BABY BOOMER ARMAGEDDON
By Jon Christian Ryter
July 18, 2008
Last October Earlesville, Maryland resident and former 7th grade teacher and nutrition consultant Kathleen Casey-Kirschling, touted for decades as "Baby-Boomer Zero" or "First Boomer," filed for Social Security benefits. Sixty-one year old Casey-Kirschling was born in Philadelphia, Pennsylvania at midnight, Jan. 1, 1946—the first official baby boomer. Her filing for benefits was a momentous occasion for her and a frighteningly symbolic event for the nation. Casey-Kirschling's filing is believed by many in government to be the financial straw that will ultimately break the camel's back. She represents the first of the World War II war babies to begin drawing from dollars that have not existed since Lyndon Johnson's Great Society. The Democratic leadership which controlled both Houses of Congress for 80 of the last 100 years spent the money that, by law, had to be invested in high yield securities since this money did not belong to the US government. The money belonged to the American people who, by law, were obligated to invest it for their old age.
After she filed for her Social Security benefits, Kathleen Casey-Kirschling completed the day at a special luncheon at the National Press Club in Washington, DC where she told reporters she was looking forward to collecting her benefits. "I'm thrilled," Casey-Kirschling said, "to think that after all these years that I'm getting paid back the money that I put in." Any senior level politicians in attendance were probably squirming in their seats as they smiled politely for the cameras, wondering deep in the dungeons of their minds where thoughts they don't ever want to voice are chained, most of them wondered just how many baby boomers it would take before Baby Boomer Armageddon occurred. Casey-Kirschling was the first of 3.2 million baby boomers who will reach 62 this year—which amounts to 365 an hour. Statistically, about 49% of men and 53% of women will take early retirement and reduced benefits.
The Social Security Trust Fund was created in 1937. Funds collected through payroll deduction could not be placed in the general treasury as "tax revenue." Social Security deposits are assigned to the US Treasury where, by law, they must be invested in marketable Treasury securities. In 2007, the US government received Social Security deposits to the Trust of $1,069 billion. During the year of 2007, the Social Security Administration paid out $879 billion, leaving a net surplus of $190 billion. There's only one problem with the government's rhetoric. Uncle Sam is paying current benefits from current revenue. That's a Ponzi scheme. And Uncle Sam knows that when the flood of baby boomers creates the human tsunami that President George W. Bush has been warning the American people about, the floodgates will open and what is left of the US economy will be swept out to sea.
Why is there no money? Not because too many people filed for earned benefits. It is because the money in the Social Security Trust Fund was used to finance handouts to the Welfare Generation from 1964 to 1994. In 30 years the Democrats, who used generational welfare to chain minorities to the feeding trough of the State and to the voting booth where they were forced to vote Democratic to keep their welfare checks coming, stole your retirement funds and replaced them with worthless IOUs.
The government, in turn, argues that far from issuing "worthless IOUs," the "investments" held by the trust funds are backed by the "full faith and credit" of the US government. The bureaucrats insist the federal government has always repaid the Social Security Trust Fund—with interest. And, that's the problem. The Social Security Trust Fund became a "passbook" savings account for the government rather than an investment in which the "people" purchased high yeild securities. Instead of earning the types of returns you would expect from high yield securities, the government paid the American people 4.656% simple interest on their money.
Only, today, the Social Security Trust Fund reserve is almost virtually nonexistent. What should still be a cash reserve in the trillions of dollars is almost an empty vault filled with worthless IOUs that Uncle Sam can't repay. The trust fund is a virtual reality illusion. The government says it exists, so in the virtual reality world of politics, it exists. However, the virtual reality trust fund exists only in the virtual reality ledger sheets kept by the federal comptroller of pipe dreams and mirages.
Because of government smoke and mirrors, three out of five middle-class retirees will run completely out of money if they try to maintain their pre-retirement lifestyles when they accept their gold watch and collect their first Social Security check. A new study by the accounting firm of Ernst & Young, released on July 14 shows that Americans, who expect to live independent of their children when they retire, are going to be faced with some tough choices —ten or more years before they retire. Those tough choices will almost completely eliminate their discretionary income in order to have a post-retirement life that is not an economic nightmare. The choice they face is one that leaves them with a greatly reduced amount of discretionary income for the last decade before they retire, or destitute and dependent on their children after they retire.
