Obama Tells Seniors They've 'Earned' Medicare and Social Security, Forgets to Note We Haven't Paid For Them

How can you tell that Medicare and Social Security aren't handouts? According to President Obama, it's because seniors have earned them, by paying into the programs. Via TPM, here's what Obama told the American Association of Retired Persons (AARP) earlier today:

"There's been a lot of talk about Medicare and Social Security in this campaign, as there should be," Obama said. "And these are bedrock commitments that Americas makes to its seniors, and I consider those commitments unshakable. But, given the conversations that have been out there in the political arena lately, I want to emphasize, Medicare and Social Security are not handouts. You've paid into these programs your whole lives. You've earned them."

It's true that workers pay Medicare and Social Security taxes over the course of their careers. But have they "earned" them? Not in the sense of having paid into the system equal to what they get out.

A single man or woman who turned 65 in 2010 and earned the 2011 average U.S. wage of $43,500 will pay $58,000 in Medicare taxes and $294,000 in Social Security taxes, making for a total of $352,000, according to a 2011 report by the Urban Institute. 

But the average Social Security and Medicare benefits that single man will recieve will come to about $432,000. And the single woman will get benefits worth about $475,000 out of the system. 

This isn't a new development either. The same Urban Institute report shows that the average wage-earning man who turned 65 in 1980 would pay about $104,000 into the two entitlement programs, but get benefits worth $265,000. A single woman in 1980 would pay in the same amount and get benefits worth $330,000. Single earner couples fare even better. In 1980, they'd pay in the same $104,000 — and get an average of $512,000 in benefits. Today that single earner couple would pay $352,000 into the system and get $798,000 out. 

This isn't about "earning" one's own benefits. With Medicare, money being paid in isn't being held for the individual who paid for it. As the Associated Press reported last year, "Many workers may believe their Medicare payroll taxes are going for their own insurance after they retire, but the money is actually used to pay the bills of seniors currently on the program."

If more seniors knew this (not that either of our current president or his Republican rival likely to tell them), they might think differently about making changes to the program. The latest Reason-Rupe poll found that 68 percent of voters say they’d be willing to accept some cuts to their own Medicare benefits if they’re guaranteed to receive benefits equal to what they and their employers paid out.

The point, though, is that Medicare is a transfer program in which the federal government takes money from current workers and gives it to retirees. One might call that a handout. 

Social Security, meanwhile, certainly isn't a guarantee. Obama might consider the retirement program a "bedrock commitment," but the Supreme Court doesn't. The court has ruled on two difference occasions that citizens are not entitled to the dollars they pay into the entitlement. Money paid into the program can be used to fund other totally unrelated government activities, just like any other tax dollars. The commitment to the program is dependent on the whim of politicians who are legally allowed to tax you for one thing and use that same money to pay for something else. That — and nothing else — is what seniors paying into Social Security have actually earned. 

Reason's Nick Gillespie and Veronique de Rugy covered a lot of this ground in their August cover story, "Generational Warfare."

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  • Heroic Mulatto||

    But...but...the Boomers have done so much for this country...unlike those feckless, spoiled Gen Xers and the moronic Generation Y-ine! Right? Right?

    Now GIVE ME YOUR MONEY so I can live forever and drive my Toyota Yaris to all the outdoorsy, social things you can't to while working to support me!

  • Red Rocks Rockin||

    I once told a buddy that the Boomers based their lives when they were young on the phrase "FUCK YOU, DAD!"

    It appears they will end them based on the phrase, "FUCK YOU, KIDS!"

    Not totally their fault, of course--this was all inevitable when the "Greatest (cough) Generation" voted themselves an end-of-life benefits program and then had enough children to pay for it until they were safely in the grave. Now their kids, the Boomers, are expecting the same treatment, except they wasted too much time extending their adolescence in the 60s and 70s instead of having a baby boom of their own--and the few they did have seem determined to conduct themselves in as childish a manner as possible for as long as possible. In any case, it won't end well, and people are going to throw up their hands and wonder what happened when it does.

  • KDN||

    Watch it, pal. That's a Venza you're talking about, not a Yaris. Yarises are for 16 year olds and people that blow all their gas money on hookers.

  • Killazontherun||

    At sixteen, I had a gas guzzling Mustang 2, but then gas was dirt cheap. Friday nights I would cruise by the high school football game for some tail. Tonight, many, many moons later, I'll be looking after the kid, wife gets off her hospital shift around 1 AM and the first thing she'll do is what she refuses to do at work, sit on the toilet.

  • Fluffy||

    It wouldn't matter, really, even if they had paid in as much as they intend to take out.

    If the money's not there, it's not there.

    If I work for years to build a tower, and the tower collapses, I haven't "earned" a tower. If I had earned a tower, the tower would be there.

  • John||

    The money is there. We could meet our social security obligations. We just couldn't do much else. When you think about it, a government that does nothing but fund defense, protect the border and transfer money to old people would not be perfect. But it would be a lot better than what we have now.

  • VG Zaytsev||

    Yep.

    Social Security is one of the least offensive things that the government spends money on.

    End the Drug Wars, the Empire, farm subsidies, education subsidies and regulatory terrorism first. And then talk to me about killing Social Security.

  • Heroic Mulatto||

    So, basically, Zaytsev's cow is more sacred than yours.

  • John||

    No. Not at all. End it all. But if you can't end all of it, which do you want to keep? I think social security is pretty far down the list of government outrages. Maybe you think locking people up for the drug war or farm subsidies is less offensive than Social Security. But I don't.

  • Death Rock and Skull||

    The huge opportunity cost of socialist security is a pretty fucking big outrage. I can't brush off the offensiveness of any of those things.

  • Heroic Mulatto||

    See, playing that game just leads to Congressional pork.

    When you have a malignant tumor, you remove all of it.

  • ||

    Why can't we hate all of them equally? I think transferring money is just as bad as locking people up for getting high. It takes money out of my paycheck that could be used towards current expenses or saving for my own retirement.

