Tuesday, July 19, 2016

Solutions 2016 :: Social Security

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19 July 2016
about 6:15 pm PST


It has taken me so long to get here because I wanted to read the chapter on Social Security again, to decide what were the most important things I wanted to blog about.  It's hard to know whether to focus on political jargon, confusing statistics, or budget details that are really just one person's projection (usually to make the numbers larger and more threatening).

I should include a notification that this chapter is important to me because I recently became a recipient of early retirement funds.  I only receive $381 a month because I spent a lot of time at home with my kids, trying other ways to make an income, working erratically at minimum wage jobs, and other factors.  I don't know how Social Security is figured, but it is my ONLY cash income right now, along with less than the maximum amount of food stamps (SNAP) because I receive that income (only $126/month).  Government living is not easy. 



I guess the biggest missing number was some idea of what the GDP amount was.  Many of the figures are compared to GDP levels by a percentage, but who knows what kind of amounts they are talking about, and what is included in the GDP.  An example that is nearby, in my notes, is the projected growth of Social Security from 2015 to 2040, from 4.9% of GDP to 6.2% of GDP.  What kind of money are we talking here?  What will life be like in 2040?

And, my biggest gripe about projections, how do we really know what will happen in the future?  It's like a business plan... it's all on paper, a best guess.  Real life changes everything you plan on paper.  Many people are homeless because their plans didn't work out.  People buy things on credit based on what they make now, then something happens and they can't make the payment.  Projections are assumptions, not reality.  We also have to remember that writers, in creating an argument for their proposals, will manipulate facts and perspectives to only present what makes their view acceptable.  This is why we have to spend so much time trying to find the real Truth.

I would guess that the main concern this report has with Social Security and its related programs, called "entitlement programs" for their purposes, would be the lack of control over them.  Part of the chapter's details revealed to me that these programs are paid first, probably AFTER the interest on the debt, and leave little money right now for anything else that might fit into a legislators bartering toolbox.  As expected, the military, national security, and defense budgets are mentioned as needing funds more than these "entitlement" programs.  I am sure there are other undeclared programs in their minds to fund, but these security programs are the hot buttons for every election... for the Republicans, anyway.

As far as I can tell, these figures break down into several different conglomerations of "entitlement" programs based on Social Security Retirement Benefits, Disability Insurance, Medicare, Obamacare subsidy payments (which I think begin in earnest in 2017), and Medicaid.  Different money amounts mentioned include different parts of those programs.  It is not an easy maze to conquer.

A graph of the projected deficit growth from 2015 to 2024 shows a category called "all other federal budget deficits" over the Retirement program and the Disability program.  Most of these years are when the Boomers enter the system, which is one of the arguments about how the program is set up.  There isn't any way to know what the "other" program deficits are, and the Disability deficits seem to be constant.  It was stated that the Retirement and Disability Funds are not yet "insolvent" but that there is no real cash in them, only government IOU's.  The Boomers and the lack of real investment money in these Funds are part of the reason the deficits are happening.  The bill is coming due now, and the current Congress doesn't want to pay it.

I was rather irritated at the argument on the same page as the graph about interest outlays and non-interest outlays as a focus for the spending cap proposal.  It was suggesting a spending cap on the non-interest related parts of the budget, and specifically saying that no action on the debt interest would be possible.  I suppose I am confused about this, but it seems to me that reducing the debt would be the best way to get rid of a LOT of our financial problems, especially the huge interest payments on it.  I think there is a conflict of interest in this topic. 

Government debt securities are seen as a very safe investment and prized for their repayment value.  At least, they were until some governments started going bankrupt.  If we didn't have our debt, we wouldn't have to pay that interest money to the debt holders.  We could use it for other important programs, like the military, national security, and other defense programs.  Right? 

This report seems to say there is no opportunity to reduce our spending (increase our income) with the debt and any other interest-related budget item.  I don't know what other interest and non-interest items are in the federal budget as no details on these items are really presented.  The only focus is to create a spending cap to "encourage" entitlement reform.

For many years I have considered ways the American People could try to solve this debt problem outside of Congress.  I think we could do it, but the bigger problem is that the government would just overspend again and create another debt crisis.  The interest on the debt is so huge it would pay for many of the programs that make the budget a constant conflict, but those tax dollars are spent on interest payments to China and whoever else owns our debt. 

I think it was when Obama sold the plans for the Hummer/Humvee to China that I decided ONLY Americans should own American debt.  In the years that passed since then, crowd-funding has become big.  I guess my idea was like a national crowd-funding effort to buy back the debt and hold it until the government was able to pay the debt back.  Do you think it would work?  I don't know.  We need to think of something.

The GDP came up again in the section on debt.  I discovered there is a level of debt that is acceptable -- for nations, I think.  The report stated that less than 60% of GDP is acceptable for a debt level, and 2% of GDP is acceptable for deficit levels.  What happens when GDP changes because of conditions beyond its control?  What seems acceptable one year may be a crisis the next.  Living within our means is a better gauge.  Creating income producing programs is a better use of our funds than subsidies for agriculture and housing.  Revolving loan funds are better than loan guarantees.  There are better choices, but something keeps our legislators from making them.  What could that be???


