STAFF NEWS & ANALYSIS
Social Security Debate: Mainstream vs Alternative Media
By Daily Bell Staff - November 09, 2015

How Social Security and Medicare just got stronger … The new federal budget bill President Obama signed into law earlier this week makes some crucial fixes aimed at strengthening the finances of Social Security and Medicare. While some people will receive reduced benefits with these changes, everyone wins when these programs are put on a sounder footing and obvious flaws are remedied. – CBSNews

Dominant Social Theme: Social Security keeps its promises.

Free-Market Analysis: Let's examine recent Social Security changes as reported in both the alternative and mainstream media. Will the results shed further light on why establishment reporting continues to lose readers and credibility? We'll provide our opinion in the conclusion.

The first report is from CBS news (see above excerpt). Below is the interpretation of Sovereign Man's Simon Black. The point of the CBS article is that changes just made to Social Security (and Medicare) will keep the programs strong and vital.

Thus, the emphasis of the CBS report is not the precariousness of Social Security but the decisive action that Congress took to repair its finances. The CBS article is firmly positioned in this manner.

Here's more:

The Social Security disability trust fund was projected to be exhausted in late 2016. If it had run out, checks to current disability beneficiaries would have been reduced. The new law reallocates a portion of FICA taxes to the disability trust fund in amounts sufficient to pay benefits until 2022. Current disability recipients can breathe a sigh of relief, at least until then.

Closing unintended loopholes in Social Security benefits … One of the most controversial features of the new law severely restricts two Social Security claiming strategies – file and suspend and restricted application – calling them unintended "loopholes."

The article goes on to explain that the "loopholes" were created in 2000 as incentives for workers to work longer. Instead, couples were taking advantage of the law to raise lifetime payouts.

We can see from the above that the article is reassuring and presents Congressional actions positively. The idea is that Congress knew what was necessary to make SS in particular solvent again and did so with confidence and competence. "It's encouraging they were made without being held hostage by other political initiatives," the article explains.

The article points out that people should not be surprised that SS "needed fixing." In fact, we are told that lawmakers are very vigilant when it comes to how "benefit changes and tax increases" might have a positive impact on SS finances. In this way lawmakers generate a "menu" of methods to increase SS solvency at any given time.

Finally, the article reminds us that that the "loopholes that were closed benefited "affluent" retirees but will save billions. Optimistically, we learn, this formula may be applied going forward, as Congress intends to reduce benefits and raise taxes "on those seen as capable of paying for an improved Social Security system."

In reviewing the above, one has to be impressed with how the Congressional changes are approached. There is no doubt from the article that Congress has reduced SS benefits and raised taxes, but this is seen as a positive because the people being targeted are those that can afford it. And as a result, SS is strengthened for everyone.

Not surprisingly, there are different interpretations about what Congress has done. Simon Black, the libertarian publisher of Sovereign Man, recently posted a column on the changes in SS that provides an entirely different point of view.

Here's how it begins:

On August 14, 1935, President Franklin Roosevelt arrived at his desk to sign the Social Security Act into law. … Just before signing it, he proudly proclaimed that the law would go down in history "as a protection to future administrations of the Government against the necessity of going deeply into debt to furnish relief to the needy."

Needless to say, that didn't happen. Quite the opposite, actually. Just like most western governments, the US government has gone deeply into debt to fund its social insurance programs. Officially, the US government is now $18.5 trillion in debt, and Social Security is the biggest financial sinkhole in America.

Social Security's various trust funds currently hold about $2.7 trillion in total assets; yet the government itself estimates the program's liabilities to exceed $40 trillion. And Social Security's second biggest trust fund, the Disability Insurance fund, will be fully depleted in a matter of weeks.

None of this is untrue yet none of this is mentioned in the CBS article. A comparison of the two articles thus begins to yield two very different narratives. One narrative is that Congress is competent to resolve the challenge of SS and the other is that Congress – and the nation – has already lost the battle.

Simon Black reinforces his perspective by reporting other facts regarding SS. He has taken the time to examine the 2015 report of the Social Security and Medicare Board of Trustees and quotes them as follows: "Social Security as a whole as well as Medicare cannot sustain projected long-run program costs… [and the public should be given] adequate time to prepare."

"Wow," Simon adds.

Wow, indeed. The CBS article went out of its way to reassure us that the changes being made by Congress would result in a healthier and stronger system. But this statement in writing by trustees seems to indicate the opposite – that SS is in trouble and will not be able to fulfill current obligations.

