THE SMOLDERING STORY OF MONEY, EGO AND ACTIONS

TAKEN IN MULTIPLE SMOKE-FILLED ROOMS

Suppose you had both a checking account and credit card inter-linked

at your local bank. Often, when your monthly income and expenses

became a little tight, you borrowed some money from the card to fund

a few expense payments from the checking account. Probably not a

very uncommon or newsworthy circumstance. Agree?

But suppose one month you noticed that some funds were removed by

the credit card company from your checking account. AND YOU

DIDN‘T AUTHORIZE OR IMPLEMENT THE TRANSACTION ! Now this is

a different story. Very troubling indeed - - YES?

Well, this blog asks whether this situation isn‘t the case with one of

your accounts: YOUR SOCIAL SECURITY RETIREMENT ACCOUNT.

So what‘s afoot here? A Ponzi scheme? Embezzlement? Something

legal, but hidden in the ―fine print‖? If Interested, please read on !

“A TALE OF TWO RETIREMENT SYSTEMS”

by WAATTHE DICKENS

CONTRASTS: SOCIAL SECURITY VS. THE GOV‘T

EMPLOYEE RETIREMENT PROGRAM

A BRIEF DESCRIPTION OF THE SOCIAL SECURITY

PROCESS

SOME FACTOIDS FROM THE 2011 REPORT OF THE

SOCIAL SECURITY TRUSTEES

THE ROLE OF SPECIAL ISSUE BONDS (SIB‘s)

WHAT‘S AHEAD ?

BIBLIOGRAPHY

BLOG TOPICS / CONTENTS

Here‘s a typical

headline often seen in

various of the

mainstream media.

But have you seen

one like this ?

NEWS HEADLINES IN CONTRAST

Social Security Fund Drained

100% in 2011 – Again !

Social Security fund lost 100% in 2011 – again

Acknowledgement: adapted from - - ―Are You Ready To Scream Foul‖, Carla Howell,

Centers for Small Government.dot com

Our fictitious headline might have Included

some facts such as these:

• ―The SS TRUST FUND accumulates the

income paid in any given year and pays SS

Beneficiaries. Any surplus ( and in past years,

there generally has been) is withdrawn, by law,

and replaced with Special Issue Bonds from the

Treasury Dept. The monies are then put into

the U.S. General Revenues fund and spent on

such things as Congress directs, including

corporate bailouts; state gov‘t bailouts; aid to

foreign gov‘ts; gov‘t employee retirement

packages; and multiple other gov‘t priorities.

Social Security Fund Drained

100% in 2011 – Again !

Acknowledgement: adapted from - - ―Are You Ready To Scream Foul‖, Carla Howell,

Centers for Small Government.dot com

SO.. A KEY POINT THAT TROUBLES MANY FOLKS

Mainstream news

coverage frequently

laments that GOV‘T

EMPLOYEE retirement

funds are only 70%

funded. Or only 80%

funded.

They warn that we will

soon have to cough up

more tax dollars to pay for

the remaining 20% or 30%.

WHERE’S THE MEDIA RE THE SOCIAL SECURITY CONCERN ?

But why should the focus be on a 20-30% shortfall in funding for

government retirement plans — when millions of Americans

have only the word of the gov‘t that future enrollee funds , paid in

by the next younger generations which follow them, will be

used to fund their own retirement .

ONE BIG REASON TO WORRY: If the average historical level of tax revenue is

extended, spending on Social Security, Medicare, and Medicaid with

Obamacare, will consume ALL FEDERAL revenues by 2049.

ref: HERITAGE FOUNDATION – BUDGET CHARTBOOK

SO . . with no funds in the

Social Security Trust Fund,

hundreds of millions of

private sector workers must

rely solely on FUTURE taxes

extracted from FUTURE

workers – at the will of

Congress – to see a return on

the FICA taxes they‘ve been

paying all their working lives.

CONCLUDING THOUGHTS RE GOV’T WORKER BENEFITS

Meanwhile, Lavish funding of government retirement packages

is a major cause of today‘s alarming government debt. In

2010, voters charged Congress to do something about high

government spending. Message received ??

CONTRASTS: SOCIAL SECURITY VS. THE GOV‘T

EMPLOYEE RETIREMENT PROGRAM

A BRIEF DESCRIPTION OF THE SOCIAL SECURITY

PROCESS

SOME FACTOIDS FROM THE 2011 REPORT OF THE

SOCIAL SECURITY TRUSTEES

THE ROLE OF SPECIAL ISSUE BONDS (SIB‘s)

WHAT‘S AHEAD ?

BIBLIOGRAPHY

BLOG TOPICS / CONTENTS

THE SOCIAL SECURITY SYSTEM - - VERY SIMPLIFIED

THE SOCIAL SECURITY SYSTEM - - VERY SIMPLIFIED

CONTRASTS: SOCIAL SECURITY VS. THE GOV‘T

EMPLOYEE RETIREMENT PROGRAM

A BRIEF DESCRIPTION OF THE SOCIAL SECURITY

PROCESS

SOME FACTOIDS FROM THE 2011 REPORT OF THE

SOCIAL SECURITY TRUSTEES

THE ROLE OF SPECIAL ISSUE BONDS (SIB‘s)

WHAT‘S AHEAD ?