The Ernst & Young study indicates that middle-income Americans must find some way to trim their standards-of-living by approximately 25% so they can put that money into 401Ks or some other form of high yield securities. In addition, retirees will have to cut their spending by at least 37% to make sure they don't outlive their money. About 77 million baby-boomers are expected to retire within the next five to seven years. What that means is not only will there be 77 million high-income middle class workers suddenly removed from the US tax roll, but there will be 77 million new retirees expecting monthly checks from Uncle Sam with 77 million fewer taxpayers paying the withholding taxes that currently "cover" the SSI and DI checks that go out every month to the current Social Security and disability insurance recipients.
Tom Neubig, national director for quantitative economics and statistics at Ernst & Young noted that most people believe they will be able to "...maintain roughly the same standard of living after retirement. Our study suggests they are going to have to make some changes. People are going to have to adapt in a number of ways that they weren't anticipating or hoping for."
Married couples with joint household incomes of $75,000 per year, whose supplemental retirement incomes come only from passbook savings or CDs and not from 401K investments, have a 31% change of running out of money before they die if they try to maintain the same lifestyle they enjoyed before retirement. Those who are obligated to depend solely on Social Security have a 90% chance of becoming destitute in their old age. Sadly, many Americans who worked for some of the nation's premiere corporations that moved their operations to the human capital-rich third world, were forced to cash in their retirement plans to keep them afloat financially as they sought new employment, or used their retirement nest eggs to finance startup ventures because new jobs were not to be found without relocating somewhere else.
Government statisticians have calculated that by 2030 the cost of the federal government's Ponzi scheme—Social Security—will outpace the contributions from its unwilling participants and, from that point, the shortfall will have to be drawn from what is left of the Social Security Trust Fund—which will be completely bankrupt in 2041. This will happen largely because of the legalization of abortion in 1973 and the removal of over 65 million consumer taxpayers through the saline baths and scalpels of the abortionists. Abortion was also the culprit that made the exodus of the factories of Corporate America to the third world inevitable since the United States and the industrial nations of Europe, with 0.5 to 0.7 population replenishment rates, were no longer producing enough "homegrown" consumers to support the consumer industry.
Medicare is in the same boat as Social Security. Only, Medicare is already paying out more than it takes in. Advocates of reducing Social Security benefits or, once again, raising the "premium," or advancing the age when recipients will be eligible to receive benefits, with partial benefits available at age 67 and full benefits at either 70 or 72 years of age insist that Social Security will begin negative payments in 2017 not 2030. To keep Social Security solvent until 2041 requires a 16% increase in payroll taxes and a parallel 13% cut in benefits. To keep Medicare solvent past 2017 requires a 122% increase in premiums and/or a 51% decrease in hospital stays.
Every year that nothing is done makes the problem worse. In 2005 President George W. Bush tried to bully the Republican-controlled Congress into beginning to fix Social Security by creating private investment accounts and removing a portion of their Social Security "contributions" from the greedy hands of politicians in order to protect their benefits. Bush and the GOP was blocked from carrying out the plan by House and Senate Democrats who said privatizing any part of Social Security would drain needed money from the Trust Fund. Clearly the liberals know just how fragile the program is, and what happens to the US economy when the house of cards falls.
Today, more and more congressmen and Senators on both sides of the aisle realize the prognosis is so bad that its just a matter of time before this nation will not be able to afford the cure because the problems in the Social Security system, Medicare and Medicare's prescription drug coverage plan are compounding themselves. Congressmen Jim Cooper [D-TN] and Frank Wolf [R-VA] argue in unison that its no longer a partisan issue. It's not red or blue. "It's as foolish as a food fight on the Titanic."
