Implosion of Social Security Disability Ponzi Scheme Accelerates

The New American
November 26, 2013

Fresh data just released by the trustees of the Social Security Administration show that the number of people receiving benefits from the Disability Insurance Trust Fund has exploded over the last five years, reducing the surplus in that fund from $216 billion in 2008 to just over $100 billion in 2013. There were 7.4 million recipients in January 2009, but as of October 2013, there are nearly nine million beneficiaries, not including another two million spouses and children of disabled workers who are also receiving benefits.

Simple math illustrates the inevitable: If those receiving benefits for disability (real or faked) continues to increase, the trust fund will be bankrupt in less than three years. This is small potatoes when compared to the Medicare and Social Security programs, but illustrates the inevitability of the ending of all Ponzi schemes, large or small.

When Senator Tom Coburn (R-Okla.) claimed on October 20 that “We have $128 trillion worth of unfunded liabilities … and another $17 trillion worth of debt,” Glenn Kessler at the Washington Post preferred to question the amount rather than the imminent failure of these schemes. He claimed that the real number was perhaps closer to $43 trillion, using numbers from the Social Security trustee themselves, or suggested that perhaps the real number was $84 trillion, relying on the National Center for Policy Analysis for that one.

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Under Obama: Disability Trust Fund Runs Record 5 Straight Yrs of Deficits

CNS News
November 22, 2013

President Barack Obama (AP Photo/Susan Walsh)

(CNSNews.com) - In the fourteen fiscal years that preceded President Barack Obama’s inauguration in 2009, the tax receipts coming into the federal government’s Disability Insurance Trust Fund exceeded the benefits paid out, and the trust fund ran a surplus.

In each of the five fiscal years Obama has served as president, the trust fund has run a deficit as the number of people receiving disability benefits has surged. The Disability Insurance Trust Fund has never before run five straight years of deficits.

In fiscal 2013, which ended on Sept. 30, the Disability Insurance Trust Fund ran a record deficit of $31.494 billion, according to newly released data from the Social Security Administration. That followed deficits of  $8.462 billion in fiscal 2009, $20,831 billion in fiscal 2010, $25.264 billion in fiscal 2011, and  $29.701 billion in fiscal 2012.

From fiscal 1995 through fiscal 2008, the Disability Insurance Trust Fund ran surpluses, as receipts from the disability insurance taxes paid by people who were working exceeded the value of the benefits paid to those claiming disability.

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Retirement no more: Median net worth at lowest level since 1969 recent study finds.

MyBudget360
January 5, 2012

There may be a temporary jubilee with the notion that the fiscal cliff has been deferred for a few months.  The media is quick to accept anything for a victory but very little has been done to stop our marching path onward on this massive debt spiral.  Many Americans continue to live in poverty with no visible exit.  The latest figures show over 47 million Americans on food assistance.  Many Americans as they enter their golden years are coming to fully rely on Social Security, a system that was on the table for being cut in the recent debates.  Since the Fed is creating asset bubbles and destroying fixed income investments, many older Americans are realizing that retirement is no longer a viable option given the rising costs in food, healthcare, and once again housing.  I see this on a monthly basis where you can spot older Americans in non-traditional and many times, temporary employment roles.  None of this intervention is ending up in household income.  In fact, when we examine real wealth the net worth of American’s is down to the lowest levels since 1969 when adjusting for inflation.

A return home

Many baby boomers are being greeted with a grim reality.  Retirement may not be an option.  A recent paper from New York University highlights some dramatic figures for net worth data from 1983 to 2010.  The study found that 2010 median net worth in the United States hit its lowest point since 1969.  This research aligns with other figures we have found from the Fed Consumer Finance Survey:

The data shows a crushing blow to the finances for most Americans.  The net worth of many Americans fell by nearly 40 percent between 2007 and 2010.  A large part of this has to do with the collapse in the housing market.  The Fed is trying its best to inflate that market once again but it is coming at a cost.  Many retirees rely on fixed income investments and these are taking a beating with quantitative easing.  Take a look at bond rates and CD rates and you will realize what a negative interest rate environment looks like.

The problem is that while many retirees have fixed incomes, the cost of items like food and healthcare continue to go up.  This becomes a major problem.  Keep in mind that most Americans have their wealth tied up in their housing.  The only way to unleash this wealth is by selling your property.  But then what?  The Fed with artificially low interest rates is pushing up home values and rents as well.  So a retiree will cash out and then chase the slow eroding power of inflation.

