America's Middle Class Knows it Faces a Grim Retirement

Per yesterday's post, I guess it isn't just the young'uns who know they're screwed. From the L.A. Times:

More than a third of middle-class families aren't saving anything in a 401(k), IRA or other vehicle, the survey found. For those 50 to 59 years old, it's 41%.

"Nearly a third (31%) of all respondents say they will not have enough money to 'survive' on in retirement," the bank says. "This increases to nearly half (48%) of middle-class Americans in their 50s."

Ahh...that younger segment of the Baby Boomer generation. Guess it really is better to die before you get old.

There was another quote from this article that I found particularly horrifying:

There's little new in these findings. They echo the findings of last year's installment in the Wells Fargo series, when more than a third of respondents said they expected to work at least until 80 to have enough to retire on.

Yikes! That's not "retiring," that's called "dying in the saddle."

I had a discussion recently with my brother-in-law. He hasn't made the best decisions in life. He failed to use his bachelor's degree to get a good paying white collar job despite residing in the high cost of living New York City area. After having four kids he dumped his wife for a fellow divorcee who has a young child of her own, and then they had yet another child before the two of them even got married. Now his oldest are reaching college age and are enlisting in the military partly to escape what has become a depressing family situation, but also for the tuition benefits. BIL was reflecting on the fact that I was able to take early retirement (due in large part to the cancer) because, among other things, my wife and I lived frugally and paid off our house even before I got sick.

"I'll retire on the day I die," he stated to me rather matter-of-factly. Problem is, he works a blue collar job that takes a fair bit of physical effort, so I wonder if he won't begin to physically break down long before it is time for him to shuffle off this mortal coil.

As for me, even if I hadn't gotten sick the idea of working until I'm 80 fills me with horror and dread. It's not that there aren't plenty of things that I could do until I'm that old (especially writing), it's just that none of those I enjoy doing are likely to pay me anything resembling a living wage. I'm very grateful to have been able to leave the rat race at a relatively young age, but in my case it remains to be seen if the hangover effects of my cancer battle will prevent me from doing many of the things I had hoped to do in retirement.

But enough about me. Let's finish the discussion of this article with another interesting tidbit:

All this points ever more strongly to an inescapable solution to Americans' retirement quandary: expanding Social Security. The program is immune from market influences, operates with rock-bottom administrative costs, and forces workers to place saving for retirement front and center.

Those who claim that increasing benefits is unnecessary because America's retirees are secretly rich -- a notion recently bandied about by independent benefits consultant Sylvester Schieber and Andrew Biggs of the American Enterprise Institute -- may need to get out and meet middle-class workers more. They would learn very quickly that middle-class Americans aren't laboring under the same misconceptions about their retirement prospects.

Forgetting for a moment that the Social Security program has its own long term financing problems, note the sheer fucking arrogance of these two assholes from the American Enterprise Institute. Do YOU know anyone in your social circle who is "secretly rich?" No, I don't either despite having a number of friends and acquaintances who are solidly upper middle class. The fact that these these two billionaire mouthpieces can get away with publicly saying such utter shit and not be tarred, feathered and run out of town on a rail is a big part of the problem in this country.


Bonus: "All your hope is gone...and it's not that funny, is it?"

Unemployed Early Social Security Claimants Putting More Pressure on the Program

This is a good companion piece to yesterday's post about raising the retirement age and why it won't work. From the New York Times, nobody could have predicted:

This retirement oasis in the desert has long beckoned those who want to spin out their golden years playing golf and sitting by the pool in the arid sunshine.

But for Clare Keany, who turned 62 last fall and cannot find work, it feels more like a prison. Just a few miles from the gated estates of corporate chieftains and Hollywood stars, Ms. Keany lives in a tiny mobile home, barely getting by on little more than $1,082 a month from Social Security.

“I would rather be functioning and having a job somewhere,” said Ms. Keany, whose pixie haircut, trim build and crinkling smile suggest someone much younger than her years. “I really don’t enjoy living like this. I’ve got too much to do still.”

Even as most Americans are delaying retirement to bolster their savings accounts, the recession and its protracted aftermath have forced many older people who are out of work to draw Social Security much earlier than they had planned.

According to an analysis by Steve Goss, chief actuary for the Social Security Administration, about 200,000 more people filed initial claims in 2009 and 2010 than the agency had predicted before the recession and he said the trend most likely continued in 2011 and 2012, though that is harder to quantify. The most likely reason is joblessness.