I found it interesting that they want to make Social Security and its related programs into a "real insurance model." I thought it already was...  a low-cost, shared, forced government insurance program.  My view is they need to include all citizens, not just those receiving paychecks... to make it voluntary and devise a payment rate based on when it is collected on.  One of the biggest problems with the system has been the family members that aren't included -- spouses, children, anyone who wants to have an account. 

Creating a government version of Retirement insurance focused on low-income households would change the way we think of government programs, allow more people to pay in, and create both cash benefits and medical care in one program.  If it is well defined, people can build up their accounts like a Health Savings Account, deciding how much they want as a final payment when they start to collect.  It won't be modified by your later income, just a planned income amount paid by the future government at the start of each month.  Medicaid and Medicare would become one part of that insurance plan, again focused on the poor, who are the only ones who really need government help anyway.  Wealthy people can buy other forms of insurance in a free market, but every citizen would be eligible to purchase it as a back-up plan.  The Obamacare focus on forced submission of every citizen is a faulty one.  I hope they will create something more reasonable for poverty households when they repeal Obamacare.

I have also found it interesting that the government wants to raise the minimum age you can begin to collect on your Social Security benefits.  It is going up to 67 by 2027 it says.  With all the expected problems in the job markets because of technology taking over many of them, I think the recent "recession" is a clear indication that the age needs to be 50, not 65, 67, or 70.  The benefit options can change by the age you choose to collect them, but the account holder is the one who needs to make the decision of when they need to start receiving their benefits... not the government.  Every life is different, people need the flexibility to choose how to survive their situations. 

In a crisis economy, business downsizes its labor expense, which often means that the older, more highly paid, employees are let go and replaced with younger, cheaper staff.  In our near future, the jobs for older people may not be as plentiful or as well-paid as they are now.  Technology is swiftly replacing real humans with robotics and other automated tasks.  None of these pay taxes.  Our current economy is still recovering... we are a global financial network now...  there is no way to know what will happen in the future.  The assumptions presented in this report are based on tax revenues that may not exist in ten years.

For me, these kinds of reports are like media presentations and the legislation Washington and other government agencies create.  It is jargon that ordinary people cannot understand.  Sometimes it is purposely so confusing so you will think it is good for everyone but it is really killing the common man it is suppose to help.  Text, statistics, and graphs, look impressive, but when you have the time to really explore them, the story isn't right.
 
In the larger section about the Disability program, I had a hard time deciphering how the reforms would help people with disabilities survive their everyday existence.  Legislators seem to make thousands of dollars a year in salaries and benefits and operating funds, but someone who has no other alternatives is seen as a burden on the government for needing a reasonable amount for shelter, food, and ordinary living expenses.  The poor, including the disabled, are always attacked when a budget crisis occurs... they are the easiest targets and few know how difficult it can be to live on government "benefits."

In the sections about "flat rate" payments for disabled people, I found it questionable that future recipients would "eventually generate savings in excess of SSDI's shortfalls" and linking this flat rate to anti-poverty benefit amounts and the "poverty level."  To me, that is government-speak for very low living amounts.  I know what low government life can be like.  Depending on where you live, it can be very, very bad. 

This flat-rate payment was also linked to encouraging recipients to purchase supplemental disability insurance.  This is a strange problem in our current government.  We have mandated insurance now.  Low-income recipients of government insurance (Medicaid) can't afford any other insurance.  Their lives are mandated by the limits of the government's insurance policies.  How is someone who is disabled and living on government assistance suppose to spend some of their few dollars on supplemental insurance?

The concept of linking the flat payment to the "poverty level" is also very questionable.  As an applicant to many different government programs over my lifetime, poverty changes every year and with every program.  Then there is the qualifying percentage of the poverty level that applies. This is a vague reference to something people know about, sounds good, and is very deceptive when applied.


It was also interesting how the savings that these proposals would create could be used by recipients to increase their own retirement savings plans and supplemental insurance.  When I hear reports from various sources, most people in America are a paycheck away from ruin.  This gap between those who have lots of money who create plans to make the poor into better citizens is really visible in moments like this.  It is totally unrealistic.

When people are trying to survive, they spend everything, including their credit card balances if they have them, and borrowing from everyone they know when they don't have a credit card.  That leads to its own problems.  The government has done the same thing... it has "MAX'd" out its credit cards, and overspent it income.  Now it is facing its own budget crisis and people who are dependent on its promises, like me, will suffer for what it has done.

Often I hear reports on TV about the state of our economy and they include credit card spending as if it is a worthy part of life, directly responsible for the improving economy.  Credit card spending can also be survival spending.  It doesn't seem like a good measuring tool to me.


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