While the Democrats still believe that Social Security, Medicare and Prescription Medicare can be patched with rate hikes, anyone who has examined the problem with both eyes open knows that's no longer possible. The only thing that's going to solve this problem is replacing the taxpayers going on Social Security with new taxpayers entering the taxable work force. Which is precisely what Bush-43 tried to do in 2005-06 by offering amnesty to illegal aliens. (Conservative alarmists flooded cyberspace with emails suggesting Bush-43 was going to provide illegals with amnesty, grant them citizenship and then provide them with an immediate windfall—Social Security benefits. Nothing could be farther from the truth. The SSI benefits for the "new citizens," like the rest of us, comes at the end of our life's travels, after we have paid into the system for at least 40 quarters (10 years).
When Bush-43 advocated amnesty to draw the illegal aliens who are working in the shadows of the underground economy into the light of day, he drew fire not only from his political adversaries but from many of the transnational corporations which not only supported both of his runs for the White House, but other Republican candidates as well, since legalizing illegal aliens and getting them into the Social Security system puts them under the protection of federal employment laws. That means employers must pay these new citizens incomes that more closely approximate what US citizens earn in that job environment. (However, having two or three people bidding for the same job will lower the wage structure, but not as much as when the employer was able to hire the illegal under-the-table for a fraction of the wage paid to US workers.)
Working under the table, illegals earn enough money to feed and house themselves while those dollars which should have gone to Washington, DC (and that State's capital) in the form of taxes, were wire transferred back to Mexico, or some other Central American country, to provide for the sustenance of the illegal's family back home. In 2007, trackable "remittances" from illegals to their families in Central America totaled approximately $66.5 billion. Since Ronald Reagan's first amnesty bill passed in 1986, illegals have remitted $1,965.6 billion to family members in Mexico. Keep in mind, that wasn't their total earnings since 1986. It was that portion of their illegal incomes sent back to Mexico. Assuming each of the illegals sends 20% of their income home, we can assume since 1986, the illegals who are taking US jobs under the table earned some $147.4 trillion dollars at the expense of the US worker.
Are you beginning to see the big picture? Or rather, the real picture. It's ugly. We are faced with what can only be called "Baby Boomer Armageddon" because if the problem isn't fixed quickly, the United States is facing an economic Armageddon from which it will not survive. The solution—the only solution other than letting the liberals tax us into oblivion—is so repugnant to most of us that we are almost prepared to become destitute oversleves to keep it from happening.
No national politician in the United States other than President George W. Bush has had the guts to tell the American people that the Social Security system is broken beyond repair. Bush's problem is that he presented the problem and the solution in a split screen narrative. But the American people weren't watching correctly. They saw the problem followed by a viable solution as two problems. The problem: (Social Security is bankrupt). The solution: (adding from 20 to 25 million new taxpayers to the tax rolls immediately will buoy the economy and give us time to find a permanent solution.)
The problem is, the politicians we continue to elect have a real problem with the truth. They just flat out won't utter it. And, more than anything else, partisanship aside, it's time for the truth. Congress screwed up. They spent most of the Social Security Trust Fund to finance the Welfare Society. The high-interest securities that were supposed to dramatically increase the yield of the dollars invested didn't happen. What funds still existed in the Treasury brought in a feeble return of 4.656% interest. Subtract from the roster of taxpayers 77 million baby boomers who are now beginning to retire, and who will begin to withdraw money from the US Treasury at an alarming rate rather than depositing it in the form of payroll taxes. Also subtract 65-plus million humans from our society whom the environmentalists decided were a detriment to nature. We legalized abortion in 1973 and killed the future taxpayers whose contributions today would have kept the system solvent as the baby boomers hung up their work spurs.
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Had Bush told the truth—the whole truth—about what happens to the economy when the incomes of 77 million baby boomers becomes 77 million new monthly Social Security recipients (with no new workers to replace them), and then make it clear that every American still in the work force can expect to see their taxload tripled because there will be a lot less of you supporting those baby boomers as they prepare to enjoy their golden years on your dime because Congress spent all the dollars.
© 2008 Jon C. Ryter - All Rights Reserved
[Read "Whatever Happened to America?"]