  • John||

    Why can't we hate all of them equally?

    Because they are not equally bad. I would rather give money to old people than big ag or some defense contractor.

  • Fluffy||

    Every dollar of social security that is paid to millionaire retirees is just as offensive as every Big Ag dollar, and just as offensive as every social worker paycheck dollar.

  • John||

    Fluffy,

    That isn't many dollars. There are not that many millionaires and their social security checks don't amount to much.

  • JEP||

    How old are you John?

  • Sam Grove||

    Even the one that are wealthier than you?

  • JW||

    The drug war or farm subsidies isn't generating a $20 trillion unfunded liability over the next 75 years, presuming nothing gets worse.

  • John||

    But JW. That 20 trillion is over $75 years or about $260 billion a year. That is not even a third of one hopey changey stimulus.

    Again, we can pay if if we want to. It is just that doing so would greatly cut down on the amount of money available to be stolen by politicians. That more than anything is why they are panicking about this.

  • JW||

    John, it's already in the red and is only going to get worse. BTW, that liability isn't the cost of the program, the the deficit between taxes and payouts.

    And the $20 trillion was beyond 75 years, my mistake. It's $8.6 trillion over 75 years (a figure that will, without a a doubt, go up long before then) or $73,167.83 per person. Please pay at the next window.

    I've heard upwards of $100 trillion unfunded liability over 75 years, once you factor in Medicare and Medicaid.

  • John||

    But JW do the math. $8.6 trillion over 75 years is only $114 billion a year out of the general fund. That is totally doable.

    Now medicare and medicaide are going to kill us if something is not done. But Social Security is totally fundable. It is just money politicians can't use to buy votes with. It is expensive but it is not going to drive us broke the way the other two will. It gets lumped in with the other two because politicians hate money they can't steal.

  • ||

    As a young person who is saving for retirement, I do find SS/Medicare to be more offensive than those others. It is money I'm never going to see again. The opportunity cost of those dollars is awful for the short to medium term as well. With the money I and my fiancee are paying in over the next couple of years could easily be a downpayment on a house or extra money to invest for college or retirement. It pisses me the hell off and it is my number one voting issue.

  • Auric Demonocles||

    Whenever I calculate my retirement plans, I enter $0 expected SS income.

  • ||

    Hey Auric I missed your San Antonio questions before and I'd though I'd add some youthful advice that the fogeys didn't give. Head down to southtown (about 15 min walk from downtown), lots of cool bars and restaurants down there. Also gorgeous neighborhoods to walk around. In downtown there is a bar called The Esquire that has delicious cocktails.

  • R C Dean||

    Same here.

  • ||

    Hell, if I applied that 13% of my income to my student loans from law school they'd be paid off in no time.

  • Auric Demonocles||

    Hell, if I applied that 13% of my income to my student loans from law school they'd be paid off in no time.

    I should have all my loans paid off in a total of about 3.5 years. But I'm not going to leave any of the match money on the table, and the extra points are still getting about the same interest that I'm paying on my loans.

  • Mr. Soul||

    its hard. We're all mis-served by our govt. Im 49 and dont expect to see anything either. But even those early recipients arent blameable. All of us would cash checks from govt when we get them. Power corrupts and government power corrupts governmentally.

  • JW||

    A trillion here, a trillion there...pretty soon you're talking about real money.

    That number was only $5 trillion or so 2 years ago. Now it's $8 trillion. This will not end well.

  • johnl||

    Exactly. SS, Medicare, interest on the debt, 1999 level defense spending, and that's it. Sorry no money left for coyboy poetry, wod, edjumcation, robots on Mars, or whatever. We'll make our own Somalia right here in the USA.

  • Sam Grove||

    The money is where?
    Where is there?
    Are you forgetting the debt and unfunded liabilities?

    Yes, they can pay out the money, but the money will be worth less, or maybe even worthless.

  • Auric Demonocles||

    They've earned it, just like the banks earned all the money from mortgages. Just because you bought a mortgage for $400k and it turns out to be worthless doesn't mean you haven't earned $400k. It means the government will magically cover the cost so that you don't lose anything.

  • Drake||

    They "earned" it by voting Democrat. That's all you have to do to deserve free stuff.

  • Heroic Mulatto||

    IT'S ALL FREE ON MY E.B.T., Y'ALL!!!!

  • Auric Demonocles||

    I earned these cigarettes!

  • Red Rocks Rockin||

    And these lobster tails!

  • Proprietist||

    Republicans never give away free stuff for political gain, like prescription drugs.

  • John||

    Good think no Democrats voted for that. And it is even better than the Democrats did the responsible thing and repealed first thing in 2009. That is what happened right?

  • Proprietist||

    That's not my point. Republicans also vote for many of the Democratic giveaways if it's good for their district or their re-election chances.

    The point is that it requires a great deal of contortion, naivete or self-delusion to claim political giveaways are the predominate responsibility of just one of the two parties.

  • ||

    For the Hit Runpublicans, I choose "self delusion".

  • Calidissident||

    I love it when someone calls out someone else for only criticizing Democrats for something both parties should be criticized for, and then John calls that person out for only criticizing Republicans. Way to miss the point. Had Drake posted the exact same thing, but said Democrat, you would have had a hissy fit

  • Calidissident||

    *said Republican

  • Drake||

    Most Republicans are little better. It wasn't their idea in the first place, but they sure aren't going to touch those "benefits" now. They're just Dem-lites.

    Somewhere around here I referenced the great Rino stampede of 2005 as they all rushed to distance themselves from Bush's proposed Social Security reforms.

    That's when Bush said "fuck it - waste all the money you want".

  • ||

    The court has ruled on two difference occasions that citizens are not entitled to the dollars they pay into the entitlement. Money paid into the program can be used to fund other totally unrelated government activities, just like any other tax dollars.

    So it's theft, as we already knew.

  • Drake||

    That lie is what kept it going. If people just thought of it as another tax that politicians wasted like the rest, killing Social Security would be a safe topic of discussion.