Simon points out that the Board of Trustees are not "wackos" but include the Treasury Secretary of the United States, the Secretary of Health and Human Services, the Secretary of Labor and others. "These are the folks who sign their name to the report saying that Social Security is going bust," he adds.

He then points out that, "The US Government Accountability Office recently released a report showing that tens of millions of Americans haven't saved a penny for retirement; and roughly half of Baby Boomers have zero retirement savings."

This broadens Black's reporting considerably and adds to our frame of reference regarding US retirement and its changes. Thanks to the additional information, we can see the lack of personal savings plus continual SS defunding will leave tens of millions in what might be described as penury.

Simon Black concludes that many living now will have to prepare to "fend for themselves." And he makes the point that, "Financial literacy is absolutely critical here, which includes the ability to both generate income and manage money, two things that aren't taught in the government controlled education system."

What's the verdict? For us it's obvious. Black's perspective aligns with ours, and we find his analysis a good deal more persuasive and meaningful than the CBS report.

One might come away from the CBS article feeling uplifted and encouraged that Congress is capable of solving even the biggest challenges. But we find Black's approach a good deal more substantial.

Once one understands reality – no matter how grim – one can begin to plan realistically for the future. He concludes: "Ultimately, learning to rely on yourself is no easy task, but it is an incredible opportunity to become more free. And … you will be the one in control of your own fate."

After Thoughts

You may have a different opinion, but from our point of view, Black's article is clearly more informative. Of course, we must admit we're biased. Here at The Daily Bell, you'll certainly find information that will provide you with the "opportunity to become more free." That's our goal, too.

Posted in STAFF NEWS & ANALYSIS
  • Elizabeth Martin

    Sorry, but I cannot agree that SS is the biggest financial sinkhole we’ve got – that would be the Pentagon, with it’s missing $2 TRILLION as mentioned by Rumsfeld one day before 9/11. The US war machine is bankrupting us, and destroying many, many countries around the world – for what? So we can be an “empire” just like the ones our ancestors fled? cheers

    • The Pentagon doesn’t directly have an impact on people’s solvency the way SS does. But indirectly it probably does have almost as much or as much of an impact just in terms of the amount of debasement it demands. Good post.

    • In terms of ‘what would happen if this was not so’ it is hard to guess where the US would be if all the money that was stolen through taxation and created (at the cost of inflation and debt) was not shovelled into the Pentagon and on towards the military industrial complex but was instead allowed to do what it would do in the economy. I am certain there would not be less commerce and wealth as a result, quite the opposite. Investment could be made in ‘things of value’ where as the war machine is ‘dead’ money.

      As regards ‘what would happen’ if there was no SS, I suggest the change would be even more fundamental, there would be a complete shift in the economy towards total employment, toward a major reduction of the cost of living, there would be a knock-on effect on the political landscape as the SS recipients would no longer be being bribed to vote for the party that is going to give them the best deal. And then there is all the social change that follows SS money, the poor having loads of kids when the working cannot justify the extra cost, immigrants coming to feed from the trough, the diminishing national IQ quotient as a result.

      It is not just the direct cost in terms of taxation, it is more so the whole picture, the ramifications. And I say ending the SS would produce by far the biggest change to the economy imaginable.

  • pcnot

    Younger workers are getting screwed two ways: one, they are paying into a Social Security Fund that will not exist when their turn at the trough arrives, and two, trying to “save” money for the future is futile given zero interest rates and actual inflation rates far north of what is advertised by Yellen and company. Talk about a rock and a hard place.

    Is there a day of reckoning in the (near) future? You betchum, Little Beaver, and it will be truly dystopian.

    I’m near 78 and watch with fear and dismay as my savings get eaten by the “too-low” inflation, exploding medical and food costs. My and my wife’s social security together just about cover utilities, the rest comes from cashing life insurance. My fear is that the money runs out before we do. By the way, the dollar value of that life insurance was substantial when I was paying for it. Those dollars now are worth now maybe 5-10% in buying power. We are all reaping the whirlwind I’m afraid.

    • Hey you

      That seemed obvious as the USA government values its money for mostly political results. Fortunately, a lot of my savings are in commodities and in foreign currencies. Both seem to hold better value than USDollar savings.
      Now, I understand that there is 4 trillion dollars waiting to enter the economy. Watch out!

  • If ‘the state’ took control of the provision of air for breathing we would all be told: ‘without them managing it we would all be asphyxiated within a week’. And if I came along and said “we must end the cult belief in the religion of ‘the state'” most people would derisively dismiss the prospect flat, questioning “just how would we all breathe without the government providing the air you fool”.