Ms. Keany had always expected to work into her 70s and add to her retirement cushion. But after losing her job as an executive assistant at an advertising agency in 2008, she searched fruitlessly for full-time work and exhausted her unemployment benefits. For a while, she strung together odd jobs and lived off her 401(k) retirement and profit-sharing accounts. Then, this year, with her savings depleted and no job offers in sight, she reluctantly applied for Social Security.

Gazing out the window where the Santa Rosa mountains rise behind the mobile home park, she said, “It just seems a waste of a life, to be honest.”

It makes you wonder just how many millions of other people there are out there who are a couple of missed government checks away from homelessness and starvation. Yet, as the story goes one to demonstrate, so many people still have completely screwed up priorities:

Finally, in January, she gave in and filed for Social Security. Her monthly check covers the $336 mobile home park fee plus utilities, her cellphone bill, insurance and a satellite dish. She is also paying $100 a month in credit card debt. To save money, she has canceled the data plan on her BlackBerry and cut back on fresh fruits and vegetables.

Notice that despite having been essentially unemployed for four years, Keany still insists upon paying satellite teevee and cell phone bills and only recently cancelled her Blackberry data plan. In fact, having the damn television and cell phone is apparently more important to her than even eating properly.

The article also mentions that she is not married, does not have children and was earning $64,000 per year before she got laid off. Not to be too much of a dick about it or anything, but there really was no excuse for her to be running up her credit card balances and not having saved a lot of money for a rainy day while she was still working.

Keany's example is why I am always torn when I read these kinds of articles between feeling empathy for those who are hurting yet shaking my head at their obvious stupidity. Most importantly, in these examples we see people who will not survive long when the day finally comes that the government checks stop coming.


Bonus: "Will you still need me, will you still feed me, when I'm 64?"

Federal Budget Deficit Rises With Payroll Tax Cut

I've written several times here at TDS warning about the dire state of the Social Security program and the reckless irresponsibility of President Hopey-Changey in cutting the payroll tax just to give the economy a short term boost and help his reelection chances. My previous writings on the subject are contained here:

Why We’re Screwed (Part 3): The Social Security “Trust Fund” is a Lie (July 13, 2011)

Social Security Blues: 2012 Shaping Up to Be a Third Consecutive Deficit Year (January 14, 2012)

Unfortunately, the lie about the supposed solvency of the Social Security program because trillions of dollars in payroll tax "surpluses" were allegedly squirreled away in the Social Security Trust Fund just won't die easily. If there really is all that money available in the fund, perhaps someone would care to explain away this story that appeared Tuesday in the USA Today:

The payroll tax cut recently enacted by Congress and signed by President Obama will increase the federal budget deficit this year, the Congressional Budget Office says.

What's more, the deficit is likely to be a little deeper than estimated in 2013 and 2014 as well.

The agency's latest report, which updates its forecast from January, shows a likely deficit this year of $1.2 trillion, rather than the $1.1 trillion originally projected. It shows the deficit declining to $1 trillion in 2013 and $953 billion in 2014, both a bit higher than January's forecasts.

Those gloomy figures are based on what CBO calls its "alternative fiscal scenario." Its basic projections are much rosier but are based on existing laws, rather than likely changes.

Because Congress and the White House are almost certain to extend expiring tax cuts and avoid Medicare payment cuts to doctors, for instance, the alternative scenario becomes more likely.

Most of the changes in the report are due to the extension of the 2-percentage-point payroll tax cut through the end of this year.

You really don't have to be a genius or a savant to figure out that if the Social Security trust fund really existed, then the payroll tax cut would not be adding to the current federal deficit. The sad fact is that your "leaders" used a quarter-century's worth of payroll tax surpluses to hide the true size of the federal deficit during that whole time period. Now the bill is on the table, and the diner has nothing in his pockets but lint and IOUs.


Bonus: "You just sat there taking everything you could get...you never dreamed that one day you might have to pay for it"

Great Recession Porn: Economic Crisis Slows U.S. Population Growth

As it turns out, a bad U.S. economy is not conducive to robust U.S. population growth. Here is the USA Today with the details:

The U.S. population is growing at the slowest rate since the Great Depression after two decades of robust increases.

For two consecutive years since 2009, the population has grown just 0.7% a year, down from annual increases around 1% in previous years and the lowest since the late 1930s. The U.S. gained 2.2 million people from 2010 to 2011 — fewer than the 2.8 million added a decade earlier — reaching a total of 311.6 million.