  • ||

    "Entitlement": the magic word. The fact that the politicians can raid this fund is, frankly, criminal, and if any private entity did this they'd be in irons by sundown.

  • R C Dean||

    The fact that the politicians can raid this fund is, frankly, criminal, and if any private entity did this they'd be in irons by sundown.

    I would have agreed, except for the recent court cases ruling that brokerages can take customer investment accounts to cover the brokerage's debts.

    So, there are, in fact, private entities that can take your money to pay for other things, and tell you to get stuffed if you complain.

  • Kwanzaa Cake||

    This is why, as a long term strategy, the right should nudge the left towards means-testing. They already love means testing, so just apply it to ss and medicare and watch the popular support for the program start to erode. It would completely bar any future politican from making the BS speech Obama just did, for one thing.

  • sarcasmic||

    I oppose means testing because I think it would lead to a wealth tax.

  • ||

    As opposed to what we have now?

  • sarcasmic||

    wealth != income

  • ||

    Are you saying a graduated income tax doesn't inhibit wealth creation?

  • sarcasmic||

    I'm saying that wealth, once accumulated, is not directly taxed.

    Yes your property is taxed, as in real estate, but your bank account is not. Your 401K and other investments are not. Your gold coins are not. Your firearm collection is not. You get the drift.

    If, for means testing of entitlements, they make you fill out a paper listing all your wealth, the next step will be to tax it directly.

  • Ptah-Hotep||

    but your bank account is not. Your 401K and other investments are not. Your gold coins are not. Your firearm collection is not.

    Until you die, then it is.

  • sarcasmic||

    That was implied.

  • Kwanzaa Cake||

    My investments are not taxed? That's news to me. Seems to me that when I sell a stock at a profit I have to pay tax, and when I earn interest or dividends I pay taxes on those, too. Yes the principal is not taxed but when the government takes a bit of every cent your wealth returns, it's pretty close to taxing wealth. Almost no one has millions in a mattress earning no income.

  • sarcasmic||

    Thing are taxed when they change hands. Yes I realize that. I'm talking about a direct wealth tax where you give them a list of your investments, and they decide which ones they're going to take.

  • Kwanzaa Cake||

    Fair enough. But I don't see why means testing is going to spur that tax, which the dems would already love to impose. I have long thought that nationalization of 401(k) accounts is going to happen at some point when the fiscal situation gets really dire or, at a minimum, they'll just slap a 30% or so tax on all 401(k) balances.

  • sarcasmic||

    But I don't see why means testing is going to spur that tax

    As it is you don't have to prove to them how much wealth you may or may not have.
    That's what means testing is. You list off your net worth (with criminal penalties if you miss something) and they use that information to decide if you get the entitlement or not.

    Once they have people conditioned to giving that information, the next step is to use that information for the purpose of taxation.

    Maybe I'm paranoid, but I don't think it is possible to underestimate the greediness of those who wield force.

  • Ptah-Hotep||

    Thing are taxed when they change hands. Yes I realize that. I'm talking about a direct wealth tax where you give them a list of your investments, and they decide which ones they're going to take.

    Basically you are saying we will have an estate tax on the living if we go to means testing? I could see where that would happen. And they would probably still keep the death tax.

  • sarcasmic||

    Basically you are saying we will have an estate tax on the living if we go to means testing?

    That is exactly what I am saying.

  • Ptah-Hotep||

    That is exactly what I am saying.

    And I think you are correct, unfortunatley.

  • ||

    Point taken.

  • Death Rock and Skull||

    No physical, non currency-in-a-government-audited account, physically possessed assets of mine will EVER be taxed when I give them away to somebody else, nor will the government ever be aware that I physically possessed and gave away anything. Putting assets in your will and letting the government tax the recipient is something that one should do to someone they hate. If you want to ensure the thing you have will ever make it to the person you want to have the thing, fucking do it yourself while you are still alive.

  • VG Zaytsev||

    Name one means tested program that's been eliminated.

  • Kwanzaa Cake||

    Means tested programs have at least been reformed, as in welfare circa 1996. I'm not saying means testing will end ss and medicare, but it will erode the near-bulletproof support those programs have b/c you could no longer claim that every recipient is getting back money they paid in. Some would get none of their money back and those who did receive the payments could be told straight up that the amounts are welfare b/c they were supplied by wealthier payors as opposed to themselves.

  • John||

    Not totally true. They want to keep it going because they are terrified of having to take care of their parents. Time was old people moved in with their kids. That doesn't happen so much anymore. Social Security has a lot to do with that.

    Young people don't vote and most of them are too retarded to cast an intelligent vote on this anyway. So that leaves old people and middle aged people. The former doesn't want to give up their entitlement. And the latter is willing to go broke to avoid taking care of their parents.

  • Heroic Mulatto||

    But...but...the Boomers have done so much for this country...unlike those feckless, spoiled Gen Xers and the moronic Generation Y-ine! Right? Right?

    John, stop messing up my satire.

  • John||

    Anyone under the age of 40 who doesn't support privatization is fucking retarded.

  • Death Rock and Skull||

    Usually when politicians talk about "privatizing" socialist security, they are talking about a mandatory program that government controls and a "private" entity does fuck knows with it. Its not logical.

  • John||

    True.

  • Ayn Random Variation||

    The "private" entity wll no doubt be the Goldman Sachs. (The "the" is for those who have seen the talking bears describing QE on youtube)

  • Ska||

    I got into an argument about this, and the person I was speaking to started talking about how the investment houses would fleece people out of their SS accounts. I told him I'll take my chances directing my investments, and he can keep letting Congress invest his funds if he thinks they're such great custodians.

  • Red Rocks Rockin||

    I told him I'll take my chances directing my investments, and he can keep letting Congress invest his funds if he thinks they're such great custodians.

    Tell him he can call it a "public option" if you really want to see steam come out of his ears.

    I guarantee that if people had the choice between being taxed for SS and saving that money for their own retirement, 90% would choose the latter in a heartbeat and SS would be instantaneously broke.

