Posts Tagged ‘Social Security’

There is an old Thai saying that goes like this: “When elephants fight it is the grass that gets trampled”.

There is a massive fight going on now in Washington D.C., and while many Americans might feel they have a stake in this battle, the fact remains that we are the grass in this battle of elephants.  On one side we have the strong and robust Republican/Tea Party – the party of the already wealthy. They feel they can take care of themselves and the less government, the better. On the other side are the weakling Democrats, traditionally the party of the working class, who believe that only a strong government can protect the average person from the avarice of the wealthy. This is not a new struggle – it is the remnants of a struggle that began in England before this country was even a glimmer in John Winthrop’s eye.

The old traditions of Europe: a small and very powerful wealthy class that owns almost everything and a very large peasant class that performs all the necessary labor so that the wealthy might live in luxury, were left behind when the Puritans sailed to Massachusetts. It was a new, virgin land (except for those troublesome Native Americans who really had no right to the land because they were not part of the Elect – and the fact that they mostly all died in battles with the early settlers (who had all the guns) proved that God was on the side of the Elect!!)

For a time, it all worked out. Anybody could just grab the land they wanted and they could live in total freedom. But with success comes more people, and more people, and more people. Pretty soon the people realized this total freedom thing wasn’t working for everyone, so they made rules. Then they fought a war against the English King and the English people because the English still wanted to play the old game of rich man, poor man. So, with the help of the people of France, who had recently overthrown their own wealthy oppressors, they created a new country styled upon the democracies of ancient Greece and Rome (which is why the architecture of Washington D.C. looks like it does).

Unfortunately, the rules didn’t cover a lot of things so it wasn’t long before the fox was in the henhouse – so to speak.  The wealthy people, not above stealing from the poor, soon owned the banks and the big businesses and went on to steal from the poor and the unsuspecting, which led to the Stock Market crash of 1929, not to mention all of the previous bank panics and economic catastrophes before that. The point was that the wealthy manipulators of the economy always enriched themselves based upon the power of their wealth, their connections with other wealthy people, and their inside information.

The Great Depression pointed out (to some people anyway) the need for reform of the system, and President Roosevelt went about that reform. In fact he named Joseph Kennedy to be the first head of the Securities and Exchange Commission – perfect: who better to catch a fox than another fox? The country recovered from the abuses of the wealthy thanks to Roosevelt’s strong government that was genuinely interested in helping the people.

Now, many years since the Great Depression we are in the midst of the Great Recession – with the potential to fall off a cliff into a second great depression if the wrong decisions are made. However, unlike the 1930’s, we do not have a President with a mandate to save the country. We have a house divided. We have the Republican/Tea Party who wants to do nothing, except lower taxes for the wealthy (the source of all jobs, remember?) and then deregulate pretty much everything. Minimal government is best they say – all we need is a strong military to kill everyone who doesn’t like the way we do things. Are far as the poor and the sick and the homeless goes – well, they’re on their own – Will of God and that sort of thing, you know? (They seem to think that this is the teaching of Jesus. After all, they are the Elect.) They feel kind of sorry for those God-forsaken people – but, they say, why is that the problem of the wealthy who have only made their vast fortunes by honest means? Exactly.

Now for the Democrats – the voice of the working man – where do they stand? It seems they stand firmly in favor of compromise. They talk a good story but in the end they will cave – and the Republican Tea Party knows that. Like a lion waiting in the tall grass, they know the Democrats have no teeth and no stomach for a battle. And why should they – after all, every Senator in the U.S. Congress is already a multi-millionaire, so really – just who do these people represent? And just why should they fight for the working man? After all, they’ve already been elected, so who cares, right? As for the Congressmen, they know where their bread is buttered. Sure some poor working class man might have scraped up $10 to make a campaign contribution – but can that compare to the vast amounts contributed  by major corporations to the campaigns? Of course not. Who would you listen to? And now that the fools in our Supreme Court have declared that corporations have the same rights of free speech as living people, everything has changed. Would you want the corporations, with their semi-infinite resources buying unattributed TV ads against you in the next election?

Don’t look to the Democratic Party to save the country this time. They don’t have the stomach for a fight – they like the good life too much. But, if we only look at history we can see that we are heading for a fight. We are a polarized country – the haves against the have-nots;  and the polarization is deepening. The Republican/Tea Party people are too stupid to see this, nor do they care, and the Democrats are equally blind to the danger that is building. When the Republican Tea Party proceeds to heartlessly cut the lifelines of Social Security, Medicare, Medicaid, Welfare, and all other assistance to the poor – the fight will inevitably come. It has to. It will be a fight for survival. It won’t be the weaklings of this Democratic Party that lead the charge, but it will come anyway.  It always does when people refuse to learn the hard lessons of their own history.

And it is always the grass that gets trampled.

