By Simon Grey, on January 18th, 2013
It’s apparently unpleasant:
American workers are opening their first paychecks of the year and finding an unpleasant surprise: The government’s take has gone up.
A temporary cut in Social Security withholdings gave Americans hundreds of extra dollars to spend over the past two years. But Congress allowed that break to expire during the wrangling over the fiscal cliff, meaning that Social Security taxes have reverted to 6.2% of salary from the temporary 4.2%.
The noticeable lightening of paychecks as consumers remain tentative threatens to put a drag on economic growth. The effect for companies is that the hit is likely to cement a frugal attitude that led consumers to cut back on eating out and shift to less-expensive store brands.
Now, I actually support a payroll tax increase. I think people who receive any form of government benefits should actually pay for them (yes, I know this is a crazy belief), and I think that the increase in tax rates is small enough and marginal enough that it will lead to increased revenues, thereby hypothetically reducing the deficit.
Of course, a higher tax burden means more economic malaise. But then, that’s simply the inevitable cost of the government living beyond its means. Bills must be paid, even by governments. If people don’t want higher taxes, they should vote for politicians who actually reduce spending. If people are unwilling to do vote for budget cuts, then they shouldn’t complain about higher taxes.
 Join the forum discussion on this post - (1) Posts
By Simon Grey, on August 13th, 2012
In the realm of inter-generational warfare:
According to government data, compiled by the Treasury Department at the request of SmartMoney.com, the federal government is withholding money from a rapidly growing number of Social Security recipients who have fallen behind on federal student loans. From January through August 6, the government reduced the size of roughly 115,000 retirees’ Social Security checks on those grounds. That’s nearly double the pace of the department’s enforcement in 2011; it’s up from around 60,000 cases in all of 2007 and just 6 cases in 2000.
The amount that the government withholds varies widely, though it runs up to 15%. Assuming the average monthly Social Security benefit for a retired worker of $1,234, that could mean a monthly haircut of almost $190. “This is going to catch an awful lot of people off guard and wreak havoc on their financial lives,” says Sheryl Garrett, a financial planner in Eureka Springs, Ark.
Many of these retirees aren’t even in hock for their own educations. Consumer advocates say that in the majority of the cases they’ve seen, the borrowers went into debt later in life to help defray education costs for their children or other dependents. Harold Grodberg, an elder law attorney in Bayonne, N.J., says he’s worked with at least six clients in the past two years whose problems started with loans they signed up for to help pay for their grandchildren’s tuition. Other attorneys say they’re working with older borrowers who had signed up for the federal PLUS loan — a loan for parents of undergraduates — to cover tuition costs. Other retirees took out federal loans when they returned to college in midlife, and a few are carrying debt from their own undergraduate or graduate-school years.
It’s hard to feel sorry for Boomers getting their federal checks raided by the government to pay off the banksters when it was the Boomers that kept those criminals in power in the first place. It’s also hard to feel sorry for the generation that kept pushing higher education on its kids and grandkids with no concern about the market realities of college-educated labor, to the point where they demanded federal subsidy of student aid, as well the constant barrage of propaganda telling kids to go to college. Of course, the main reason they wanted their kids to go to college was that they could be more productive laborers, which the Boomers were going to tax to death in order to pay for retirement. Basically, the Boomer’s plan for using future generations as slave labor is backfiring. And the karma could not be more beautiful.
Join the forum discussion on this post - (1) Posts
By Simon Grey, on August 9th, 2012
Some hack is complaining about how people who were promised that the government would take care of them are relying on the government to take care of them:
How much do senior citizens rely on Social Security? Even more than you might think. A new study finds that more than 46 percent of Americans die with less than $10,000 in financial assets, with many spending the end of their life strongly dependent on the government.
There’s a lot of stupidity in this first paragraph.
