponsible spending ways.

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The Democrats Prove there is no such thing as a Social Security Trust Fund

Posted by PITHOCRATES - December 25th, 2011

Week in Review

So much for that Social Security trust fund (see The GOP’s payroll tax debacle by Charles Krauthammer posted 12/22/2011 on The Washington Post).

This is a $121 billion annual drain on the Treasury that makes a mockery of the Democrats’ reverence for the Social Security trust fund and its inviolability. Obama’s OMB director took Social Security completely off the table in debt-reduction talks under the pretense that Social Security is self-financing. This is pure fiction, because the Treasury supplies whatever shortfalls Social Security faces. But now, with the payroll tax holiday, the administration openly demonstrates bad faith — conceding with its actions that the payroll tax is, after all, interchangeable with other revenue and never actually sequestered to ensure future payments to retirees.

This is the real reason why the Democrats are so steadfast against privatizing Social Security.  They want that money.  Our contributions to our retirement.  And if we privatize it they can’t spend it.  And if we privatize and die our heirs get our unspent retirement money.  The government doesn’t get to keep it.

The Democrats also love Social Security to scare old people with.  By saying the Republicans want to take it away.  And yet here they are.  The only funding mechanism for Social Security, those payroll taxes, is going on holiday.  The Democrats are defunding Social Security for two months.  Now that means one of two things.  They don’t care about the money being there for our seniors.  Or this 2 month holiday doesn’t amount to much money to either the Social Security trust fund.  Or the economy.

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