"Almost anybody who observes these things over the years can say this is almost all recession-related," says Carl Haub, demographer for the Population Reference Bureau.

The government says the recession ended in June 2009. Although the economy has improved, the downturn's effect on birth and immigration lingers. The number of babies born from July 1, 2010, to July 2011 dropped 200,000 from the same period in 2008-09. The number of additional immigrants fell 150,000.

"It's an indicator of an unhealthy economy," Haub says. "People are obviously still delaying births, and immigration has continued to drop because job opportunities are not there."

The U.S. fertility rate — which has been close to the replacement level of 2.1 children per woman in contrast to many developed nations that are well below that level — now is estimated to have fallen to 1.9, says demographer Joseph Chamie, former director of the United Nations Population Division and more recently research director at the Center for Migration Studies.

Putting aside the looming collapse of our economy for a moment, long term this portends a real disaster for an aging population which expects to be supported by government programs post-retirement. Demographics were already working against the long term solvency of Social Security and Medicare even before the downturn hit.

Though the article doesn't say so, I would gather that a large percentage of those delaying having children are the sons and daughters of the middle class who have not been able to find the types of secure employment that would allow them to settle down and raise a family. Which means the trend is doubly bad because it is the middle class that pays the lion's share of the overall taxes in our society.

Nevertheless, somehow despite this very bad news hope still springs eternal:

Demographers expect population growth to pick up when the economy rebounds fully, but a bounce-back in births is likely to lag.

"Many — but likely not all — of the postponed births can be expected to be made up," Chamie says. "Even with the slight current downturn in births, the U.S. population will very likely reach 400 million midcentury."

There it is again, that completely faith-based belief that real economic growth just HAS to resume, because in always has in the past. The demographers would do us all a much better service if they would instead devote some time studying what the effects would be if economic growth DOESN'T resume. Because that is the reality we all face and the one for which we need to start basing our planning for the future.


Bonus: "I think I'm sophisticated 'cause I'm living my life like a good homosapien. But all around me everybody's multiplying 'till they're walking round like flies, man"

The Great Muddle

image: downtown Freeport, Illinois...courtesy Wikipedia Commons

In what should have come as a surprise to precisely no one, it was reported this past week that the Republican congressional “leadership” has backed down on President Obama’s request to extend the payroll tax cut. I’ve posted before that I believe gutting the already-insolvent Social Security program’s designated revenue stream is exceedingly bad public policy, so I’m not going to beat that particular dead horse yet again.

Instead, I’d rather discuss a different aspect of this story—why exactly it is that after riding the Tea Party Tsunami to regaining control of the House of Representatives last year, the Republican Party since then has backed down on every single “fight” it has taken up with a president who was supposedly mortally wounded politically. The only such engagements the Republicans can claim to have “won” since their victories in the midterm elections are those in which President Hopey-Changey backed down before the battle was even joined—on freezing federal employee salaries for instance (indicating, of course, that doing so actually fit the Obama agenda, even if you will never convince his die hard supporters of that fact). From the multiple federal government shutdown threats, to raising the debt ceiling, to creating the utterly ineffectual deficit reduction commission, to extending the payroll tax cut, when push came to shove the Republicans, for all of their tough guy rhetoric, blinked every single time.

The pattern by now is so clear that it should be obvious to all but the most addle-minded of observers. When it comes to the economy, conventional left-versus-right politics no longer exists in America. Instead, policies which enable extend and pretend to carry on a bit longer will ALWAYS win the day, no matter which party is nominally pushing them. Whether they consciously realize it or not, most politicians across the political spectrum instinctively know that nothing will effectively end their careers faster than enacting legislation that can be directly attributable to setting off the next round of economic collapse.

This is why the Democrats, and Obama in particular, have resisted calls from the likes of Paul Krugman to greatly increase government deficit spending above its already insane levels in order to “jump start” the economy. The result of such madness would quickly be $200 oil and $7-a-gallon gasoline, and a crash in the consumer economy that would make 2008 look like a boom year by comparison.

On the other side of the aisle, the Republicans, for all of their bashing of “out of control" federal spending, have scrupulously avoided pushing through any form of genuine austerity programs such as the ones in fashion now all over Europe. Doing so would also result in another huge economic crash, just a deflationary one rather than an inflationary one.