In reality very few families actually own stocks.  Only 1 out of 3 Americans actually have any savings so stocks might seem out of the question.  Hard to see those 47 million Americans on food stamps investing in the stock market.  Below is some data on stock ownership among American families:

Only about 15 percent of all US families actually own stock outright.  So it should come as little surprise that the recent stock rally has had little impact on the income figures for most US households.  Many US companies now derive a large portion of their income abroad so they have in many ways decoupled from the US economy.  During the recession, many profitable companies used the recession as a time to cut back and push forward on a path of low wage capitalism.  This strategy will certainly hurt those planning for retirement.

Contrary to popular belief and the 2012 rally, retail investors are pulling money out of equity funds:

Source:  ICI

$154 billion was pulled out in 2012.  There are a variety of reasons for this including lower cost ETFs but also, for those that built portfolios with funds many have to sell to provide for retirement.  We are now seeing 10,000 baby boomers per day reaching retirement age.  This is the first time in history that we have had some large group of people save up for retirement in a retail fashion.  But now they must sell.  After all, there is a purpose to saving for 30 or 40 years.  This is to provide for a retirement (and clearly the vast majority did not, or could not).  Yet those that did will have to sell and age does not stop for market speculation.

The fact that we have a younger less affluent generation is also going to create some issues.  Younger Americans are entering a weak work force and have little illusions about a cushy retirement.  In fact, many are not expecting Social Security to be around when their time comes yet today, during more prosperous times many rely on Social Security as their primary source of retirement funding.  Are we to expect human behavior is going to change moving forward?

The study found that median US households saw their wealth drop by 18 percent over the studied time period but those in the top one percent saw a gain of 71 percent.  The middle class is being squeezed tighter and tighter and the concept of retirement is being turned on its head.  There may be no retirement for the middle class but a combination of low wage work supplemented with what is left of Social Security.  So far, that seems to be the plan for millions.

A clash of generations – 1 out of 6 Americans receiving Social Security benefits.

A larger share of workforce dominated by older Americans.

MyBudget360
July 10, 2012

The bill is coming due.  A stunning 61,000,000+ Americans receive Social Security, Supplemental Security Income, or both.  Add another 46,000,000+ Americans on food assistance and you begin to see why we are running on borrowed time on a variety of fronts.  With Social Security, working Americans are taxed for current retirees.  This works when you have a large and young work base supporting a relatively small retired population.  That equation is not our current situation.  In 1960 you had nearly 5 workers for each beneficiary.  Today that number is down to 2.8 and will hit 1.9 in 2035.  For many young and less affluent Americans this is the time they will enter into retirement.  If we are having a hard time funding current programs what is going to change the math down the line?

The infinite deficits

The current system is built on debt financing and spending money we don’t have.  We are running deficits much quicker with Social Security than once expected:

This is now simply a reality.  The one thing about Social Security however is that money is flowing into the system versus money just flying out to say bailing out the banking sector.  The “trust fund” is nothing more than promises to pay people in the future but there is no giant bank account with trillions of dollars waiting to be paid out.  For many young Americans struggling with the poor economy, Social Security benefits in the future seem more like a distant dream.

We are now officially three years out of a recession but of course the public does not feel this economic recovery:

The reality is of course most Americans have taken a major haircut to their investment portfolios.  While a small part of our economy is protected by bailouts and massive disinformation, the rest are left to contend with a fierce version of market austerity.  So it should come as no surprise that household net worth is down, wages are down, and low wage positions dominate the new jobs that do hit the market.

The math behind the deficits in Social Security are no mystery.  This is one part of the economy we can predict with certainty:

The trend is unmistakable.  We have a smaller pool of workers to support a quickly aging population.  Here are some stunning figures:

People 65+ as a share of the working-age population

2010:           21%

2035:          36%

Not only will young compete against old, there will be a smaller pool of benefits to distribute out.  The only thing that can remedy this is if the economy hits a boom cycle and wages and jobs increase.  That is not happening and what seems to be the case is we are expanding our debt more and more.

Social Security & the Government's Fuzzy Math

Slideboom.com
July 23, 2011



Summary: The fuzzy math embedded within the 1983 Social Security reform legislation has been exposed with the realities of 2011. Still the game goes on as politicians from both parties spin the outcome to their own liking.

Social Security - Won't Back Down

Slideboom.com

June 6, 2011

Summary: Not knowing their retirement dollars were being turned into a 2.6 trillion dollar new debt they would have to pay again, millions of working Americans were duped thanks to the 1983 social security reform legislation. We have a better way, it's the peoples plan, and this time we won't back down.

No wonder you have tears in your eyes. We’re peeling the onion that is Social Security.

SIC SEMPER TYRANNIS!!!