  • ||

    And 90% of them would buy cigarettes and beer and be on the dole at 65.

  • Red Rocks Rockin||

    Isn't living on SS technically being on the dole anyway?

  • Red Rocks Rockin||

    Not totally true. They want to keep it going because they are terrified of having to take care of their parents. Time was old people moved in with their kids. That doesn't happen so much anymore. Social Security has a lot to do with that.

    Not a surprising development when progs have pushed the philosophy that the government should take care of you from cradle to grave.

    40 years ago, my girlfriend's grandfather bought a place in Wyoming about 2.5 hours from where her parents live now. That was to be his retirement home, and it was for several years. But he's suffering from Alzheimers and is now living with the girlfriend's parents because he can't go out for walks by himself without getting lost, and the house will have to be sold.

    The biggest problem with a program like Social Security is it undermines family structures and gives the illusion that oldsters can be "independent" and die in their own beds at age 90. It gives their kids an excuse not to remain involved in their lives until they're at death's door. That's not good for any society.

  • Ptah-Hotep||

    The biggest problem with a program like Social Security is it undermines family structures and gives the illusion that oldsters can be "independent" and die in their own beds at age 90. It gives their kids an excuse not to remain involved in their lives until they're at death's door. That's not good for any society.

    This is so true, I wish more people would think about it. It really does destroy a sense of community.

  • VG Zaytsev||

    No, it destroys a sense of family.

    The great society welfare programs began the destruction of community.

  • Ptah-Hotep||

    No, it destroys a sense of family.

    The great society welfare programs began the destruction of community.

    I think they are inter-related. But I would agree with you that these programs have destroyed both.

  • Red Rocks Rockin||

    Not to mention, if I knew I would have to eventually depend on my kids to take care of me in my dotage, I'd be a lot less likely to treat them like shit when they were younger.

  • Drake||

    There is some of that - who wants to deal with a geezer in your living room.

    There is also the general aversion to saving and investing. Stop paying SS and people might ask why they have their savings and inheritance taxed.

  • John||

    There is only an aversion to savings and investment because of our idiotic tax system. Most people have taken the money they should have saved and put it into a house because that is the only tax shelter the average person has access to.

  • Drake||

    Yes - I know lots of people who don't save at all. But our politicians seem determined to keep it that way.

  • Death Rock and Skull||

    Good thing for me is, no matter what, my parent(s) can go shit themselves in a charity nursing home bed.

  • John||

    Obama might consider the retirement program a "bedrock commitment, but the Supreme Court doesn't.

    Neither does Obama. Obama would make a grand compromise that fucked old people and gave him more money for his supporters in a heart beat.

  • R C Dean||

    Remember, too, that it was Obama who cut the taxes funding for these programs so that they are operating in the red years before anyone thought they would.

    That's a funny thing to do to a "bedrock commitment."

  • Mike M.||

    "Don't you dare call Americans lazy, greedy welfare bums Mitt Romney. Only we here at Reason are allowed to call Americans lazy, greedy welfare bums!"

  • Heroic Mulatto||

    Are you high?

  • ||

    No, just a TEAM RED schmuck.

  • Mike M.||

    Nope, not even in the slightest.

    Over the last week there's been about a dozen pieces here about Romney's comment, most of them basically excoriating him for implying that there's too many free-riding sponges in the country today and not enough taxpayers, and yet lo and behold, here's another piece at Reason basically calling the elderly free-riding sponges. There's even an adorable cartoon showing gramma robbing her poor little grandson at gunpoint, for those who are a little slow to get the message.

    So remind me again exactly what it was about Romney's comment that was so out of line? There's a disconnect here that makes no sense.

  • ||

  • Heroic Mulatto||

    Pointing out errors in Romney's math is "excoriating him"?

    C'mon, son.

  • Mike M.||

    There were no "errors in his math". There is plenty of valid stuff to critize Romney on, but that remark was absolutely true in both letter and spirit. Frankly, I wish he only had the courage to say it over and over again, because that palooka doll is going to just keep bouncing right back up, no matter how many times people hit it.

  • Heroic Mulatto||

    Well, the authors of those Reason articles believe there were and presented their arguments as to why. Do you have data that shows Romney was correct or are you just going with your "bellyfeel"?

  • Proprietist||

    Far less than 47% don't pay any income taxes. You only get that number by excluding payroll taxes.

  • Mike M.||

    Romney didn't say that they pay no taxes at all, he very specifically said that they pay no income taxes.

    And his statement was factually correct. Last year, 46% of Americans had a net income tax liability of zero after legal deductions. This isn't just Mitt Romney saying this: the freaking Brookings Institution agrees with him.

  • R C Dean||

    Far less than 47% don't pay any income taxes. You only get that number by excluding payroll taxes.

    "Income tax" is generally understood to be what you owe after you fill out your "income tax return". Conflating income taxes with payroll taxes is more of dodge than separating them.

    His assumption that everyone who doesn't pay income tax is an automatic Democrat voter is certainly not true.

    Yeah, that's where he went off the rails.

  • Proprietist||

    Payroll taxes are taxes on a percentage of income. Hence, they are income taxes. They can pretend it's different because the percentage is different, but that doesn't mean it isn't an income tax.

  • Zeb||

    No, it wasn't absolutely true. His assumption that everyone who doesn't pay income tax is an automatic Democrat voter is certainly not true.

  • Tim||

    Where's your lockbox now Al Gore?

  • niobiumstudio||

    You don't mention interest on your what you put in vs. what you get out... If a worker put that kind of money into a 401k account or invested that $352,000 ($7822 a year for 45 years - age 20 to 65) they would have a hell of a lot more than $475,000 - they would have $1.3 million with a 5 percent interest rate or $3.2 million with an 8 percent interest rate...

    I would say Social Security is a REALLY shitty deal when you barely get back what you put into it...

  • The Hammer||

    But, but, but, the government pays interest on the money it borrows from Social Security! So it's really a good deal! 401k-stock market-Goldman Sachs-WWWAAAARRRRGGHHH!!!