Back on July 29th of last year, in my post, "GDP Checkmate – Four Choices of the Apocalypse" in the run up to the "last minute" agreement to raise debt ceiling, I wrote that our “leaders” were backed into a corner and faced with having to make one of four choices. It’s pretty clear now that they have chosen Option 2:

2). Raise the debt ceiling and MAINTAIN current levels of deficit spending. This would probably be Obama’s first choice to get him past Election Day 2012. This option would achieve results similar to those above, but it would take a little longer to get to hyperinflation and economic ruin, most likely at some point in Obama’s second term.

Anyone who thought the politicos would act any differently made the mistake of thinking that they really mean what they say whenever they open their mouths. In reality, Option 2 was their only real choice, given that their whole existence is staked in the system as currently constituted. The alternative is an economy resuming its free fall and the voters placing the blame squarely upon any incumbent they can vent their wrath against the next time around at the ballot box.

In closing, regarding my prediction that Option 2 would likely push back the day of economic reckoning until sometime in Obama’s second term, I see no reason six months after I first made that assertion to alter that time line. The Great Muddle will continue on…until one day some event beyond the control of the politicos rocks the system sufficiently to kick off the next phase of collapse.


Bonus: "Beat your feet in the Mississippi mud"

The New Realities About Retirement are Slowly Sinking In

Giving credit where credit is due, the USA Today, which I admittedly have mocked over the years as "McNews," has actually been doing some decent reporting about the economy lately. Case in point was a somewhat lengthy article that appeared on Monday entitled, "Many Have Little Savings as Retirement Looms." The article starts off with a good summation of the financial pressures being placed on older Americans as they approach their retirement years:

For many Americans, the golden years are quickly taking on a tin-like hue.

After a vicious decade of no growth for the stock market, including two 401(k)-eating bear markets and persistently sky-high unemployment, more Americans are finding themselves in their 50s and 60s with practically no money saved for retirement.

"We were in our 30s, blinked, and now we're our parents' age," says Alan Tipps, a corporate jet pilot who typically earns more than $100,000 a year when he's working. But Tipps, 52, has been laid off three times during the past four years, and says that has forced him to burn through what was in his 401(k) just to "keep the lights on" in his home in Portales, N.M.

Investors of all ages have suffered. But for those close to retirement, it's been especially tough, because they're faced with taking distributions from investment portfolios that in some cases are a fraction of their peak value. Forced early retirements and the near extinction of pensions are making things worse, creating a generation of aging investors in which some have little or no plans for how they're going to pay for retirement.

It gets more ominous, given the other changes Americans are facing. Declining property values have drained home equity that many retirees might have counted on. Meanwhile, the number of people reaching retirement age is soaring as the Baby Boom generation ages.

That sounds an awful lot like the things I've been saying around here, actually. But what really struck me is some of the quotes from people interviewed for the story who are belatedly waking up to the new realities. For instance: gee, what happened to those magical 10% annual returns in my 401(k) account I was promised?

The people Redmond encounters most who are lacking sufficient retirement savings weren't necessarily delinquent or negligent. Many had money saved but were wiped out by the sour stock market in the past decade and poor investment strategies, Redmond says.

That's what happened, in part, to Robert and Connie Cabana of Tampa, who are both in their 60s. Robert built up a sizable 401(k) working as a financial executive at Verizon. Connie was a business assistant for a local irrigation supply company. Connie was laid off four years ago; Robert was let go three years ago.

But the serious hit to their retirement, which wiped out half their 401(k) savings, resulted from the stock market and an overexposure to risky stocks, they say. Now, 75% of their 401(k) is gone, and they have "very little" left, Robert says.

Here's another one: oh, you mean I can't just blow all my money like there is no tomorrow and have Social Security there to take care of me when I get old?

Baby Boomers, in contrast with their Depression- and World War II-era parents, who typically were good savers and had company pensions, have looked at savings as a downer, says Chris Olsen, 49, a financial planner with Ameriprise.

Many people now in their 50s and 60s with no savings figured they could lean on Social Security for their retirement, he says. In reality, Olsen says, Social Security payments are far from adequate to fund skyrocketing health care costs. The payments also are losing purchasing power relative to inflation, he says. Social Security, in practice, pays for only about 40% of most retirees' needs, says Paul Jarvis, financial adviser at State Bank & Trust in Fargo, N.D.

"I always made a lot of money. I always spent a lot of money. I've done whatever I wanted to do," says Paul Conlin, 53, a contractor in Liverpool, N.Y., who says he has less than $50,000 saved for retirement. "I live for the moment. When I want to do something, I do it."

But after consulting with a financial planner, Conlin, who is married and has three children, is starting to put money away for retirement. He's saving $6,000 a year in a Roth IRA, "and it's growing," he says. "I've changed my habits."