First, since you can’t take anything with you when you die, what good is it to have any assets left at death? Yes, you could always leave an inheritance for your children, but if leave a certain amount of wealth to your kids, the government takes half of it, unless you’re crafty enough to spend a sizable portion of your wealth on lawyers in order to not spend a sizable portion of your wealth on bureaucrats and their politician lackeys. Furthermore, your kids could waste your inheritance because you were a terrible parent who didn’t raise them right, so there’s no point in leaving anything to them anyway.
Second, the whole point of having government programs was to pay for people to not have to worry about paying for things in their old age. The government was supposed to provide for them. How could anyone possibly expect others to refrain from receiving government benefits when the whole point of said benefits was to give them to as many people as possible? (I, of course, refer more to social security than other programs, though I’ve yet to hear of any social spending program turn down money because it wasn’t interested in increasing its scope.) Why begrudge people for taking advantage of a system that asked to be taken advantage of.
Why should low financial asset levels be a problem, then, if these seniors’ income seems to remain steady? After all, you can’t take it with you. With almost no financial assets, these seniors “have little capacity to pay for unanticipated needs such as health expenses or other financial shocks or to pay for entertainment, travel, or other activities.”
Again, the whole purpose of having government programs, like Medicaid or Medicare, or, recently, ObamaCare, is so that people don’t have to worry about unexpected health expenses. The government promised to step in. Why should anyone be surprised when people start acting like the government is supposed to step in?
Also, a lot of the things on the list are completely unnecessary. Travel, entertainment, and other activities? Yes, these things cost money, but is it really so heart-rending if some old fart can’t buy tickets to Batman? Or can’t go see the Grand Canyon in their own RV before they take the eternal dirt nap?
Really, this is a story about a non-issue that only matters now because the government is going broke and is going to have to find a way to cut the budget. Of course, it’s hard to feel bad for those currently lamenting the problems seniors face today when a lot of these problems were easily predicted by those who opposed the government welfare programs in the first place.
Join the forum discussion on this post - (1) Posts
By Simon Grey, on June 6th, 2012
Here’s a waste of analysis:
A much better alternative is for the household to “buy” an annuity from Social Security. They can make this “purchase” by using their savings to pay current expenses and delaying claiming to get a higher monthly benefit at an older age. The savings used is the “price” and the increase in monthly benefits is the annuity it “buys.”
For example, consider a retiree who could claim $12,000 a year at age 65 and $12,860 at age 66 – $860 more. If he delays claiming for a year and uses $12,860 from savings to pay the bills that year, $12,860 is the price of the extra $860 annuity income.[1] The annuity rate – the additional annuity income as a percent of the purchase price – would be 6.7 percent ($860/$12,860). Remember that Social Security benefits are indexed for inflation, so the retiree is buying a real annuity. Vanguard – a wonderful company – also sells real annuities but it pays much lower rates.
This is all a lot of wonderful math, but the validity of the analysis is predicated on the assumption that Social Security is a reliable source of income. Currently, it is. However, it’s long-term reliability is very much in doubt.
The reason for this is simple, and two-fold. First, Social Security is primarily redistributive, in that it distributes current taxes instead of invested savings that were paid in by participants. Second, and more perniciously, a good portion of Social Security’s investments consist of owning federal government debt. As Social Security continues to run a deficit, it will have to sell the US bonds it currently holds. There are a couple of things that can happen. The government can raise taxes in order to buy back the bonds, the fed can print money to buy the bonds, private investors can forego investing in productive ventures, or consumer can forego consumption. With the exception of inflation, all of the choices require taking at least a short-run hit in aggregate standard of living. Inflation merely requires taking that hit in the long-run. To put it more simply, Social Security’s continued success as an investment is contingent on screwing taxpayers over. Needless to say, this may not make for the most reliable of investment programs. Just ask Bernie Madoff.
By Simon Grey, on February 22nd, 2012
In addition Mr. Krugman cites evidence suggesting large percentages of Social Security and Medicare beneficiaries are confused about their use of these government programs. They don’t seem to think they’re getting handouts.
