May 2014 Update: Social Security Enrollment

The May 2014 numbers are in and we added 114k people to the SS rolls compared to 124k in May 2013.The total consolidated enrollment now stands at 58.589M…good for 18.41% of the population receiving an average of $1187 per month.2014-06-28 May SS Analysis

We can see what appears to be stabilization for four months now just a bit over a 1.1M annual rate of increase. I keep an eye on this series to catch a material change in the enrollment trend….in particular the beginning of another spike like we saw in 2008-2010. Clearly…we don’t see that this month. In fact, it’s not even clear that the stabilization is a trend…yet.

As of May 2014…the rate of change in SS EFT cash outlays was +$50B annualized. This is down from a peak of $65B in Dec 2012, but it’s still a big number….requiring $50B of new revenues each year just to keep the deficit even. That hasn’t been a problem in the last year…with revenues gaining at a $300B+ rate, but this is unlikely to be the case forever.

Failure: The Only Option??

I read The Queen of Obamaland by Pat Buchanan with great interest as he turned his guns on HHS Kathleen Sebelius who’s disastrous rollout of the Obamacare website has caught the attention of many late night comedians. It’s worth a full read….just like everything Pat writes, but here’s the money quote:

In World War II, FDR brought together the men who made things in America,  dollar-a-year industrialists who swiftly took charge and met his immediate  demand for 50,000 planes and 1,600 ships.

They built the most awesome military machine the world had ever seen, arming  12 million Americans, Russia and England as well, and smashing two mighty  empires on opposite sides of the world.

And these men did it in about as long a time as it took Barack Obama’s  regime, captained by Kathleen Sebelius, to flunk a test to create a website.  There is something deeply wrong with our republic.

Doesn’t he have a point? Now…I knew that our government sucked at just about everything it touched….but have we sunk this low…we can’t even build a stinking website…even after spending $600M+. And this is likely just the tip of the iceberg….we know damn well that whatever cost estimates and savings they promised to justify this whole thing will turn out to be disastrously wrong as well.

This is one (of many:)) fundamental reasons I could never be a liberal. You see, the liberals for the most part have their hearts in the right place. They want to eliminate poverty, educate everybody,  make sure everyone has healthcare….essentially just make the world a better place, and I get that. But then…they go completely off course by making a fundamental assumption….that Governmentt has the capacity to accomplish any of these things. It can’t….and it has a documented record of failure in just about everything it touches. And yet…the liberals just can’t give it up. After his failure…nobody on earth would trust Bernie Madoff today with their retirement accounts today….but here are the liberals….”please Uncle Sam…we have this great idea on how to fix healthcare”…”can you take it from  here?”

And it’s not like the Rebublicans are any better….what with the nation building and the department of homeland security ect…

On the same vein of thought…on Meet The Press Sunday, Alex Castellanos-republican strategist made a good point…asking…”name something government can do well”….then went on to name a list of failures…including pointing out that social security was a ponzi scheme…excellent…truth telling on national TV…that never happens.

Enter Neera Tanden-Democrat…who  giddily declared after this bit of truth telling..” I think it’s good to know my republican colleagues don’t like social security and medicare”. That’s it….that’s the only thing she heard.  Hee hee… now i get to bash republicans…for telling the truth. I watched it about five times…and you could see the sparkle in her eye the second the truth slipped out of Alex’s mouth…it kinda made me sick to my stomach.

And you know what…it will work. All you have to do is accuse a candidate of wanting to cut back…even a tiny % of the SS Ponzi scheme…and 60M+ voters will crush whatever political aspirations they may have had….even if they were the best candidate with the best ideas for the long term.

And this truth….more so than anything else…including the $17T of accumulated debt is why I remain convinced that the collapse of this system is inevitable. I will grant the optimists out there that we are not too far gone to fix this country….solutions exist to put us back on the right track to long term prosperity. However….none of them will ever see the light of day…and it’s our own damn fault. For 30 years we as a society have been making piss poor decisions at the ballot boxes, and the result is profound. The country that not so long ago…as Pat said:

“built the most awesome military machine the world had ever seen, arming  12 million Americans, Russia and England as well, and smashing two mighty  empires on opposite sides of the world.”