    -Tony, Shrike, HuffPo, etc.

  • Heroic Mulatto||

    Toney, Shrike and the HuffPo play Gorkamorka?

    Who knew?

  • Trespassers W||

    I thought that was spelled WWWAAAAGGHHH!!!

  • Red Rocks Rockin||

    Shit, I'd have more just putting it in an actual savings account that couldn't be touched until I was age 65 or whenever I decided to stop working. Burying cans in the back yard would be an option if the Fed wasn't so hell-bent on inflating the currency in perpetuity.

  • niobiumstudio||

    Exactly, as it is now for a single person, the ROI on Social Security is right around 1%... Less than inflation.

  • VG Zaytsev||

    If a worker put that kind of money into a 401k account or invested that $352,000 ($7822 a year for 45 years - age 20 to 65) they would have a hell of a lot more than $475,000

    It's actually twice that much because the employer 'contribution' is really your money too.

  • niobiumstudio||

    I was assuming Social Security's parameters and ignoring employer contribution.

  • niobiumstudio||

    Oh sorry, forgot about that part. I was thinking of employer contribution for a 401k. Forgot about the social security contribution. So it's even MORE of a shitty deal...

  • Death Rock and Skull||

    "$58,000 in Medicare taxes and $294,000 in Social Security taxes"

    This is a fuckload for a reasonable working time frame, with a shitty "return".

    Even worse for people who know they have a reduced life expectancy.

    Even worse than that for people who know these bullshit programs aren't worth shit to them in the future.

    The amount of money stolen from people is disgusting.

  • Red Rocks Rockin||

    "$58,000 in Medicare taxes and $294,000 in Social Security taxes"

    Yeah, and those Medicare expenses end up being about 10-100 times more than what was paid in taxes.

    This is why I laugh at progs that tell me how cost-effective Medicare is and that it's had no effect on the rising cost of healthcare.

  • The Late P Brooks||

    But have they "earned" them? Not in the sense of having paid into the system equal to what they get out.

    What is the likelihood of finding a privately offered annuity with the same terms? That should tell you pretty much all you need to know.

  • John||

    So you are telling me that saying that old people are getting free things from the government and are unlikely to vote to take them away is telling the truth?

    Somebody phone Chapman.

  • niobiumstudio||

    Any private annuity that took roughly $8k a year for 45 years and only had an ROI of roughly 1% would be put the fuck out of business. Social Security is the worst retirement investment you can make.

  • The Late P Brooks||

    "Many workers may believe their Medicare payroll taxes are going for their own insurance after they retire, but the money is actually used to pay the bills of seniors currently on the program."

    But don't you dare call it a Ponzi Scheme!!!!!11!

  • tarran||

    One thing to point out: even though the SS recipient is getting more than they are putting in, as a retirement vehicle, Social Security provides a shitty return that doesn't keep up with inflation.

    Conservatively speaking, if people were to put say 10% of what they earn into an annuity that tracks the stock market with guaranteed floors as to income (effectively 12% is what goes into SS generally), over its lifetime, the annuity would grow into a massive kitty.

    Most people could amass 1.5 million easily, which could be used to fund a $60,000 annual income nearly indefinitely.

    This is the problem Bush was purportedly trying to solve with the private accounts. Of course, with the government controlling who was allowed to benefit from these forced savings accounts, his plan would have inevitably resulted in the effective nationalization of securities markets.

  • John||

    One thing to point out: even though the SS recipient is getting more than they are putting in, as a retirement vehicle, Social Security provides a shitty return that doesn't keep up with inflation.

    That is a good point. There seems to be two mutually exclusive arguments going on here. One the one hand we get posts like this talking about how old the old people are looting the country and getting such a great deal on Social Security.

    On the other hand, whenever privatization comes up, we hear how Social Security is just a horrible return on your investment and everyone is getting ripped off. Which is it? It can't be both.

    It seems to me that you can't judge whether someone is getting more out of social security than they put in without considering the time value of money. The government took these people's money and kept it for over 40 years. Sorry, but paying back the raw value with no interest and no adjustment for inflation is not giving them what they paid in.

  • tarran||

    That is a good point. There seems to be two mutually exclusive arguments going on here. One the one hand we get posts like this talking about how old the old people are looting the country and getting such a great deal on Social Security.

    The difference lies in what happens to the money after the government officials get their grbby little hands on it.

    When Metlife gets the money, they invest it in various securities, monitoring their performance and using their judgement as to what are prudent investments. And, if their investments do badly, Metlife has to adjust the offers they make, how much they invest and where in order to keep meeting their obligations. In the end, the mismatch between what they promise to pay and what they can actually pay is kept at a minimum and closely monitored.

    The government, on the other hand, spends the money planning with utter shortsightedness to get the money they need to fulfill their promises somehow when they are due. Since the money is not invested (and giving grants to businesses is not an investment) it doesn't grow the economy, it doesn't provide a return. Rather they will have to take it down the road.

    Social Security essentially makes people less financially secure, shrinks the economy and obligates people to cover expenses that they never contracted to cover.Which is why it needs to go.

  • niobiumstudio||

    Using the numbers provided above, the "average" person has an ROI of 1% through Social Security using what they put in vs. what they get out assuming they work 20-65 (45 years). That is less than inflation. I would say seniors certainly earn what they put in. You are certainly right, even the most conservative 401k or retirement programs offer much more than that and what a person puts into Social Security would easily net them well over a million or 2 with the same parameters and an ROI of 4-6%.

  • Marshall Gill||

    I would say seniors certainly earn what they put in.

    True, except they received the benefit for what they were taxed immediately. They were taxed and the money was spent, right then. They received what they "earned" back then.

  • Trespassers W||

    You know, this whole thing sounds like some kind of scheme. Imagine, if you will, the contributors arranged into a triangle, with the fewer, earlier contributors at the apex, and more numerous, later contributors at the base...

    I call it "triangle economics", and predict it will end in tears.

  • Heroic Mulatto||

    By the way, the solution to all this is to realize that dubstep kills seniors.