BIBLIOGRAPHY

BLOG TOPICS / CONTENTS

Based on the most recent

Social Security Trustees

Report (ref) , Social

Security projections show

we are now entering a

prolonged phase of Large

annual deficits.

It‘s an issue that needs to

be understood more

carefully, as it will

deteriorate increasingly in

the future .

BUT . . . GETTING BACK TO SOCIAL SECURITY

- - AND Mr. WAATTHE DICKENS

ref: - ―Social Security 2011 Trustees Report Shows Permanent Deficits‖, David John

May 16, 2011

A TOP LEVEL VIEW OF THE SS TRUST FUND

THE DATA

SHOWN AT

DECADE END

ARE NOT

CUMULATIVE.

THIS IS SIMPLY

A GLIMPSE AT

THE ANNUAL

ACCOUNTING

FOR EVERY

10th YEAR.

AT FIRST GLANCE, THIS DOESN’T LOOK SO SCARY - - ASSETS ARE

GROWING. GREAT ! BUT THE PROBLEM: THESE ASSETS ARE IOU’s

AND THE GOV’T BACKS THEM WITH PROMISES - - NOT GOLD,

NOT $$, NOT EVEN EQUITIES.

THIS IS A

2 ½ DECADE VIEW

OF THE MONIES

PAID IN TO THE SS

FUND AND THE

MONIES PAID OUT

PREDOMINANTLY

TO SS BENE FIC-

IARIES.

THIS SHOWS THE

POSITIVE CASH

INFLOW EXCEPT

FOR THE

DETERIORATING

TREND IN THE

LAST YEAR.

A GRAPHICAL VIEW OF FUND RECEIPTS AND PAYOUTS

A KEY POINT MADE IN THE

TRUSTEES REPORT:

• OUTYEAR DIRECT DEFICITS

ARE BALLOONING DUE TO THE

WEAK ECONOMY AND THE

INCREASING LONGEVITY OF

OUR POPULATION.

• E.G.,

THE FUTURE DEFICITS MEAN THAT U.S. GENERAL REVENUES

MUST BE CONTINUALLY SIPHONED TO PAY FOR SS. BUT THE

FEDERAL GOV’T IS ALREADY IN DEBT UP TO ITS EARS.

2020 $81B

2030 $288B

2035 $343B

CONTRASTS: SOCIAL SECURITY VS. THE GOV‘T

EMPLOYEE RETIREMENT PROGRAM

A BRIEF DESCRIPTION OF THE SOCIAL SECURITY

PROCESS

SOME FACTOIDS FROM THE 2011 REPORT OF THE

SOCIAL SECURITY TRUSTEES

THE ROLE OF SPECIAL ISSUE BONDS (SIB‘s)

WHAT‘S AHEAD ?

BIBLIOGRAPHY

BLOG TOPICS / CONTENTS

THE TRUSTEES REPORT

ELABORATES ON WHY THE

SYSTEM IS NOW PROJECTING A

DEFICIT IN ALL FUTURE YEARS.

REASONS:

• CURRENT RECESSION IS

IMPACTING $ PAID OUT TO

RECIPIENTS SINCE MORE ARE

FILING AT AN EARLIER AGE

• UNEMPLOYED WORKERS ARE

NOT PAYING IN .

KEY SOURCES OF THE SS FUND SHORTFALL

THE SIZE OF THE AMOUNT SS OWES HAS GROWN TO $9.1T

[THIS IS A NPV CALCULATION PROJECTED OUT 75 YEARS.]

$9.1T = $2.6T (TO REPAY THE SIB‘S) + $6.5T (TO PAY BENEFITS

AFTER SPECIAL TRUST FUNDS ARE EXHAUSTED IN 2036 ).

LET’S EXAMINE THE PROCESS A LITTLE FURTHER

SIPHONING OFF CITIZEN PAYMENTS FOR OTHER USES MAY BE

LEGAL, BUT IS IT HONEST OR MORALLY ACCEPTABLE ?

THE “IOU” GIMMICK MAY BE MAKE THE SYSTEM SEEM

SOUND. AND IT MAY BE LEGAL - - BUT DO YOU WANT TO BET

YOUR RETIREMENT ON THE WHIMS OF OTHERS ?

THE TRUSTEES REPORT ALSO

CALCULATES A

―PERPETUAL PROJECTION‖, WHICH

INCLUDES MONIES TO REPAY THE

NEW SIB‘S ( NOT INCLUDED IN THE

BASIC $9.1T CALCULATION.)