    • Heywood Jablome

      now just imagine the global state in control of the climate change dialogue…..

      • I like to call it the: global man-made climate warming change taxation system

  • apberusdisvet

    Given that true COL increases that are supposed to be applied to SS benefits are vastly understated, the overall effect on seniors is devastating. It’s not hard to see the incremental genocidal impact. It appears that all segments of the American public are being attacked; from the vaccines, fluoridation, chemtrails, and the biggie…………..non reported Fukushima radiation, already in our food and air.

  • Jim Kluttz

    I think a quick look will show that SS trust funds are mythological creatures. Money collected in SS taxes is spent and government IOUs substituted as assets in the funds.

    What does this mean? It means that when trust funds are paid out the feds must replace the IOUs with cash in either of two ways, borrowing or raised taxes. Thus, mathematically SS distributions from trust funds to beneficiaries are collected twice from we the people. The deal is pay in twice and collect once.

  • Praetor

    I have this on going debate with myself, about all this government social care aid money. I have built my life to be self sufficient, of course you have obligations as mandated by government, the main one being property taxes and its substantial, I sell what I produce to pay these mandated taxes. Then I reduced all other obligation to the lowest possible levels, these being power, energy uses, ( the net being one), cell phone, fuels (gas/diesel), Food (I eat what I grow) all paid with what I produce. No DEBT, house and property paid for, no vehicle payments, no credit cards, no seconds, no monies owed to anyone. I collect no monies from government, I have no income. I do not receive SS or medi anything to live, I do not and never had a doctor. I have had work in my life, I started working when I was 16 and have Retirement money, but it sits there waiting to be collected and my income stolen by government for the social care aid, but decided a long time ago to have nothing to do with it. I live well, I live free and have no need for government and the money they stole from me is just that stolen, gone. I am why old enough to collect but,why, collect the money and put it in a bank, right. See the guy up there biting his finger nails that is what they want, be afraid very afraid for you will die with out the government. You may think I’m crazy, but when the system collapses, not much will change for me, except when I sleep, I will have to keep one eye open. Prepare yourselves!!!

  • Praetor

    MSM, is the right hand of government, and henceforth should be referred to as the ‘Ministry of Propaganda’. All ‘Tele’ news is propaganda, in other words ‘no news’. The nukes could have fallen on L.A. & NYC and the Ministry would be telling us all is well, not to worry. Lies, deceit and manipulation is its only purpose. As that great philosopher, Timothy Leary once said, turn off, tune out & disconnect yourselves, ‘O’ wait, he didn’t say that, something like that, anyway!!!

  • Demonocracy

    Here is the smoking gun Simon speaks of. The government calls it a trust fund but how can it be a trust fund if it’s dipped into and depleted from time to time? The definition of a trust fund is that you don’t touch it until a pre-determined date. Ron Paul commented and said if SS was treated as a trust fund it would not be in trouble. That was 10 years ago.

    “Social Security’s and Medicare’s projected long-range costs are not sustainable with currently scheduled financing and will require legislative action to avoid disruptive consequences for beneficiaries and taxpayers. The sooner that lawmakers take action, the wider will be the range of solutions to consider and the more time that will be available to phase in changes, giving the public adequate time to prepare. Timely resolution of the financial imbalances will prevent the uncertainty currently facing the disabled population from being experienced by other Social Security and Medicare participants. Earlier action would also provide more opportunity to ameliorate adverse impacts on vulnerable populations, including lower-income workers and people already significantly dependent on program benefits.”

    https://www.ssa.gov/OACT/TRSUM/

  • robertsgt40

    “Social Security’s various trust funds currently hold about $2.7 trillion in total assets.” I guess we need clarity on the term “assets”. Those assets are IOUs to replace the actual cash looted by the feds to be spent in the general fund. Hasn’t been a dime there for decades. The payouts have to be funded every year. SS is just a smaller Ponzi of the larger Ponzi created by the Fed. Rearranging the deck chairs won’t make any difference.

  • Grisly Atoms

    You can thank the SCOTUS for the insolvency of both SS in particular and the Federal Government in general. In 2000 the people voted to elect Al Gore for president and continue running government budget surpluses and paying down debt. But the SCOTUS voted to elect George W Bush as president, with his budget-busting policies. Thanks a lot, Supreme Court. I thought you people were supposed to be smart.

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