…is now so friggin incompetent they can’t even build a damn website. In the movie Idiocracy it took 500 years for society to devolve….I’m thinking for us…50 would be a miracle. Democracy…it seems, is simply incapable of fixing this. Thus failure, it would appear is…the only option. With collapse comes the opportunity to rebuild from scratch. Ctrl-Alt-Del


September 2013 Update : Social Security-Annual Change In Retired Workers

The September numbers were just released…. the total Social Security population grew 140k to 57.695M people, with the average recipient receiving $1,162 per month. Penciling that out yields a very large number, but that’s not really what I am interested in. I watch this series because I am looking for a material change in the rate of retirements….which is what we would expect some time soon as we get into the meat of the baby boomer retirements.

For some reference, in the late 90’s, we were adding about 300k people to Social Security programs(Old age and disability) per year. By 2006/2007, the rate had edged up to about 700k per year of additions before spiking to over 1.6M in 2009 as millions jumped onto Social Security/disability after losing jobs due to the recession. Since then, it had slowly been drifting down, with the latest annual rate being 1.248M additions per year. For the month, last September had 155k additions, 15k higher than this September so the slow drift downward is continuing, but we are still adding a lot of people each year.

I guess you could say it’s a good thing that the rate is coming down, but the truth is, we are still adding people at a phenomenal rate, and that rate will likely be heading back up before too long. For reference…while SS is adding an average of 104k people to it’s rolls each month…the total population is growing at about 187k per month, and jobs are being added at 184k per month over the last 12 months. On the cost side, we are seeing growth of about $62B per year due to growth in the population and the annual cost of living adjustment. So all else equal, to keep the budget deficit constant, we need either 62B of new revenue each year, or need to make $62B in cuts….each year in perpetuity, and that # will probably start accelerating up over the next 5 years. So it’s bad, and getting worse. Remember all the drama last year surrounding the $85B sequestration?

Finally, just a thought on retirement choices. For most, you have a choice to apply for social security from when you turn 62 all the way up until 70, but the longer you wait, the more money you get. I suspect that for those who can, they try and work as long as they can. However, during the “great recession” many in the 62+ age group who lost their jobs couldn’t find jobs, and therefore took social security earlier than they would have liked at a reduced rate. Now, the economy isn’t quite as terrible, so more seniors are working just a tad longer…delaying their retirement, but ultimately increasing their potential payout. So while that may be temporarily suppressing boomer retirements, in the long run, the higher payments could actually make the long term situation worse.

On the other hand….why worry about the long run. The odds of this turd staying afloat for another decade, much less 30+ years is slim to none. I suppose one of the reasons I do this is just to document the absurdity in real time. None of this is rocket science. Anybody with a spread sheet and the ability to do middle school level math should be able to sit down and see that none of this will end well….and yet, a (vast?)majority of politicians and citizens seem deluded enough to believe we can just keep kicking the can. Hint Hint….we can’t 🙁

Proof (well…circumstantial evidence) Social Security Implemented As Stealth Income Tax

A while back I wrote a post titled Uncle Madoff Sam’s “Social Security Trust Fund” which was a tongue in cheek look at Social Securities Ponzi beginnings… excerpt below

Bernie Madoff Sr. 1935 (BM) : Ok everybody step right up. Have I got a deal for you today!! All you have to do is give me 15% of your paycheck from the day you turn 18 until the day you turn 62, 65, 67, 70?? In exchange for this modest contribution, I will, at my sole discretion, give you a meager monthly benefit until the day you die.

To back up a bit, it has been a hypothesis of mine that Social Security was invented not as a program to help the all the poor widows living in poverty like the history books say, but instead, as a disguise to pass a broad income tax that would (at least temporarily) bring in far more revenue than outlays, allowing the government to spend that revenue wherever they wanted, leaving future elected officials to worry about the promises being made.

The story line kind of fits….right in the middle of the depression, people are generally unhappy with the government and probably not in the mood for a tax hike. However, revenues are depressed, and outlays are surging….what to do? Create a fake program to help widows and the elderly and a broad based tax to pay for it. Then…set the retirement age so high…most people will die before they are old enough to collect and voila!! It’s not like the public could download the data into excel and crunch the numbers themselves back then, who was gonna know the difference?

So that has been my hypothesis, but I never had any raw data to correlate with it…until now. Over at I found a neat little table showing Social Security’s  annual cash inflows and outflows…all the way back to 1937. Then, at I found the total US government historical revenues and outlays. Put them together, and the evidence is pretty convincing.

First, lets set the backdrop…From 1920 to 1930, the government ran 11 consecutive surpluses averaging $4.3B in revenues and $3.5B in outlays. Just scaling that up to 2012, that would have been like pulling in $4.7T of revenues on 3.9T of outlays…good for a $900B annual surplus….instead of the $1.1T deficit we actually recorded. Then…just do that 11 years in a row.

