These Are Supposed to Be Social Security Fixes?

I am known as a bit of a contrarian when it comes to investment & financial matters but there have been times when I agreed with new legislation. But when it comes to Washington's decisions on Social Security and many other important matters, I'm almost always left mad as hell and confused. Are people living on the same planet as the rest of us ? The latest items that have run across my monitor are a prime example ...

These Are the Proposed "Fixes" For Social Security ?

In June, U.S. Senator Herb Kohl, Chairman of the Senate Special Committee on Aging, convened a hearing to examine ways to shore up Social Security. And he tasked the GAO (Government Accountability Office) to undertaking a study S.S. issues, including ways to “improve its impact on lower-income recipients”.
I hope Senator Kohl's report tackles the big issues, but I'm not holding my breath.

Kohl's larger report on the entire system will be released in the near future. But for now, U.S. News has reported these details in the GAO report. :

"The GAO report reviewed eight areas where, it said, benefit changes were most commonly proposed. The report looked at how effectively each proposal would help lower-income beneficiaries, whether it would have much of a financial impact on Social Security, and on how difficult it would be to administer."

What were those areas? Here are a few of the most common ideas our lawmakers are coming up with when it comes to making Social Security better.

A. Guaranteeing a “minimum benefit” amount for people who have worked lower-wage jobs during their careers.


B. Lowering the number of credits needed to become eligible for the program.


C. Adjusting calculations to get more money into the hands of low-income single workers.


D. Giving credits to stay-at-home parents so they don't miss out on benefits.


E. Increasing survivor benefits so widowed spouses, particularly those who didn't work, are less affected by spousal deaths.

And these suggestions continue, but they all essentially amount to increasing benefits and coverage, particularly for folks who didn't pay into the system.

All of which leaves me wondering: What are these people thinking?

Now is precisely the wrong time to be trying to find ways for Social Security to pay out MORE. The system is already unable to pay out that which it has already been committed to! This program's continual expansion over time has been gasoline on what was a well-intentioned, but ill-conceived, fire of a Ponzi scheme from day one.

When Will Someone In Washington Start Talking About The Real Problem?

This is rearranging deck chairs on the Titanic. 4 Obvious items come to my mind:

Obvious Item 1: Social Security was intended as a pay-as-we-go structure, which by any by definition means, that the more we ask it to pay out, and the more people we ask it to cover, the more money we need going IN!

Obvious item 2: Today, LESS money is coming in because of the recession.

Obvious item 3: Recipients are living longer, which is compounding the overall funding crunch.

Obvious item 4: Demographic trends tell us that there will be fewer and fewer people paying into the system and more and more people receiving money from the system as the baby boomers retire.

Social Security will begin paying out more than it receives just six years from now.

That is 2016 (and possibly sooner), Social Security will essentially be losing ground every single day. As reported by Niles Mattive of Money & Markets Blog, by 2037, it will only be able to pay out 78% of the benefits promised today.

Ok, so the stewards are busy rearranging deck chairs, the band is playing and the passengers are dancing, the Captain isn’t on the bridge, ice is falling on the deck and the view of the Iceberg is filling my monitor. Now I know how the Titanic’s lookout felt.

So what’s going to happen: They'll continually follow the same "what us worry?" policies they pursue everywhere else. Issue more misdirecting talking points, ignore budgets altogether and figure out ways to spend more, all the while kicking the can down the line.

But mark these words — another Social Security tax hike and a removal of the current contribution cap are coming sooner rather than later.

Those inside the beltway are likely to reduce benefits for many of the same recipients who spent the last few decades funding the program. The most obvious way to do this is by additional taxes on benefits being paid to “certain” recipients. On that, you can make book.

Omar P Bounds III A.A.R.E., C.E.S., G.P.P.A.
The Bounds Auction Company