THE ―PERPETUAL PROJECTION‖

FOR YEAR 2011 AMOUNTS TO:

$17.9T = $9.1T + $8.8T

THIS IS UP $1T FROM THE 2010

AMOUNT OF $16.9T

THE SINKHOLE SEEMS BOTTOMLESS

CONTRASTS: SOCIAL SECURITY VS. THE GOV‘T

EMPLOYEE RETIREMENT PROGRAM

A BRIEF DESCRIPTION OF THE SOCIAL SECURITY

PROCESS

SOME FACTOIDS FROM THE 2011 REPORT OF THE

SOCIAL SECURITY TRUSTEES

THE ROLE OF SPECIAL ISSUE BONDS (SIB‘s)

WHAT‘S AHEAD ?

BIBLIOGRAPHY

BLOG TOPICS / CONTENTS

• FOR MANY YEARS THE SS RAN A YEARLY SURPLUS. THESE

FUNDS WERE SPENT BY VARIOUS CONGRESSES AND

ADMINISTRATIONS FOR NON-SS PURPOSES , AND THE SIB ―IOU‘S‖

WERE LEFT IN THEIR PLACE.

• SOUNDS LIKE A ―PONZI SCHEME‖ TO ME. [DEFN: EARLY

ENTRANTS ARE PAID WELL USING FUNDS FROM LATER ENTRANTS

BUT EVENTUALLY THERE ARE TOO FEW LATER ENTRANTS AND

THE SCHEME FALLS APART. THEN DUPLICITOUS BOOKS &

REPORTS ARE PUT OUT TO ―REASSURE‖ OLD AND NEW

ENROLLEES. BUT, IN ACTUALITY, THE SCHEME IS BANKRUPT,

UNLESS RESCUED BY A HEROIC ―WHITE KNIGHT‖.

• WELL, FOLKS - - WE HAVE MET THE WHITE KNIGHT - -

AND . . . HE IS US.

SOME BOTTOM LINE THOUGHTS

• SOME FOLKS CLAIM THAT THIS

ISN‘T A ―PONZIE SCHEME‖ BECAUSE

THE SS FUND HOLDS THE SIB

‗IOU‘S‘ BACKED BY THE US GOV‘T.

• WELL, LET‘S RECALL THAT OUR

U.S. GOV‘T CREDIT RATING IS NOW A

LITTLE LESS SHINY THAN IN PAST

DECADES. THE REASON: BECAUSE

THE S&P RATING AGENCY HAS LOST

SOME FAITH IN THE GOVT ‗S ABILITY

TO MANAGE ITS MONEY. MOREOVER,

TO RAISE THIS MONEY, THE GOV‘T

MUST: GROW THE ECONOMY;

BORROW MONEY FROM OTHERS;

RAISE TAXES; OR OTHER DIFFICULT

UNDERTAKINGS.

SOME BOTTOM LINE THOUGHTS

SO IS SS A ―PONZIE‖

SCHEME?

LET‘S ASK SOMEONE WHO

SHOULD KNOW:

MR. CHARLIE PONZI

PONZI?

NAH !

COMPARED

TO THESE

GOV‘T GUYS,

I‘M JUST A

PIKER !

• THE SOCIAL SECURITY SYSTEM ,

AND IMPORTANTLY, ALL OUR

ENTITLEMENT PROGRAMS ARE

NOT AS SOLID AS GIBRALTER. A

MORE APPROPO DIAGNOSIS:

THEY ARE AS SOLID AS SOME OF

AMERICA‘S OLDER , RICKETY

BRIDGES & ROADS.

• THE Rx : THE SYSTEM GOING

FORWARD MUST ALLOW FOR

DIRECT COMPETITION FROM

RESPONSIBLE PRIVATE

ENTERPRISE. THOSE HAPPY WITH

THE GOV‘T PRODUCT - - FINE !

THOSE PREFERRING MORE

PERSONAL OWNERSHIP AND

RESPONSIBILITY. FINE !

THE BOTTOM LINE MESSAGE

LET’S PUT

AMERICAN DREAMS

AND ENTERPRISE

TO WORK !

CONTRASTS: SOCIAL SECURITY VS. THE GOV‘T

EMPLOYEE RETIREMENT PROGRAM

A BRIEF DESCRIPTION OF THE SOCIAL SECURITY

PROCESS

SOME FACTOIDS FROM THE 2011 REPORT OF THE

SOCIAL SECURITY TRUSTEES

THE ROLE OF SPECIAL ISSUE BONDS (SIB‘s)

WHAT‘S AHEAD ?

BIBLIOGRAPHY

BLOG TOPICS / CONTENTS

BIBLIOGRAPHY

1 ―Are You Ready To Scream Foul‖, Carla

Howell,

www.CentersforSmallGovernment.com

2 ―Social Security 2011 Trustees Report

Shows Permanent Deficits‖, David John

May 16, 2011, Heritage Foundation,

WEBMEMO #3256

3 http://en.wikipedia.org/wiki/Social_Security

_(United_States)#History