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There is a saying that goes, “Those who do not learn from history are doomed to repeat it.”  Clearly, one of the things that the Tea Party, the Republican Party, and conservative American organizations like the CATO Institute have not learned is that their policies with respect to Social Security are diametrically opposed to the lessons of history. These people conveniently forget the origins of Social Security, the reason it was created, and why it is necessary now and for the foreseeable future. A good history of Social Security can be found at the Social Security website.  In brief, while Republican President Herbert Hoover stood by helplessly at the beginning of the Great Depression, millions of Americans lost their jobs, their savings, their homes – everything. Among the hardest hit were senior citizens. Some of these might have had some sort of private pension, but it went up in smoke along with the rest of the economy.  Many of the seniors lost all of their savings because of the collapse of the stock market and the failure of the banks. It was only when Franklin Roosevelt, a Democrat, became President that our Social Security system was created – and it saved thousands upon thousands of senior citizens from becoming homeless and from facing the very real prospect of starvation.

Now we hear the newest “words of wisdom” from the CATO Institute and other right-wing organizations: Privatize Social Security.  These people are either fools or they take us for fools – or both.  If you would like to know how Social Security would be if it were privatized, just take a look at your 401k account. That is a privatized pension plan – a gift from that “great” Republican economic genius Ronald Reagan – the man who drove us trillions of dollars into debt with his foolhardy concepts of Reaganomics. The problem is that Republicans think he did a great job, even while he drove the U.S. debt to historic levels. Another foolhardy concept that came to fruition during the Reagan era was the 401k Plan. Until then, people had employer pension plans; however, the creation of 401k plans let the employer off the hook i.e. the employer’s responsibility ended when the employee retired – the employee would then obtain his retirement income from his 401k investments. Most employers terminated their retirement plans and their employees were told to invest in the stock market in order to create a nest egg that would fund their privatized pension. So, how’s that working out for everyone out there? All set to retire?

The privatization of Social Security is nothing more than yet another Republican scam designed to force people to invest in the stock market.  If this happened it would create another stock bubble similar to the one created by the 401k investments that began in the Reagan years. And what would happen the next time the stock market gets overheated and crashes, like we have seen just recently? You guessed it. You can kiss your privatized Social Security account goodbye – but don’t worry, the government will save the banks. So that’s good.

It is truly amazing that Republicans, Tea Party people, and conservative “thinkers”, like the CATO dudes are actually advocating this. One can only conclude that they feel pretty smug about their own situation. They have plenty of money themselves so they don’t need Social Security anyway. I’m sure that’s true for all the wealthy Republican bankers – but the poor Tea Party people? What are they thinking? Do they really think they don’t need Social Security?

As for those CATO guys, I wouldn’t buy a used car from any one of them.

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It began during the reign of Ronald Reagan, although he certainly was not the architect of the idea.  Even so, he must have wholeheartedly approved. Why? Because it was good for business.  If there was ever a gigantic hoax put upon the unsuspecting American public, it is embodied in section 401k of the U.S. tax code.  It is this provision that provides for employers to set up tax deferred 401k retirement accounts for their employees. You know, so that when that day comes, in the dim and distant future, you will have a great big nest egg awaiting you, so you can have a long and comfortable retirement.  – Oh, and by the way, since all you workers now have these great 401k plans there isn’t a need any longer for your employer to provide a pension plan, is there?  So – goodbye pension plans. American workers, you are on your own.  How very Republican.

Oh, but wait.  There is one other little detail. You know all that money you can put in your 401k account? Well, you can’t put it in a bank and earn interest like other money you save. Of course you could of course put it in a money market account  with your broker.  There you could earn 0.003 percent interest and then watch the actual purchasing power of your savings drop by 50% or more in the next 30 years before you retire. (because of inflation. Or… you could invest it!  Yes, that’s the ticket!  You can put all of your money in the stock market – you could even buy stock in the company you work for!  And don’t worry. This isn’t gambling with your retirement money – it’s investing for the future!

Well, the future is here. As far too many boomers have found out and far to0 many children of the boomers have learned, there is no gold at the end of this rainbow, just a pile of horse manure – all of it a  gift from your government and big business and the IRS. Wasn’t it wonderful for them? Think of it. For so many years before the invention of the 401k scheme the Dow Jones average was essentially flat. The stock market was a no growth system.  Stocks had hardly moved since the Great Depression. Then, as if by magic, as soon as the 401k ripoff began the stock market started going up.  And the more our 401k dollars went into the market the more it went up!  Isn’t that incredible – just like the housing market! Of course the housing market went the way of all good Ponzi schemes…. and so did the stock market, because that was just an artificial bubble too – a scheme contrived by the arch Capitalists of America to use their employees wages to fuel the growth of their businesses, and all the while calling their scheme a retirement plan.

I’m afraid the chickens have come home to roost. Too many 401k plans are nothing but a smoldering ruin now. Too many retirees will be getting most of their retirement income from Social Security, not their 401k plan.  Thank God for Franklin Roosevelt, perhaps the last honest President this country has had.  But wait. It’s not over yet.  The 401k system still hangs over the heads of our youth. Cunning businessmen and government “servants” tell us to invest our 401k money wisely. Better still, young man, take the money and run.  Don’t listen to the advice of the big businessmen and certainly don’t listen to the government people who are owned by the businessmen.  They have worked out a system where your employer no longer has to give you a pension.  Even worse, a lot of people in power would like to kill Social Security as well.  Avoid the advice of businessmen and government hacks, they mean you no good.  We are truly floundering in a Republican world now – you are on your own and you will sink or swim by your own wits and not with any help from your employer or the government.