Maybe that’s because they’re in fact not getting handouts. As they were reminded every time they looked at their paycheck stub and saw the Social Security and Medicare tax deductions, they were forced to sacrifice part of their income for these programs through their working lives. The programs are compulsory; there is no opting out of them; the taxes come out of your paycheck whether you like it or not.
Therefore the notion that people who don’t like big government should not get Social Security and Medicare is utter nonsense. What are they supposed to do? Refuse the benefits that they already paid for? You’d have to be rich to do that. But one can see why left-liberals keep bringing up this humbug. People who don’t share their love of big government are labeled inconsistent for doing what by law they are coerced to do, mocked for complaining about a government apparatus from which they can’t escape.
But why do regions that rely on the safety net elect politicians who want to tear it down? I’ve seen three main explanations.
First, there is Thomas Frank’s thesis in his book “What’s the Matter With Kansas?”: working-class Americans are induced to vote against their own interests by the G.O.P.’s exploitation of social issues. And it’s true that, for example, Americans who regularly attend church are much more likely to vote Republican, at any given level of income, than those who don’t.
Alternatively, as I proposed before, they may simply see this as sunk costs to be recovered. They can’t avoid paying taxes, so they might as well try to recover as much as they can. Furthermore, opposing the political program one uses makes sense because political programs tend to be monopolies for the poor. If the government offers medical care for poor people, they are going to have an impossible time trying to refuse it, especially since taxes (both direct and indirect) eat up a decent portion of their budget. In a sense, the only people who can refuse government programs are the sufficiently wealthy because they can afford to bite the bullet on taxes while also avoiding government programs. The poor cannot do this. The only way a poor person can opt out of a suboptimal government program is vote against it. Thus, it should make sense that some poor people oppose the government programs from which they receive benefits because they would much prefer to simply not go through the government to get their benefits.
By Simon Grey, on February 20th, 2012
Many liberals like to point out the apparent hypocrisy of the people featured in the article, who rail against big government, demand lower spending, and simultaneously rake in benefits from the federal government that they hate. The central figure in the article, Ki Gulbranson, works hard yet has barely enough money to support his family, even with the earned income tax credit* and reduced-price school lunches for his kids. His conclusion: the country is going bankrupt, but people don’t make enough money to pay more taxes, so we should have smaller government. He would rather go without his current benefits—but he can’t imagine retiring without Medicare and Social Security. [Ed.—the rest of the article is worth reading as well.]
I have no opposition to people pursuing or receiving government benefits if they’ve paid into the system, even if they oppose the offering of those benefits. There are two reasons for this.
First, if you’ve paid taxes, you should be able to recoup them because the government is supposed to act in your interests. Some benefits will be indirect (military spending, e.g.), some are indirect (highway construction, e.g.), and some are direct (welfare, e.g.). The problem with government is that all benefits are part of the same basket; you can’t opt out of paying for any of the benefits. As such, there is little reason to opt out of receiving any benefits because you’ve already paid for them and, as is the case in a democracy, they belong to you (what with it being a government of the people, by the people, for the people and all).
Second, the government does things that incentivize the receipt of direct benefits. Taxation is one example, in that taxation prevents you from taking care of things for yourself. More people would be able to afford their own health care if the government cut health spending and the corresponding taxes. Another example is regulation (which is in many cases not enacted democratically), which also makes many things more expensive. More people could more easily afford the things they need if regulatory compliance costs were reduced.
Now, political principles are indeed wonderful things, as they give us some idea of where we want to go. But we should never mistake political principles for political reality. It would be great if there weren’t any unconstitutional government programs and their corresponding taxes. But that is currently not the case, and our ethical considerations need to account for the various distortions that come at the hands of the government. If the government is going to force you to make bricks, there’s no principled reason to refuse their straw.
* Caveat 1: while I argue that people shouldn’t be considered hypocrites for receiving government benefits that they argue against, they should also be aware that there are costs to qualifying for government benefits, and that they should be prepared to comply with them.
