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Scott Anderson
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I am a bored corporate accountant who has been following the debt/deficit issue personally for nearly a decade. in 2012 I launched to live blog the US Cash Deficit and in 2015 to freely distribute public climate data. More recently, I have decided to use my... More
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US Daily Deficit
  • Social Security Demographics Guarantee US Bankruptcy 4 comments
    Apr 11, 2013 2:41 PM | about stocks: DIA, SPY


    "I cannot afford to have my Social Security cut by one penny! Plain & simple."


    "I doubt that one government official can begin to live on what the average senior citizen does," wrote one 77-year-old woman. "I hope that Pres. Obama truly understands the dire straits that his plan could cause senior citizens."

    As discussed a few days ago the latest discussion to fix the deficit has to do with changing the annual inflation adjustments from regular CPI to "chained cpi", which supposedly runs a few fractions of a % under CPI. Both numbers are laughably bogus…CPI has been running around 2% or year….gasoline has more or less doubled in the last 4 years…you do the math. Actually…the government gets to do the math, and make the number whatever they want anyway…not sure why they need to pretend about using a different made up number, but I digress. That we are even discussing such miniscule cuts and pretending they will save us is a testament to the rampant financial stupidity present in DC.Back to the article, which basically has a bunch of seniors discussing whining about the potential impact of losing a few dollars a year…you know, throwing them back into poverty ect… They are all pretty pissed at Obama for even allowing the discussion. This is one of the main reasons I firmly believe we are incapable of fixing our problems….In a democracy, it is possible for a powerful voting block to demand, and get free stuff from a weaker voting block. And please don't send me anything about how you paid into Social Security so you are owed. The truth is, every penny you ever paid into social security was stolen and spent years ago by politicians you elected…Regardless, with 300k seniors retiring every single month (netted against the 200k or so that pass), I suspected that the demographics are getting close to if not already past a point where it is likely impossible to actually make any real changes to the program. I mean what are the odds of anyone on social security supporting any reduction at all? Pretty close to zero I'd say, and I completely understand that. If I was living off$1400 a month of government cheese, and hadn't saved a dime of my own money, I suppose I might feel the same way.So I looked at the US population, finding that in 2011, the population over 20 (sorry…no breakdown of 18+) was 223M. Of that population, 44% was over 50, and I assume not willing to vote to make any voluntary cuts to social security. Then, I looked at some other statistics and determined that the over 50 crowd has a voter participation rate of about 66% compared to the under 50 rate at ~50%. After adjusting for participation, on a straight vote, Over 50 has 51% of the vote to 49%, and thus the power of the majority to do whatever it takes to prevent benefit cuts for themselves, and even raise taxes on the under 50 crowd to pay for it.So absent a moral uprising against the blatant generational theft that is the Social Security/Medicare program, the demographics of democracy virtually ensure we will go full speed over the cliff. No matter what the politicians say, or the jokesters at the CBO predict…there is no way in hell the hundred trillion or so of promises made by the federal government won't be defaulted on in one way or another, so you might as well get ready for it. If you can't afford the $3 a month cut being proposed, you're going to be in for a rude awakening when the checks stop coming altogether.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: DIA, SPY
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  • Widows&Orphans
    , contributor
    Comments (19) | Send Message


    It makes sense that almost anyone would view the facts in the same way. That you are a bored Corporate Accountant strenthens the observation.


    Good luck to us all.
    11 Apr 2013, 03:33 PM Reply Like
  • Scott Anderson
    , contributor
    Comments (75) | Send Message
    Author’s reply » All... Sorry about the formatting with no paragraphs. I tried to fix twice, but soon gave up. It looks better at :)


    W&O...the math is so simple and obvious, and yet here we are..nothing but crickets :)
    11 Apr 2013, 04:34 PM Reply Like
  • a fat panda
    , contributor
    Comments (813) | Send Message
    The facts about Social Security and the Chain-CPI are worse than most realize. There is no cut. Obama didn't offer to accept the Chain-CPI by itself. It was in conjunction with other changes to protect the very old and those without income. Basically, I am agreeing to a change provided that you completely strip it of impact.


    Social Security isn't an obligation of the government. Benefits cannot bankrupt the country. You are making the assumption that the voting block will change that fact. I doubt your assumption that participation rates will remain constant. Once we aren't able to print our way to prosperity, those rates will change.


    Your data is more current - but this comes from 2010. In 2010, more than 50% of voting aged Americans expect to retire after the Trust Fund is gone - and that is in a good economy. More than 80% of the country expects to live long enough that they will see depleted benefits. Whatever participation rates are today, they will change as the collapse of Social Security comes into view.
    4 May 2013, 09:20 AM Reply Like
  • a fat panda
    , contributor
    Comments (813) | Send Message
    "So absent a moral uprising against the blatant generational theft that is the Social Security/Medicare program, the demographics of democracy virtually ensure we will go full speed over the cliff."


    "Fix Social Security Now" on FB. Reform will come. All we ask for is a honest discussion. http://www.FixSSNow.Org feel free to tell us where it is wrong.
    4 May 2013, 09:22 AM Reply Like
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