And finally: what do you mean I have to "lower my expectations?" That's un-American.

Perhaps the most likely option for many is doing an extreme makeover of their finances and slashing costs. Olsen and Jarvis have both seen retirees with little money sell their homes in costly parts of the nation and move to less expensive places. Others forgo many of the things Americans dream of doing during retirement, such as travel.

There's no guarantee that even such extreme measures in retirement will help Americans recover from a lifetime of not saving. Making such sacrifices now creates worries many Americans would rather avoid at this stage in their lives.

Nevertheless, these people have still not completely unmoored themselves from business as usual:

Connie Cabana cautions young people to learn from her predicament. "Young people need to start saving as soon as they start working," she says. "There are roadblocks you don't see when you're young. You think money will always be there," she says. "But with life, you need to make provisions."

Clearly, Ms. Cabana has no idea what it is like to be a young person these days. In order to start saving money for retirement you actually have to be able to earn decent money in the first place. As many of the millions of Occupy protesters could have told her, that is becoming nearly impossible these days.

What this article really demonstrates is how the desperation is building up out there, not just among young adults but all segments of society. My theory is that the U.S. is about one more severe market crash away from massive instability. Propping up the stock market has been the elites' way of trying to pull the wool over enough people's eyes to keep things relatively calm. It may not work for very much longer.

Warning: Tough Decision Ahead on the Payroll Tax

I've written here before about how the Social Security system is fundamentally insolvent and how Obama's decision to cut the payroll tax has hastened that program's ultimate day of reckoning. Well, don't look now, but the failure of the so-called "super committee" to cut the federal budget deficit has created a situation whereby the payroll tax break is about to expire. Here is CNN with the details:

With the super committee's failure, lawmakers are now facing a year-end legislative challenge that could have an outsized impact on the economy.

At issue: Whether to extend the payroll tax holiday, or let it expire.

Employees normally pay 6.2% on the first $106,800 of their wages into Social Security, but this year they've only been paying 4.2%. That tax break, however, is set to expire January 1.

Failing to extend it would amount to raising taxes during a rough economic patch -- something that President Obama would like to avoid.

Obama is expected to ramp up pressure on Congress Tuesday during a visit to New Hampshire, where he will call on lawmakers to extend the payroll tax holiday.

No, restoring the full payroll tax does NOT amount to "raising taxes." It is instead a way to sustain a program that is already running in red. It's called paying your damn bills, and it is something that this spoiled rotten country needs to get used to sooner or later.

But, as always, you can count on an economist to provide the very worst analysis available:

Economists at Capital Economics expect that consumption growth will suffer "a very sharp slowdown in the first quarter of next year if the payroll tax cut is not extended," according to a research note released Monday.

And Moody's Analytics estimated in August that letting the tax cut expire would reduce growth by as much as 0.5%, and called extending the cut one of the "most straightforward" ways to "reduce some of the coming fiscal restraint."

As I stated last summer in my post, "GDP Checkmate: Four Choices of the Apocalypse," the time for putting off hard decisions about the nation's economic future by borrowing insane amounts of money is rapidly coming to an end. Better to lose the "consumption growth" that would disappear from restoring the payroll tax now than suffer a much larger crash when America does finally start to experience the same "bond vigilantism" now being experienced by the PIIGS nations in Europe.

My guess is that the payroll tax cut will be "saved" when the Republicans agree to allow it to continue in exchange for eliminating the scheduled automatic cuts in defense war spending because of the super committee's failure. If that does happen, it will mean that this whole deficit cutting exercise was nothing but a bit of pure wankery.

Long term, of course, Social Security is doomed anyway. But keeping the payroll tax cut is like stepping down on the accelerator as we speed towards the edge of the cliff.

Florida GOP Voters Suddenly Realize that More Spending on War Means Less for Them

So what’s a warmongering Republican presidential candidate to do who wants to place the boot heel of the American military upon the neck of every “rogue regime” around the world where the locals actually have the audacity to be living on top of America’s oil? Ever since President George Bush the Lesser lied the country into the Iraq War, it always seemed that you could reliably count on Republican voters to mindlessly back whatever harebrained military misadventure the neoconservatives could cook up next.

But not anymore, apparently. As reported by the Miami Herald, according to a recent poll likely Republican voters in Florida appear to be waking up to the fact that America’s out-of-control military spending is hitting them in their pocketbook:

Florida Republican voters have a clear feeling about cuts to Medicare and Social Security: Don’t do it, according to a new poll by the AARP.