Caveat 2: this ethical analysis only applies to people who have paid taxes. Those who haven’t paid a dime in taxes should not receive a dime in benefits.
By Simon Grey, on October 7th, 2011
I believe that a person who is 65 years old and has been forced into Social Security is owed something. But the question is, Who owes it to him? Congress has spent every penny of his Social Security “contribution.” Young workers have no obligation to be fleeced in order to make up for the dishonesty and dereliction of Congress. The tragedy is that most seniors just want their money and couldn’t care less about whom Congress takes it from.
Here’s what might be a temporary fix: The federal government owns huge quantities of wasting assets – assets that are not producing anything – 650 million acres of land, almost 30 percent of the land area of the United States. In exchange for those who choose to opt out of Social Security and forsake any future claim, why not pay them off with 40 or so acres of land? Doing so would give us breathing room to develop a free choice method to finance retirement.
This seems like a very good way to handle the current mess known as Social Security because it’s rather fair to both those who have already paid in and those who are currently paying. Best of all, it takes power away from the federal government, which is reason enough in my book to go forward with this plan.
By Simon Grey, on September 22nd, 2011
Aside from these lies, Social Security is a Ponzi scheme. The major difference between Social Security and Bernie Madoff’s Ponzi scheme is his was illegal. Three Nobel laureate economists have testified that Social Security is a Ponzi scheme. Dr. Paul Samuelson called it “the greatest Ponzi game ever contrived.” Dr. Milton Friedman said it was “the biggest Ponzi scheme on earth.” Dr. Paul Krugman predicted that “the Ponzi game will soon be over.”
The media and government need to take a hint here. When two Nobel-prize-winning Keynesians say that Social Security is a Ponzi scheme, it’s safe that Social Security is a Ponzi scheme.(Because if there’s anyone who knows Ponzi schemes, it’s going to be a Keynesian.)Incidentally, I was also ahead of the game in demonstrating that Social Security is a lie, at least in terms of guaranteed benefits. While I only focused on Flemming v. Nestor, it is important to also look at Helvering V. Davis: Another lie in the Social Security pamphlet is: “Beginning November 24, 1936, the United States government will set up a Social Security account for you. … The checks will come to you as a right.” Therefore, Americans were sold on the belief that Social Security is like a retirement account and money placed in it is our property. The fact of the matter is you have no property right whatsoever to your Social Security “contributions.”
You say, “Williams, you’re wrong! We have a right to Social Security payments.” In a U.S. Supreme Court case, Helvering v. Davis (1937), the court held that Social Security is not an insurance program, saying, “The proceeds of both (employee and employer) taxes are to be paid into the Treasury like internal revenue taxes generally, and are not earmarked in any way.” In a later Supreme Court case, Flemming v. Nestor (1960), the court said, “To engraft upon the Social Security system a concept of ‘accrued property rights’ would deprive it of the flexibility and boldness in adjustment to ever-changing conditions which it demands.” [Emphasis added.]
Of course, Social Security is not technically a Ponzi scheme because one is not forced to pay taxes contribute to a true Ponzi scheme: It’s true that Ponzi engaged in fraud; his victims never would have “invested” with him, had he accurately explained the business model. Libertarians therefore agree with everybody else that Charles Ponzi was a criminal and would have to face legal consequences in any just legal order.
However, so far as we know Ponzi never threatened anybody. He didn’t tell struggling young workers, “Give me 15 percent of your paycheck every week, so that I can make you a fantastic return — or else I’ll send goons to kidnap you.”
In this respect, Social Security isn’t a Ponzi scheme after all. It’s more analogous to mobsters shaking down people for protection money, because otherwise “bad things could happen.”
Join the forum discussion on this post - (1) Posts
By Simon Grey, on July 15th, 2011
President Obama on Tuesday said he cannot guarantee that retirees will receive their Social Security checks August 3 if Democrats and Republicans in Washington do not reach an agreement on reducing the deficit in the coming weeks.