Then…the Depression hits. Revenues fall more than half from $4.1B in 2030 to $2.0B in 2032. Outlays…$3.3B in 2030 grow 40% to 4.7B by 2032, on their way to 8.2B in 1936. All of a sudden, after more than a decade of healthy surpluses, the government is spending more than twice what it brings in. By the end of 1934, the surpluses of 1920-1930 have been more than wiped out, with nothing but huge deficits on the horizon. They can only issue so much debt (Quantitative Easing hadn’t been invented yet)…they desperately need a new revenue stream, but raising taxes on a pissed off population doesn’t always end well. Enter Social Security. Passed in 1935….implemented in 1937.

So…anyone want to guess what the payout in year one was? Today it’s roughly 1:1. in 1937, according to the SSA, the SS tax brought in $737M of revenue..a full 14% of the federal government’s $5.4B total revenues in 1937. That would be equivalent to today, a $420B per year tax hike. Does anyone think Obama could get that passed? Total Social Security outlays that year… $1M. That’s right…they brought in 737M, and paid out $1M.

Ok…maybe it was just a fluke, maybe you had to wait a year or something, and Y1 only had admin expenses. Let’s look at Y2. $10M paid out on $375M of revenues…2.3% payout. Between 1937 and 1950, SS brought in $18.1B of revenues, and paid out $4.4B…paying out less than 25% of revenues. Not exactly what you expect from a Ponzi pay as you go program to help widows. No…Social security was designed from the start to be a broad based income tax to fund general government, and on the side (as a cover)… they would use a very small % of proceeds to take care of the few who managed to live to retirement age and fill out the right paperwork (typically before dying a few months later)

After a great start… by 1957 (Damn you FDR!!!), the math was starting to catch up and Social Security was running a deficit. And so it started. Taxes were raised… problem solved for a few years, until the math caught up again. Rinse, repeat, and here we are again… What will we do with the “Little Ponzi Scheme That Could”?

Hell if I know!! How do you tell 40M voting seniors and 60M  near retirement Boomers they’ve been paying into a Ponzi scheme 10,000X bigger than Bernie Madoff’s for their entire lives. The money is gone, and the only way to continue it is to screw over the younger generation even more than they already did with Obamacare. Also…they(the young) are young and stupid…you are old and frail…. (so it’s even right 🙂 ) I don’t know how it ends, but I am sure it’s gonna be bad for someone.

Social Security-Annual Change In Retired Workers

I know it was just yesterday I did a post on Social Security. Today…the SSA released  the June updates…among other things revealing that the number of people in the Retired Worker program increased  97k to 37.4M. This is not unexpected, though there is seasonality involved (more people seem to retire in Jan-Feb) 100k per month in additions is about where we are…though the trend is headed up. Just for fun…I charted the YOY additions (which eliminates the seasonality…and it shows a very interesting picture.

06-26-Social Security Beneficiaries

We start all the way back in 1995 adding about 350k people to the SS rolls a year. It moves around between  a 200 and 400k pace before spiking right around the dotcom  bust. After that it drops back around 350k before heading steadily up to about 600k per year in June 2008. Then…it takes off like a rocket topping out in December 2009 at an over 1.2M rate before declining back to about 1M at the end of 2011. Since then, we have seen a steady increase in the rate…likely driven by the demographics of Boomer retirement.

So the question is….what will this chart look like at the end of 2015? As we chug along in 2013 with a not so terrible economy, we are adding to the program at record rates and the demographics only get worse from here. Even a mild recession could cause a huge spike in early retirement…so just as revenues are being squeezed, we would start adding huge numbers to the Social security program. Just some quick math, adding 1.2M retirees, at $1,267 per month is about $18B per year. (I know yesterday we said $60B…that’s the entire program…not just retirees, and it includes the annual COLA on the entire population.) Each retiree… assuming the same $1267 payment and 20 years on the program….will draw in $304k of payments…ignoring inflation/COLA ect…

So… lets go out on a limb, and assume that of the current population of 37.4M, the average life expectancy is 13 years. (wild ass guess…got some 62 year olds and some 95 year olds). Pencil that out, and if we eliminated SS (retirement only) tomorrow for everyone not on it….we would still be on the hook for $7.4T…roughly (still ignoring inflation).Someday I’ll add in the rest of the population. But as we know…it won’t be eliminated….and there are 60M boomers waiting in the wings.