By wide margins, the survey shows that Republicans of all kinds — whether they’re Hispanic, moderates or in the tea party — would rather fix the nation’s budget by withdrawing from the Iraq and Afghanistan wars, eliminating foreign aid or eliminating so-called tax loopholes.

But despite these sentiments of GOP voters, many of the Republican frontrunners for president are more likely to support trimming benefits than raising tax revenues or getting out of foreign entanglements.

“There’s a major disconnect between what the candidates and other folks in Washington want and what the voters think when it comes to Social Security and Medicare,” said Jeff Johnson, AARP’s interim Florida director.

“For the candidates and lawmakers, Social Security is a budget problem we need to fix the math on. Medicare is a budget problem we need to fix math on,” Johnson said. “But this isn’t about math for voters. This is about voters’ retirement.”

So what were the specific results of the poll?

When specifically asked if they favored Medicare cuts over withdrawing troops from Iraq and Afghanistan, only 9 percent wanted the former and 66 percent favored the latter. The numbers were similar for Social Security.

Wow—that’s pretty overwhelming. Enough so that you would think the more belligerent Republican presidential candidates are probably running scared right about now, right? Well, not so fast:

The poll also reflects an irony, of sorts, with voters: The candidates who most want to withdraw from foreign wars, Jon Huntsman and Ron Paul, were among the least likely to be favored.

Face palm! Herein lays the real problem with public opinion polls. Respondents are likely to say whatever dumb shit they think sounds good when the pollster calls them, but unless they are willing to actually change their behavior when they go to vote, nothing is going to change in the real world.

Rationally, these people may realize that the wars represent a threat to their cherished government benefits in a time of gigantic budget deficits. But many people vote based upon their emotions rather than logical thinking, and the politicians are well aware of that. It's the same dynamic that will cause millions of liberals and progressives disgusted by Obama's selling them out on nearly every issue of importance to them to traipse back to the polls and cast another ballot for him next year. Which is why you can also expect this result to have exactly zero effect on the presidential campaign and that the eventual Republican nominee, whomever he or she turns out to be, will continue to aggressively promote unfettered American Exceptionalism, regardless of the costs.


Bonus: Doug Stanhope doesn't care what your opinion is.

Wall Street Journal to Older Americans: GTFO So We Can Lower the Unemployment Rate

Pension plans are broke, Social Security is broke, the cost of Medicare is skyrocketing. Clearly, the LAST thing the country needs is a huge wave of people taking early retirement. Right? Am I right? Please tell me I'm right.

Well, not according to the Wall Street Journal:

The nation's unemployment rate may fall faster in the future than many economists assume for one simple reason: The rapid aging of the American work force is helping reduce the share of the population hunting for jobs.

For more than a decade, the labor participation rate—the share of the population over 16 that is either working or looking for work—has been falling. It stood at 64.2% in October, down from its peak of 67.3% in 2000, and economists project it to continue heading lower. Part of this decline reflects aging. As workers move into their late 50s and beyond, they are much more likely to drop out of the work force.

In today's job market, that could mean that many people now counted as unemployed may simply drop off the rolls and never return—making it easier to pull down the jobless rate once economic growth accelerates, since fewer new jobs will be needed to get the jobless back to work and keep up with population growth. Fifteen percent of the nearly 14 million jobless are 55 or older.

Because that's what's REALLY important, don't you know...getting that manipulated and utterly meaningless official unemployment number to go down. It doesn't matter that the federal government is teetering on the brink of insolvency, in part because so many additional people, particularly older Americans, are becoming dependent upon it.

To be fair, this particular example of business reporter stenography did at least mention the long term fiscal problem:

While that suggests the economy won't need to create as many jobs to bring down the unemployment rate, said Barclays Capital economist Dean Maki, the downside is that it won't have as large a work force to power it along and pay for the needs of an aging population.

"If you have a greater fraction of the population not working, that will make it harder to pay for costs that will be ballooning," he said.

We can't pay for the costs we have now without borrowing a trillion and a half dollars every year, fucknuts. So how the hell do you think we're going to be able to afford it going forward? This is yet another sad example of what passes for legitimate economic analysis in the mainstream media these days. No wonder we're in such deep shit.