  • The Late P Brooks||

    But BUSH WANTED TO GIVE MY MONEY TO WALL STREET!

    Thank Cthulu cooler heads prevailed.

  • Drake||

    And it lead to the great Rino stampede of 2005.

  • sarcasmic||

    Let's say you see all this wealth out there that seniors have accumulated on their own for their retirement, and you want to take it away from them.
    First step would be to start means testing for entitlements.
    "Whoops! You've got too much invested, so we're going to deny you so we can pay the bills of someone less responsible than you who paid less into the system."
    Step two is to require that everyone report their wealth every year, just as you must report all your income.
    Then once you have all the information and you know where all the wealth is, it's time to tax it.
    Kleptocracy here we come!

  • John||

    ^^THIS^^ It always amazes me when the same people who claim to want to encourage savings and investment are so gung ho to means test Social Security.

    Fine, lets means test for it. Then why the hell would any middle class person every save money again? Fuck it, any dime you make they are going to just take back in lost social security. Better to just enjoy your money now. You are going to have the same income in the end anyway.

  • Heroic Mulatto||

    Then why the hell would any middle class person every save money again? Fuck it, any dime you make they are going to just take back in lost social security. Better to just enjoy your money now. You are going to have the same income in the end anyway.

    This is porn for Keynesians.

  • Heroic Mulatto||

    (AKA Sticky Wages #47)

  • Kwanzaa Cake||

    The middle class is largely not saving money right now. They are running up massive debts to finance concumption. Of course there are exceptions, but, just sayin'

  • John||

    Gee I wonder why that is? Could it be that the government has set up the system to totally fuck savers and reward consumption?

  • JW||

    The middle class is largely not saving money right now.

    I'm not saving money now, because saving pays exactly jack and shit and jack left town.

    I'm investing and trying to maintain zero debt, beyond my mortgage.

  • Kwanzaa Cake||

    But to invest you have to save. My point is that huge numbers of people are spending every dime, not saving a little bit and buying a few shares of stock per month. I agree that zero interest rates explains at least part of that.

  • JW||

    I guess I see saving and investing as 2 different things. Saving it throwing the money in the bank and never thinking about it again. Investing is putting to work and making sure you don't screw the pooch in bad investments or fees.

    I'll maintain a $10K "Oh Shit" fund in bank as savings, just for emergencies. I then invest whatever else that doesn't get spent, either for my own retirement or for the kids' future underwater basket weaving degrees.

  • ||

    Saving it throwing the money in the bank and never thinking about it again. Investing is putting to work

    For the past 13 years, there hasn't been much difference.

  • JW||

    It always amazes me when the same people who claim to want to encourage savings and investment are so gung ho to means test Social Security.

    If you believe that people should provide for themselves in retirement, through saving and investment, why wouldn't you means test a gubmint handout for retirement?

  • John||

    For the reason I gave above JW. If you keep the entitlement and just means test it, a large number of people are going to get the same income regardless of whether they save or not. If you know you will lose a dollar in social security for every dollar in income you earn, why the hell would you save or work? You end up in the same place anyway.

  • Fluffy||

    That's only true at low levels of income and wealth.

    So one could argue that if your means-testing scheme incents large numbers of people to not save, that you've set your thresholds too low.

  • John||

    Fluffy,

    If you only means test it for the really wealthy, you won't save any money. The number of actual wealthy retirees is just infinitesimal. The money is in the middle class. To save money you will have to screw them. And those are the people who would then see no reason to save.

  • Randian||

    How would you be "screwing" the middle class?

  • John||

    You are not screwing them Randian. You are just telling them don't bother saving because your getting the same income regardless.

  • Marshall Gill||

    You say all this as if everyone isn't getting screwed right now. It isn't a question of being perfect but being a lesser of two evils. I really can't see the means testing of SS as being a greater evil than just leaving it the way it is.

  • JW||

    If you know you will lose a dollar in social security for every dollar in income you earn, why the hell would you save or work?

    You work because you have this need to eat. Are you presuming a a total welfare state? It doesn't make any sense otherwise.

    Also, I was talking about the idea behind a system, not the witless sheep in it, trying to goose the system to their advantage.

  • John||

    JW

    It is. Everyone over 65 is eligible for SS. So tell me again, why should I save if every dollar I earn will be subtracted from a social security benefit I will get regardless?

  • JW||

    That presumes that SS will still be a functioning system when you turn 65. You get better odds in Vegas and you at least get free drinks too.

  • Slut Bunwalla||

    "If more seniors knew this...they might think differently about making changes to the program."

    Haha. Hahahahaha. Hahahahaha! Right, sure. Heh.

  • niobiumstudio||

    If it were me, I would be telling the government to fuck themselves and make changes now. Getting 1% ROI back for them holding onto my money for 45+ years is complete bullshit. Just putting that same money in Berkshire Hathaway would leave me with 3.2 million at the end of my 45 years.

  • ||

    Nick was on the Michael Garibaldi er, Jerry Doyle show two nights ago and they were discussing how to move away from the entitlement mentality. Nick made a great point.

    We need to inform the young about the incredible ass fucking they are going to get from the old. (obviously paraphrasing) When they see what the bill is going to be, and how attempting to pay that bill will affect their quality of life, they may come around. He went on to say, when you present the argument in that manner, to the old, i.e. would you take a cut to your entitlements in order to spare your kids misery, a lot of them change their tune.

    I think this is spot on. I hate to divide and conquer, but age warfare may actually be beneficial.

  • John||

    the old people won't care for the most part. The middle aged will care if the argument is, "do something or there will not be anything for you". As for the young, young people never think they are going to get old. I don't see how you ever convince them. Most of them have little understanding of economics and wear politics as fashion.

  • ||

    Young...okay, forgot my audience. The mid-30ish "young" will get it.

    I personally resent the hell out of the old for allowing this to happen. I think it may have been the most horrendous act selfishness ever perpetrated. If anyone deserves blame, it's the old. They truly deserve to lose their benefits and work the rest of their lives for what they are about to do to the young.