Jim Gries

February 27, 2011

Excuse me, Mr. President

This week President Obama said: "When it comes to choices about our budget and priorities, we have found common ground before, Ronald Reagan and Tip O'Neill came together to save Social Security".  Excuse me, with all due respect Mr. President, as a member of the custodial generation, and more importantly a certifiable grandparent, I find your statement lacking in fact, an insult to my intelligence, and quite frankly, an affront to my 15 grandchildren.  It's exactly why meaningful dialogue on this issue is so lacking; you can't begin with fairy-tale statements, and expect to end up with logical real-world solutions.  The common ground you referenced began with Reagan and O'Neill sipping suds at an Irish pub in DC 30 years ago, and thirty years later millions of middle class working Americans are waking up with a financial hangover.  In other words the “common ground” Social Security solution has put middle class America on shaky financial ground.  

No doubt Social Security has been a force for good, however post 1983 its morphed into a cancer on middle class working Americans.  Evidence can be found littered across main street America; lost jobs, home foreclosures, bankruptcies, and financial institutions unable to fund business growth and new job creation.   2.54 trillion dollars of potential Social Security trust fund assets have been turned into a 2.54 trillion dollar debt.  Mr. President, that’s a 5 trillion dollar net loss, and that’s what this conversation has to be about; “common ground” be damned.  Personally I pencil in the “I’m entitled” box, however at the same time the left side of my brain is asking, if you’re entitled who’s obligated?   That intra-gray matter conversation informs me there’s more than one party who has a stake in the outcome of this Social Security debate.  One wants their retirement benefits fully funded until the day they expire, and another would like to have more of their paychecks left to build their own retirement estates.  That’s why this conversation belongs in the intra-generational conference room, and has to be built on “solid ground” not political common ground.  

We’ve completed a preliminary assessment of the issue, demonstrating the results of the 1983 “common ground” legislation: http://sobreport.com/?p=66  Then built a “solid ground” treatment plan that allows middle class working Americans, their families, and the communities they call home to prosper again: http://sobreport.com/?p=70  Finally Mr. President, common ground solutions crumble under financial tremors, while “solid ground” solutions are built to withstand financial quakes. 

Take the stick out of their eyes, and put a carrot in their future.  Be the seed in your community; we provide the fertilizer, and growing directions.

Jim G.

352.293.4496

Social Security Fund to Be Empty by 2037

In another sobering estimate, the congressional office said government red ink this year will increase to $1.5 trillion, the most in U.S. history.

FOXNews.com

January 27, 2011

WASHINGTON -- Sick and getting sicker, Social Security will run at a deficit this year and keep on running in the red until its trust funds are drained by about 2037, congressional budget experts said Wednesday in bleaker-than-previous estimates.

The massive retirement program has been suffering from the effects of the struggling economy for several years. It first went into deficit last year but had been projected to post surpluses for a few more years before permanently slipping into the red in 2016.

This year alone, Social Security will pay out $45 billion more in retirement, disability and survivors' benefits than it collects in payroll taxes, the nonpartisan Congressional Budget Office said. That figure nearly triples -- to $130 billion -- when the new one-year cut in payroll taxes is included.

Congress has promised to replenish any lost revenue from the tax cut, but that's hardly good news, either, adding to the federal budget deficit. In another sobering estimate, the congressional office said government red ink this year will increase to $1.5 trillion, the most in U.S. history.

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Emergency Call to Congress: Stop the Destruction of Social Security by Wall Street Puppet Obama!

Webster Tarpley

Webster G. Tarpley
TARPLEY.net
December 12, 2010

Dear Senator/Congressman –
American voters are shocked and outraged by Obama’s latest betrayal of the FDR New Deal heritage. Most alarming in his dirty deal with the Republicans is the proposed sabotage of Social Security.

We will work hard to defeat any politician of any party who loots or drains the Social Security trust fund, including Obama’s diabolical trick of a payroll tax holiday. Tell Obama HANDS OFF OUR SOCIAL SECURITY! Any problems with Social Security can be easily solved by removing the cap on the FICA payroll tax and making rich parasites and economic royalists pay their fair share — not rewarding them with tax bonanzas. We can already see the GOP vultures led by Ryan, DeMint, & Co. getting ready to destroy Social Security if this measure goes through.

We demand that you use your position and influence actively, to beat back this sinister ploy by Obama.
In the Senate, any senator who does not filibuster Obama’s plan deserves to be primaried first, and then defeated at the polls.

If this rotten sellout is not stopped, House members must dump Pelosi as minority leader, rather than become parties to such monstrous treachery.