No Country for Old Men

"You can't stop what's coming. It ain't all waiting on you. That's vanity." - No Country for Old Men

I’ve written here numerous times about the daunting challenges that await Americans who have been conditioned by media lies to think that a comfortable retirement awaits them during their golden years. The data regarding the true financial condition of private and public pension plans around the country, to say nothing of the Social Security system, are sobering to say the least. My estimate is that America’s retirement paradigm as we currently know it will collapse within the next decade, well before dwindling energy supplies completely snuff out the overall economy.

The only question is whether this collapse takes the form of the federal government explicitly defaulting on its debt obligations or it starts printing so much money that the monthly payments to retirees become virtually worthless. Either way, the end result is the same—utter destitution for anyone whose sole source of financial support is their pension and/or Social Security. Even having money socked away in a 401k plan won’t help as either a stock market collapse or hyperinflation (or both) tear asunder the ability of such paper assets to purchase physical needs such as food and energy.

Almost as daunting for those either just retiring or soon to retire is the impending collapse of Medicare and the overall health care system. As the federal government’s biggest budget line item and the one that has been growing the fastest in real dollar terms, the program is rapidly reaching the point of being financial unsustainable. It remains uncertain exactly how the strain on the system will cause its financial demise, but America’s senior citizens should expect that within a decade or so the only medical treatments which will be available to them is that which they are able to purchase from their own resources. And this will happen at a time in their lives when their individual health issues begin pile up on top of one another.

Another factor to consider is just how quickly America’s transportation infrastructure is breaking down. As I reported last week, the average American bridge is now a mere SEVEN YEARS away from having reached the limits of its useful life. Additionally, the effects of continued rising gasoline prices as those remaining supplies of cheaply produced oil run out will fall most severely on those living on fixed incomes. This means that senior citizens are likely to become virtually immobile in a society where there are few viable public transportation options available for most people.

Another social factor negatively affecting senior citizens is the atomization of our society and the constant shuffling of our population. How many people these days live within a reasonable commute of any of their immediate relatives? For many seniors, the “empty nest” not only means that their children have grown up and left the household, but that they now live many hundreds if not thousands of miles away. As transportation becomes more difficult and the loss of jobs as the economy gets worse makes travel unaffordable for even for the most well-intentioned offspring, many seniors are likely to face the daunting challenges of economic collapse utterly alone.

Then you have the whole matter of America’s worship of the culture of youth. From even a casual observance of the images relentlessly glorified by our mass media it should be apparent that our culture does not value the wisdom and experience that comes with age. Rare is the popular entertainer or media personality on the wrong side of 40. Instead, we literally make millionaires and even billionaires out of the likes of Miley Cyrus, Justin Beiber and the Kardashian sisters. Plenty of younger adults think nothing of shuffling their aging grandparents and even parents off to decrepit assisted living facilities that are really nothing more than warehouses for the dying. What’s to become of these lonely souls when the government checks that pay for their pitiful upkeep start to bounce?

As bad as the coming years are going to be for those young adults of the Occupy movement who are just now beginning to realize that all of the promises made to them about their economic future have been nothing more than cruel lies, at least they have a chance to adapt to the changing conditions. Adaptation becomes harder as you get older, however, and for most of those middle age and older it will be well nigh impossible. The only chance older Americans have of not succumbing quickly when collapse accelerates is to recognize that the economic growth paradigm in which they have lived their entire lives is dead and to make the necessary adjustments in their mental outlook and in their physical lives while there is still time left to do so. Most, however, will not come to this realization until it is far too late.


Bonus: After all, sometimes life is just a coin toss.

Thousands of Social Security Numbers Leaked Every Year

Sometimes, you read a news story and the only sane reaction is a massive face palm. Here is Computerworld with the details:

The Social Security Administration (SSA) puts thousands of Americans at risk of identity theft each year by accidentally leaking their Social Security Numbers, names and dates of birth, according to an investigative report by the Scripps Howard New Service.

The leaks are the result of keying errors made by SSA employees when entering data into the agency's Death Master File, a database containing the records of 90 million deceased Americans.

Since 1980, when the SSA first started making the file publicly available, more than 400,000 SSNs belonging to living Americans may have been inadvertently published in the Death Master File as a result of the errors, according to the report.

Okay, the government is incompetent, I hear you saying. We already knew that. Tell me something I don't know. Well, betcha didn't know this:

In most cases, the victims of the inadvertent leaks are not informed of the breach. Many discover the error only after they ran into problems such as having their bank accounts frozen, job interviews refused or having their credit, mortgage or student loan applications declined, Scripps Howard reported.

Yeah, I can see where that would be a problem, all right.