    Being human, I can't let that happen, so pragmatically, the only option is to phase these entitlements out to stop the exponential increase increase in misery that will be caused by their continuation.

    If it takes the young beating the old over the head and forcing them to acknowledge their selfishness, SO BE IT!

  • John||

    We need to change our society a bit too. Sure people need to work longer since our lifespans are so much longer, although the liberals will solve that problem if we give them the chance. But you can't do that unless you make a big push to hire older people and make pretty strict age discrimination laws. It is pretty hard for older people to find work even if they want to work. And a lot of that is just this bullshit idea society has that hiring young is better.

  • sarcasmic||

    We need to change our society a bit too.

    You know who else sought to change society?

  • ||

    Jesus?

  • ||

    Mohammed?

  • JW||

    I tried to get a 29 year old woman to think about her future and just 3% away in her 401. No dice. That would get in the way of partying.

    Of course, with the way things are going, she may have the last laugh at the prudent.

  • ||

    I'd say most people start being concerned for their future in their 30s. That's about the time you start acquiring a little wealth, get married, start pumping out screaming poop machines...

    That's your target. Prior to that, life is nothing more than a party and you're immortal. Caring about the future doesn't happen until you have skin in the game.

  • JEP||

    I'm not putting anything into my 401 yet, but I've also only been working full time a year and a half, paying off a little credit card debt left over from college, trying to get a solid balance in my checking account in case unforeseen expenses arise (car breaks down), and buying adult things here and there like an actual kitchen table and pants.

    I'm almost ready to start contributing to my 401, but I'll be putting it into commodities and instead of opening a savings account I'll be buying precious metals.

  • Auric Demonocles||

    I'm 24. I've been working for about 16 months. I'm currently putting 10% of my money into my 401k.

  • JEP||

    Yep, same age, etc.

    I've probably waited a little too long, but I'll be taking about half of what I have in my checking account and buying gold and silver and putting about 10% into my 401 as commodities within the next month or so.

  • NoVAHockey||

    about 10 years ago at my first post-college job, the company sat down the new hires with a financial planner. he asked if we thought Social security would be enough or even an option. nobody thought it did. but only a few us signed up for the 401k plan. which had a match. they left money on the table and when drinking. i saved and went to grad school at night.

  • ||

    I started saving at 35 (2000). DINKs. By by 2005 we were saving one paycheck a month. Figured a lot of folks survive on a single paycheck, so could we. We lived very comfortably and are now pretty much set.

    Anytime I had a chance to mentor someone younger, that's where I went with it. Compound interest, invest young, live below your means, invest the difference.

  • NoVAHockey||

    DINKs -- that seems like a lifetime ago. not the 3 years it's been.

  • JW||

    Yeah, my Lamborghini payments have been finding a way to suck that extra expendable income. And by Lamborghinis, I mean kids.

  • NoVAHockey||

    daycare is a bitch.

  • ||

    Yep. Life's about choices. I always assumed kids. Wife was the one who didn't want em. Bless her heart.

    Course, I'll die old, alone and miserable, but I figure why change just because I get old.

  • sarcasmic||

    Obama Tells Seniors They've 'Earned' Medicare and Social Security

    That's right. All through your life you were forced to pay for the retirement of people who are now dead, and by doing so you earned the right to force younger workers to pay for your retirement.
    And when they retire, well, they'll be fucked. But you'll be dead so what do you care?

  • Auric Demonocles||

    Abusive dads have earned the right to beat their kids, because their dads beat them when they were growing up.

  • sarcasmic||

    Someone gets it.

  • NoVAHockey||

    I think the winning argument with social security is that it lacks a feature that "the rich" enjoy. inherited wealth. You can't build up assets over time and pass them along with Social Security.

    I would think this would be attractive to people. Using "Julia" as an example. she was apparently single and with a kid. If her kid is older than 18 and she dies before retirement, he gets shit from social security but can inherit her 401k. Assets and wealth give you options. waiting for the monthly check does not.

  • John||

    Considering that minorities and poor whites have a lower life span than average, Social Security is a terribly classist and racist program.

  • Heroic Mulatto||

    You mean FDR and his cronies during the 30's were classist and racist?

    I am shocked!

  • John||

    And all of these upper middle class white people who demand their social security might just be a little self interested.

  • sarcasmic||

  • John||

    That is working class white people sarcasmic. For liberals those people dying is a good thing.

  • The Late P Brooks||

    When Metlife gets the money, they invest it in various securities, monitoring their performance and using their judgement as to what are prudent investments.

    Thank you.

    Social security, on the other hand, is more like a cookie jar full of IOUs the government has written to itself. If I live long enough, the government will give me some of those IOUs; fortunately (or not), they will also force the checkout girl at the grocery counter to accept them.

  • Paul.||

    Without speaking for Medicare, it is demonstrably false that (many) receiving SS haven't earned it... at all.

    The idea that Social Security is for retired geezers went out the window decades ago.

    There are drug addicts that haven't worked a steady jobs in their lives who receive social security.

    I have a family member who has worked maybe two or three of her 48 years on this here earth, and she gets a social security check. Someone recently offered her a job, and she's not sure if she's going to take it because it could interfere with her social security check.

    So go get stuffed.

  • John||

    That is just it. They won't cut the addicts and the bums who never paid off. They will fuck everyone in the name of "fairness".

  • NoVAHockey||

    don't you need qualifying quarters of work or something for disability?

  • Paul.||

    Nope. Unless you need one (1) qualifying quarter. This family member of which I speak hasn't worked in damn near 20 years. Draws a check every month. She worked for a couple of years before college-- receptionist jobs. Got married, spent several years going to college, got a job out of college that lasted about a year, quit, and never went back to work.

    She's disabled-- was disabled right after high school. Wonderful person, love her to death, but she is exhibit A in how fucked up SS is. And it came home hard the other day when she called me all excited that this tax accountant wanted to offer her a job, but then said, "Yeah, not sure I'm going to take it because it might interfere with my social security..."