“I cannot guarantee that those checks go out on August 3rd if we haven’t resolved this issue. Because there may simply not be the money in the coffers to do it,” Mr. Obama said in an interview with CBS Evening News anchor Scott Pelley, according to excerpts released by CBS News.
If one were to look at box 4 of IRS form W-2, one would see that part of their pay goes specifically to Social Security. Why, then, if part of one’s taxes are earmarked for specifically for Social Security, is the government unable to mail out Social Security checks as promised? They claim on everyone’s W-2s that they have earmarked a certain amount of tax money for Social Security. Why are they suddenly unable to pay it?
Yes, people, you’ve been lied to. For all intents and purposes, there is no Social Security fund. There are simply a bunch of empty promises made by soulless parasites, and now there is no denying the fact that Social Security was a Ponzi scheme from the get-go. We were all suckers for believing politicians about Social Security, and we get what we deserve. Let’s not make the same mistake about the debt ceiling.
By TamzinRosenwasser, on July 5th, 2011
In my childhood and teen years, going to the mall meant going to the grand expanse stretching from the United States Capitol building to the Lincoln Memorial, with the Washington Monument in the center, bordered by the Smithsonian Institutions museums and by federal government buildings along Constitution Avenue on the north, and Independence Avenue on the south. The best event there took place every 4th of July, when we heard reflections on freedom and our Revolution, and then witnessed a stunning fireworks display, complete with booming explosions that shook the ground.
We are no longer free. Now, we are much less free than Washington, Jefferson, Madison, and Franklin, and all the other colonists were before the American Revolution.
Need to see a physician because of illness or injury? Now it is between you, your physician, and the government. The government will decide whether you are worth treating. You lucky dog! has taken on new meaning, because for your lucky dog, it is still between you and the veterinarian how to take care of your sick or injured pet. You have been made as dependent on the government as
your pet is on you, but I bet you love your pet. Your government does not love you.
Want to start a business? Youll need to go through wearying red tape, comply with a noose of regulations, buy a bunch of Occupational Safety and Health Administration posters, and worry about whether there is something you’ve overlooked, whether it makes sense or not, that could land you in violation. Also, for occupations from physician to simply braiding hair, or decorating a house, you may need a license, and be forced to take a couple of years worth of courses before you can compete with someone in deciding what kind of sofa pillow to recommend.
Want to move into your own house? You may need permission from the local government to occupy it, and they may insist that you alter the banister on the basement steps so nobody could possibly fall through between the banister and steps. Rain stain on the wallpaper? It must be fixed, and then be re-inspected to make sure it has been done to some government functionarys satisfaction. And so on and on and on. Think you own the house? Think again. In some locales, you use it only at their sufferance.
Think you are ever going to retire? The government has forcibly taken the fruits of your labor from you, and claimed they are in some trust fund and will be paid back to you in due course. For people in the early part of their Ponzi scheme, it worked in spades; they got much more back than they ever paid into the scheme. For those of us reduced to serfdom to pay the way of others, we are likely never to get back what was taken from us. The government, especially since World War Two, has become more daring and brazen in stealing from us and bullying us. There is no legal enforcement at any citizens disposal to compel government to give us what was taken. It is said to be a compact between generations, but I never signed on to it. The same goes for Medicare and Medicaid.
People who die before getting Social Security, many of whom are poor, cannot leave it to their children, so are doubly robbed.
Stalin is said to have taken a bird and slowly plucked off its feathers, and then disgustingly boasted that not only was the bird now totally at his mercy, but was also grateful for the slight bodily warmth of his hand. We are similarly at the mercy of an irresponsible, bullying government, which has partially plucked us and has as its goal to reduce us to subjects under a despotism much more absolute than that of King George the Third.
As we enter the third bleak year of an unconstitutional and alien regime, there is no cause for celebration this July the Fourth. When we have restored Constitutional government, limited only to its delegated powers, and are teaching our children how to be ever vigilant in preserving it, that will be the time to celebrate.
|
|
Most Popular Posts