Let's call this one out for what the real source of the trouble is: complexity. Our society has simply become too complicated to be effectively run by the majority of idiots who are responsible for running it.

Clearly, a large percentage of the Social Security Administration's employees charged with entering the data into its computer system are incompetent. But I didn't write this post just to bash the federal government, as I suspect by the way things are going in the corporate world these days that the feds hardly have a monopoly on such incompetence.

Face it, folks. Our whole system was created by a handful of really smart people, who then turned their creation over to the rest of us morons to fuck it all up. That's why we have our collective heads up our asses on issues like peak oil, resource depletion and climate change. We're just too damn dumb, yet we're still arrogant enough to think that we know what we're doing.

Bonus: here's my man Joe Rogan on the subject of our collective idiocy. Enjoy!

Why We’re Screwed (Part 3): The Social Security “Trust Fund” is a Lie

After I began this “Why We’re Screwed” series as the U.S. Government debt limit showdown D-Day approaches, I received several inquiries from readers asking why Social Security benefits are on the table to be slashed given that the Social Security Trust Fund is supposed to make up any gap between revenues and benefits payments. It’s actually a very good question. The short answer is that the Trust Fund is a gigantic lie being used to pull the wool over people’s eyes so they won’t realize just how bad America’s fiscal situation really is.

As for the longer answer, the first thing you need to know about Social Security is that it’s a pay-as-you-go program. That means that today’s benefits are paid for by current year payroll tax collections. Any extra payroll taxes collected over and above the amount paid out in benefits rolls over into the Social Security Trust Fund. Prior to the financial crash of 2008, the Social Security program had enjoyed many years of large surpluses. According to Wikipedia, as of the end of calendar year 2010 the accumulated amount in the fund stood at just over $2.6 trillion. Had that money be placed into real revenue generating assets, the U.S. Government could have withstood payroll tax collections dropping below benefit payouts for a long time.

Unfortunately, the crash could not have come at a worse time—the very year that the oldest members of the Baby Boom generation became eligible to take early (though reduced) retirement benefits. It has long been recognized that the size of the Baby Boomer population bulge was eventually going to cause Social Security to begin running an accounts deficit and thus have to dip into the Trust Fund. Up until just a couple of years ago, that wasn’t expected to happen until around the year 2020.

Well, guess what? It’s already happened. During 2009, the payroll tax surplus disappeared as more Boomers than expected opted for early retirement benefits, presumably because they had lost their jobs during the Great Recession. Then, in one of the more insane ideas to come out of Washington in a while, President Obama and the Republican congressional leadership agreed in December 2010 to slash the payroll tax from 6.2% of the first $106,800 of every wage earner’s income to only 4.2% as a (rather desperate) way of stimulating the economy. This meant that Social Security’s revenue stream was being reduced by the short-sighted politicos just as the program was beginning to run in the red. Sure enough, a month later the Congressional Budget Office estimated that Social Security’s account deficit in 2011 would be approximately $45 billion.

All of this still might have been survivable for awhile if the Trust Fund really existed. Unfortunately, when it was set up it was required by law to buy Treasury securities, which means U.S. Government debt. As Wikipedia explains it:

“These [Trust Fund] balances are available to finance future benefit payments and other Trust Fund expenditures – but only in a bookkeeping sense. They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures.”

So in effect, the U.S. Government has been filling up the Trust Fund with IOUs that can only be cashed in at the cost of increasing the deficit. It’s like raiding your son’s piggy bank to buy cigarettes and leaving a promissory note. Do it often enough and there’s no cash left in there, and your son will be mighty disappointed when he tries to go buy that new toy he really wants.

Now you know why the politicos are suddenly so hot to trot to slash Social Security benefits. The program has gone from being a net plus, whereby they could use its surpluses to mask the size of the deficit, to being a net drain that is now directly increasing the deficit. The blindingly obvious fact that they are the ones responsible for this state of affairs seems not to register with them.

Even more disconcerting is that as of next year the first Baby Boomer retirees, those born in 1946, will be eligible to receive FULL (not reduced) Social Security benefits. Without cuts in the program this year, the net drain on the U.S. Treasury is about to get a whole lot worse.

These are the facts you need to know in order to have any understanding of what’s at stake in the debt ceiling battle. For the last 30 years, America has been living high on the hog on money borrowed from the future. Now the future is here, and NOBODY wants the programs that benefit them to be the ones cut in order to reduce the deficit. The politicos find themselves trapped in a box from which not even they will be slimy enough to worm their way out.