  • NoVAHockey||

    I really can't understand that mentality. I truly do not.

  • Paul.||

    I can... I don't agree with it, but I can understand it.

    Someone bumpin' you $700 a month to not work, and then someone offers you a part time job where you may earn a little more than that... to work, what you gonna choose? $700 a month to walk down to the mailbox and pick up a check, or $1100 a month to go into an office and sit under flourescent lights dealing with cubicle politics for four hours a day.

    I'll take "Walk to the mailbox" for $700, Alex...

  • NoVAHockey||

    yeah, but you're stuck at $700 a month or whatever with no potential, however remote it may be, for better.

  • Paul.||

    There's some context here.

    She's married to a guy who works and earns a very good living. Her house is bigger than mine, and she owns a second vacation home.

    So yeah, $700 a month as a sole source of income, absolutely.

    But to them, this is just play money. Play money they put no effort into making. She's a housewife with a high earning husband. It's a no-brainer.

  • Paul.||

    Of course the flipside of this is that you and I are subsidizing someone who makes more than the both of us*. So in that picture, I'm the red-haired Nick Gillespie, and this family member is the lady in the Rascal. Except the lady in the rascal is about 48 years old.

    *I'm presuming you're not a schoolteacher.

  • Ayn Random Variation||

    How about this scenario.

    You collect $405 a week on unemployment. You are offered a temp job, calling people who haven't paid their medical bills, that pays $12 an hour. So after taxes you're getting less than $405 a week, and you're harassing broke people for your troubles.

    What would you do?

    Serious question to all.

  • NoVAHockey||

    you take the job in the hopes that it leads to something better. but i get what you're saying.

  • Paul.||

    that pays $12 an hour. So after taxes you're getting less than $405 a week, and you're harassing broke people for your troubles.

    It's better than rich people harassing broke people for their troubes...

    http://reason.com/blog/2012/04.....ant-retire

  • Fluffy||

    You take the job, because if you work

  • Fluffy||

    Fucking squirrels.

    If the temp job is 34 hours a week or less, you can continue to collect a partial UI benefit. Basically the first 1/3 of your benefit rate is free and clear, and then they reduce your benefit dollar for dollar above that.

    So if you get paid for 30 hours at $12 an hour, that's $360. The first $133.65 is free. After that, they take the remaining $226.35 out of your check. So they'd still send you $178.65. That means you have a total of $538.65 that week because you took the job.

    Also, any amounts deducted from your check are appended to the end of your claim. So that lets you collect UI longer.

  • ||

    Thing is that there is a depression that most people fall into when they are unemployed like that, sitting on their ass subsisting on $700/month.
    It's probably mentally healthier to go get a job. Get out of the house, have some social interaction, make some new friends. If you keep the job for a while you might eventually start making more money.

  • Ayn Random Variation||

    Yeah the depression is really starting to sink in. It seems hopeless out there.

    Also, nice response Fluffy.

  • ||

    Thing is that there is a depression that most people fall into when they are unemployed like that, sitting on their ass subsisting on $700/month.

    Even if you aren't getting money, if you don't have a job, and you aren't in college, it can be hard to get the motivation to do ANYTHING, including looking for a job.

    When I was put on drop status by my college, I didn't have a job, and it was exactly like that. I just sat on my ass in front of a computer day after day, playing games and surfing the web. That went on for months before I finally got a job.

  • Randian||

    You only need like 10 credits or so, which is about 2 1/2 years of work.

  • Paul.||

    Well there ya go... I think she has about that. Maybe 3.

  • Marshall Gill||

    You don't need any. I have a cousin who is mentally retarded and his mother has been getting checks in his name since he was 18. He most certainly never worked.

  • Paul.||

    I don't know how it works with a minor in your care. There are obviously some special rules for that.

  • Mike M.||

    So much this. Social security disability is the big new scam in America now, and it's only growing and growing and growing.

  • Fluffy||

    True.

    I have a friend who's a public defender, and when his clients get out of jail, they all apply for SSDI claiming the disability of having PTSD...due to going to jail.

  • Paul.||

    Yeah, don't even get me started on the FAKE disabilities.

  • Ayn Random Variation||

    I know a guy who's been on disability since the 80's. He's never worked since I have known him, and even now in his 60's he's still in incredible shape and still plays basketball and handball.

  • Paul.||

    Maybe the disability is real: Their utter inability to even consider working for a living. I'm sure there's a genetic component...

  • sarcasmic||

    I have an ex-friend (he ditched me as a friend when I expressed my disgust at his quitting free (to him) college courses because he didn't want to write a paper) who, in his forties, achieved his goal in life: disability.

    Take a wild guess as to which Party he supports.

  • Paul.||

    The Disability Party.

  • sarcasmic||

    You got the first letter right ;-)

  • ||

    to take the disparate payout/received stats one step farther, there have been several articles that point out that not only is there a gender disparity (as noted) but a racial one

    black males, due to a # of factors including lower life expectancy have a much higher paid in to SS/receive from SS than most other demographics. iow, disparate impact and all that shit

  • Ayn Random Variation||

    "Many workers may believe their Medicare payroll taxes are going for their own insurance after they retire.."

    If "many" people actually think this, then I hope Obama wins so this whole thing ends faster.

  • NoVAHockey||

    I really think it's most.

  • Gladstone||

    How come there aren't any "youth" activists out there demanding an end to SS and medicare since they are getting screwed by it? Well they are out there demanding free shit now and want more later and don't like the idea of taking care of their parents, as supposed to vice versa, when they get older. This does not bode well for the future.

  • Mike M.||

    Youths are stupid idiots who don't know anything and believe all the bullshit force fed to them by the teachers and Hollywood.

  • ||

    Most youth are brainwashed by a parade of left-wing high-school teachers and liberal college professors. Very few of these people will mention anything about how bankrupt SS is ot them.

  • ||

    The money wasn't stolen from the trust fund. it was "invested in America". No word yet on when America is going to give us a return on those investments.

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