Meanwhile, a new crop of people are reaching retirement age every day. They are being pushed out from their jobs by mandatory retirement rules.  They can’t survive on what is left of their puny 401k and their Social Security benefits don’t come close to paying the bills. And WalMart doesn’t need anymore help. They’ll need to sell their homes now, but to whom? There is no market for houses anymore. It is like the retirees are stepping off the deck of the sinking Titanic only to find that there are no lifeboats in the water.  It is a slow moving catastrophe.  It is happening one day at a time, but it never makes the headlines.

How can a government tell its citizens to gamble in the stock market with their pension funds?  How can an employer look an employee in the face and shut down their pension plan while at the same time telling them to invest their savings in the company’s stock?  Today as people retire in their 60’s they can look forward to living a long life, perhaps into their 90’s or more.  But how will they pay for their housing and how will they buy food? The 401k catastrophe is only beginning. Wait a few years.  Wait until the retirees have spent what little is left of their 401k money.  Wait until they try to survive on their paltry Social Security payments. And just to rub salt into the wounds of these unsuspecting workers, wait until they try to take their money out of their 401k plan and they find they have to pay tax on each withdrawal – It was tax deferred, remember? Ah, but the IRS is sneakier than either you or I could ever imagine, for you not only have to pay tax on the money withdraw from your 401k, for if you also take additional money from your 401k to pay the 401k tax, you have to pay tax on that money too! So then, if you take out more money to pay that tax, well…you have to pay tax on that too! So you are paying tax on the tax on the tax. Isn’t that wonderful?  It’s a tax collectors dream.  And it all comes out of your 401k.  How perfect!

Happy retirement, America.

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It was inevitable.  For the past forty or fifty years a bulge in the U.S. population, known as the Baby Boomers (because they were born in the aftermath of World War II) created a moving spike in the U.S. economy. This huge group of people needed more schools, and more schools were built.  They needed more cars, and more cars were built.  They needed more houses, and more houses were built.  The economic expansion of the past forty years probably owes as much to the presence of this market as the effects of the Second World War itself.  However, as an ancient philosopher once said, “This too shall pass”.  And so it is. The age of the Boomers is coming to an end; they are beginning to retire and exit the productive economy.

And that is the problem.  As more and more Boomers retire every day and apply for the Social Security benefits they have earned, the Social Security system is beginning to draw down its reserves.  Like any good pyramid scheme, Social Security depends upon an ever growing number of contributors in order to pay out its dividends.  It isn’t designed to cope with a population bubble – at least not the backside of the bubble, which is where we are now.  Social Security is going into the red. More and more Boomers are about to be collecting Social Security while fewer and fewer people are paying into it.

This, however, isn’t the only problem.  Think about health care. Many Boomers will be looking at Medicare as their source for health insurance – and why not? They paid into it for most of their lives, now it’s time to collect, right?  Yes, but.  You see, Medicare is another government Ponzi scheme, and it only works when the number of contributors is increasing.  Boomers, who can look forward to a life expectancy much greater than their parents, may face a future where they have to get by on meager Social Security payouts and meager health benefits.  The generation that brought us the mass demonstrations against the Vietnam war, the mass protests against racial discrimination, and the sexual revolution are unlikely to take this lying down, especially since they are much more physically fit than their parents were at this age.  Expect to hear from them.

Which brings me to another point.  Many of the Boomers who are applying for Social Security are doing so because they are being forced out of the job market – a job market that has become extremely tight due to the Global Recession.  Even before the recession began many employers had clandestine (and illegal) programs in place to get rid of the highly paid Boomers so they could replace them with lowly paid young people who had just graduated from universities.  That’s just how our capitalistic system works.  It happens to everyone when they get older, you get moved out – it’s nothing personal.  In a strong economy, the Boomers who were forced into early retirement from their jobs might have just gone somewhere else – but not today.  There is no place for many of them to go.  So…it’s time to kick back, relax, and collect Social Security and Medicare benefits! The problems is that it won’t last long – certainly not until the Boomers reach their 90’s or even 100 years old.

If we had a robust economy and more enlightened capitalists – the Captains of our Industry, we would find that the economy would adapt and jobs would appear for these redundant Boomers, and they would still be productive, paying taxes and not collecting benefits.  But our economy is anything but robust and our Captains of Industry are mostly devoid of imagination.  The result is a looming crisis that any half-intelligent person can see coming, which explains why it is invisible to our government.  Wait a while – maybe a year or two – then watch what happens. We’ll have a sudden crisis because we don’t have anymore money for Social Security or Medicare and besides that with the Boomers no longer paying massive income taxes from their high-paying jobs we’ll have a huge run up in our national debt, which will devalue the dollar, and thus plunge the nation into a new financial crisis.

And it will all be a big surprise as the Baby Boomers churn by, like a gigantic supertanker. The economy of the nation will heave sickeningly and maybe even capsize as it is caught by surprise by another enormous financial tsunami – the wake the Boomers leave as they pass by.

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