Framing the Conversation   2 comments

Paddy Waggin’ (originally run in the Turnagain Times)

Paddy Notar

The arrival of our problems, with baby boomers, is many and inevitable but none of them compares to Social Security. Millions of them have approached or will approach retirement age and our Social Security cash surplus, if there ever was one, will shrink and then it’s going to disappear completely.

Tax revenue for projects such as highways and defense will have to be cut drastically and the EPA will have to find another way to defend the environment. Think about it this way – from 2011 to 2021 over 10,000 baby boomers will turn 65 years old every single day. Those baby boomers didn’t have enough children whose taxes would help pay for their benefits and the numbers are shrinking. Remember that you really aren’t a substantial taxpayer until you are about 25 years old.

According to the Heritage Foundation, in 1950 the average retiree had their benefits spread amongst 16 taxpayers that were still in the workforce. You got paid by other people’s money going into the system, just like today. Your money was long gone before you ever retired but there was a guarantee that it would be there for you when you did the same.

Without worker-bees, you wouldn’t have any kind of social security. Today, the number of people working for those who are retired has dropped from 16 to 3.3. By 2025, the number is expected to drop to 2.1 workers for every retiree. Think about that for a minute. In less than 100 years, our “New Deal” system will become a bad deal. That means we will have only one choice; taxes will have to go up and many government programs will have to be cut. Unless something else is done, that will be the case.

You hear people complain that our government completely screwed up our Social Security system and that we should have privatized it a long time ago. We should have cut out Uncle Sam and just let people invest their money as they saw fit but it’s not that easy. I’m sure you know of a few people that can’t balance their checking account let alone save money for their retirement. That’s one of the many pitfalls of privatizing the system. There’s also the problem of who would get a good portion of the percentage for investments if Wall Street got involved. Where there’s money there’s blood sucking lawyers and investment bankers. Just like Obama and his friends fed the greed of insurance companies with the Affordable Care Act, privatizing social security would give certain companies and friends a great deal of money. After all, that’s what politicians do – funnel taxpayer dollars to people that are on their short list and you’re not one of them. Sorry, but it’s true.

(Section removed because I thought it was off topic and partisan)

Around 2017, our Social Security system is going to take about $100 billion to stay afloat. The Peterson Foundation and the Social Security Administration estimates that it’s going to take $200 billion a year around 2022 and $300 billion five years later to keep everything on track. Let us also not forget about Social Security’s red headed step-sister Medicare. By 2040, almost 60 percent of all taxes will go to paying for Social Security and Medicare and that, of course, will leave 40 percent to run the rest of our government. That should be fun. We’ll be borrowing money until New York City becomes part of Beijing. So what’s the solution?

First, we must create a semi-private investment system for the younger generation that diversifies their money so that they may prosper. Think about something that is structured like a balanced fund, which guarantees a five-percent return annually. Next, and probably just as important, is to protect Social Security from political jerks who want to arbitrarily raid it; although I highly doubt you’ll meet a politician who wants to actually protect something from greed. They’ll make up some great excuse as to why they’ll need to borrow or steal from it, even if Social Security does get that type of protection. Alaska’s Permanent Fund isn’t far from suffering such a fate but that’s another story from a very near future.

Lastly, we need to pay the remainder of what an individual paid into Social Security to a person’s family after they died. Just because a person passes on doesn’t mean that government gets to keep their money. That’s wrong and shame on any representative that supports stealing a dead person’s wallet because that’s exactly what they’re doing by freezing their funds post mortem.

I don’t know if I have all the answers or if any of us ever will but I do know that we have a major problem that our United States Congress continues to argue about and do very little to fix. Just like most of our social programs, I assume it will have to implode before it receives some emergency knee jerk reaction funding that creates a domino effect that uproots other government programs.

In the end, I think Scott Cook, an American businessman and founder of Intuit, summed it up best when he said, “Today, more people believe in UFOs than believe that Social Security will take care of their retirement.”

Posted January 15, 2015 by aurorawatcherak in Common sense

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2 responses to “Framing the Conversation

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  1. Paddy Notar is the best columnist in Alaska and one of the best in the country.


  2. I certainly liked what he had to say. It’s been 35 years since Ronald Reagan informed Baby Boomers that the SS “trust fund” was more or less empty and that was before Bill Clinton’s administration raided it to make the debt seem to be paid off (it never actually was). The signals have all been there, flashing the end of the line, but we’ve done very little to change tracks and avoid the train wreck.

    I’m 55; I’ve mostly planned for SS not to be available to me, so I won’t starve, but I am mad as hell that so much of my money has just been sucked down a hole of government spending when I could have had it available to me to invest toward my 401K and self-financed accounts. My sister–in-law is an accountant and she loves to show people how much their payroll taxes would have meant in real retirement dollars had they actually been invested. Even with market downturns and the like and making a modest income — I could have been sitting on $1.7 million by now … and that’s conservatively invested, not playing casino roulette with my retirement.

    This is what we get when we let the government protect us from our own good instincts.


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