Social Security Bailout Bill
That is what I call it. Based on current chatter in congress, it appears collectivists are amassing troops to attack retirement plans, 401(k)s, IRA’s, and Keogh plans - anything private citizens saved for retirement, is now in jeopardy (of course not defined benefit public pension plans). Expect the bill to be called, “The Pension Assurance Act”, or maybe the “Equalization of Retirement Opportunity Act”.
Here is the problem: Social Security is nearly bankrupt; we all know that. It is a Ponzi Scheme for which the government will never be prosecuted, because, well, they are the government. They take money from current workers to pay benefits of retirees, routinely raid the funds for other reasons, push back the retirement age, and just keep increasing the rate on those still paying into it to make up the difference.
We have gotten to the point that it is becoming more clear that it can’t last much longer. What do we do when Social Security can’t pay any more? Do we arrest Treasury Secretary Tim Geithner for the operation of a Ponzi Scheme like we did Bernie Madoff? Considering the fact that the Treasury Secretary got away without paying his own taxes, I think he is pretty safe taking over control of it. In reality and also to be fair to the honorable Mr. Geithner, this has been going on for a long time, years before he entered the picture.
So what then? There are trillions of dollars in American’s retirement plans. Don’t forget, these are the funds of the evil Americans. You know the ones, those contemptible successful ones who sacrificed some and saved money. Why shouldn’t they kick in something? After all, they got an unfair tax deduction for most of those contributions, and then the money accumulated tax free. Avoiding all that tax just isn’t fair to the rest who never contributed to their own retirements and depended on Social Security.
In the mid-nineties, there was a democratic proposal for an excise tax to be leveled against retirement plans in the amount of 15%. That’s right. Take 15% of the plan right off the top and send it to the feds. There wasn’t quite enough support for it, and so it never made it.
The reasoning was that those who contributed received at least that much in tax savings and so that wasn’t fair to those who didn’t contribute - you know, the ones who spent all their money. So it was felt that to just take away 15% would be more than fair.
Fast forward about 25 years. Social Security is in even worse shape than before as we are another two decades deeper in debt. The Bush proposal to relieve some of the pressure by privatizing a small portion of Social Security was not passed, so all of it is still under government’s direct and complete control.
In November of 2008 the Argentinean Congress voted to nationalize their nation’s pension plans for the good of the people to be distributed more “fairly”. Is our current government all that different?
If our leaders act as they normally do, expect the following:
We will have a Social Security Bailout Bill proposed. It will be for the good of the people to preserve and protect the retirement income of every American, a noble cause indeed. It will consist of:
Another Increase in Retirement Age
Look for another increase in the retirement age of workers so payments will not have to begin until later. The hope here is that if more won’t just please do us the favor of dying before any payments commence, at least they will receive less over their remaining lifetime. The longer we wait for benefits, the more retirees who never receive money at all, and the fewer payments others receive. Very simple.
Surtax on Private Pensions
Expect to see some kind of one time tax grab on all pension plans, likely in the 15 - 20% range - right off the top. Maybe there will be a minimum amount of assets in a plan to be looted ($100,000?) so not to bother too many voters who might make a difference. They will settle about there after some suggest complete nationalization.
The reasoning being that it is only fair to remove the tax benefit the evil pension plan holders received when others didn’t receive that benefit. In fact, most even received more tax savings than that because their tax bracket was higher, which in many cases it was. Those who never contributed, never got any tax break at all. This will be promoted as just a removal of the tax break that the rich unfairly received. It will be said to be a correction of an injustice. Redistribution of Wealth and fairness are IN.
You might expect the elimination of the deduction for retirement contributions. Reasoning that if they take it away, why continue to allow it in the future? They may want to take another grab later. If they don’t encourage the annual pension deduction, a lot of people will not contribute, or maybe even go offshore and hide more cash if they don’t get the tax break. No, the deduction will remain. It is easier for our rulers to keep track of the money if there is so much reporting. Remember, pensions have to report every year – they kind of like knowing what everyone has. How else can they calculate how to seize it?
Back on track….
Increased Tax on Social Security Income Received
For those in that netherworld of partially taxable social security benefits, the maximum taxable portion will undoubtedly be increased to 100%. Currently 85% of benefits can be taxable. What’s another 15%? They can certainly afford that.
Greater Contributions Required
There will have to be increases in the payments from workers. Currently we pay about 12% (not including Medicare) on about the first $140,000 of earnings. I think we can expect that limit to be eliminated so that social security tax will be payable on all earned income.
Need Based Social Security
Social Security will become “Need based”. Of this I have no doubt. This is a natural progression in a socialist country. Those who don’t “need” government payments, won’t get them. Social Security is not our money; it belongs to the government. When we put it in, we were told that it was for our retirement. Our retirement contributions will soon fund someone else’s retirement and not our own.
It does not matter that we paid it under the promise of having it returned to us at retirement; what matters is that someone else needs it more. Many won't receive any social security income at all because it will be determined based on a combination of assets and income, that they do not "need" it.
It is still for “our” retirement, no real change there, it is just that we will use the word “our” in the collective sense.
How much will it matter to national financial stability? By most guesses, there are about 15 trillion dollars in pension plans in the United States. 20% of this is 3 trillion dollars. More than the current bailout suggested. Let’s assume this figure drops to only 10 trillion dollars, the tax on that would be 2 trillion, or roughly twice the amount of the current bailout of about 1 trillion dollars. There will be plenty of support from those who have no pension plans as they rationalize that social security is more important than the pension plans of rich people who don’t even need the money and who should be ashamed if they object. After all, they should share.
Most of this money is held by a large group of unrelated wealthy people whose combined vote may not even be able to get a handful of U.S. Senators elected. So if they can’t vote anything, what right do they think they have to be able to keep their money? Who cares about them anyway? Those bastards.
How much is a trillion dollars anyway? It is a “1” with twelve zeroes after it. NO help? OK - if you do the math and spend 1 million dollars a day for a year, you spent 365 million in a year. If you live to age 50, you will have spent over $18 Billion dollars, to age 100, you would have spent almost $39 Billion Dollars.
In order to go through 1 TRILLION DOLLARS spending a million dollars a day, you would have to live to be 2,738 years old. That is not a misprint. It is Two Thousand, Seven Hundred and Thirty Eight (and a half) years old. Wrap your brain around that for just a second. Then don’t forget - they tell us that may not help as much as we need because, - they need more.
Another way to look at it is if Greek philosopher Socrates were still alive today (he was born in the year 399 BC) had a trillion dollars, and spent a million dollars every day since the day he was born, he would still have over 100 billion dollars left.
Just imagine how many socialist programs can be funded with a bankroll like that. Of course they will soon need more in the future to continue the new and increased programs we can’t even envision now.
Some will rail against the injustices of it all. They will cite broken promises, fraudulent anti-American practices, wasteful spending, irresponsible money management, deception, even outright lies, corruption and bribery. Maybe even the dreaded “C” word (Communist) will rear its ugly head, but like the bully in the schoolyard who steals lunch money from the rich kids, the government will be unfazed and to those complaining will respond:
Hold on to your hat – better make that your wallet – unless we decide we want to do something about all this. The answers follow.
Next: Part 7 - If I were King