The Debt Ceiling Charade Amid Screams About Social Security

During the State of the Union Address, the president said the Republicans want to cut Social Security. Several boos were heard; Rep. Marjorie Taylor Greene shouted “liar!” The pushback was swift; a nonsense deflection of the major problems facing America.

Social Security accounts for almost 20% of federal spending, approximately $1.25 trillion. By 2034 it’s estimated to only be able to cover 77% of scheduled benefits.

Andrew Biggs, at the American Enterprise Institute told ABC news: (emphasis mine)

“Congress has been a poor steward of this program, in the sense that they simply delayed acting on the solvency issue and it’s clear they’re delaying for political purposes because they don’t want to make the difficult decisions.

But it can’t kick the can down the road forever. And the longer you kick it down the road, the harder it gets.”

Social Security is the tip of the iceberg. Politicians of all flavors are standing on the deck of the Titanic, the iceberg is looming, and they do nothing meaningful; their only concern is placing blame on their political opponents.

Social Security’s solvency is pale in comparison to the dangers looming ahead.

Deficit spending has skyrocketed; congress shows no fiscal responsibility whatsoever. They used to borrow money to support their folly. Since 2008, they borrowed what they could at artificially low interest rates, while the Federal Reserve created trillions out of thin air to make up the shortfall. Inflation is raging, the dollar is tanking and could easily collapse. Politicians are doing what they do best – ignoring the real problems – while screaming that it is their opponent’s fault.

As the debt ceiling showdown nears, the noise level will be unbearable, politicians and news media shrieking at one another. The government, as always, will threaten to stop paying social security and other social programs to create public pressure on congress to do something and get the debt ceiling raised.

“Vote for me, I’ll make all your problems go away!” BS, the politicos broke it and don’t have the courage to fix it.

Bill Bonner explains it clearly: (Emphasis mine)

“The fight over the debt ceiling increase is a sham battle. Both sides fire blanks. Both vow to fight to the last man to get what they want.

…. They say that every time the ceiling is raised. And in the end, the ceiling is raised without any real constraints on federal spending.

Yes, the decline of the US empire happens with the advice and consent of both parties.

Republicans and Democrats pretend to be fierce competitors. But the typical member of congress has much less in common with his own voters than with his fellows in the Capitol – even those in the opposite camp. …. They all…earn the same amount of money – enhanced by the same slimy contributions from the industries they regulate. …. They all have the same interest in seeing the flow of money from the public to the elite deciders continue without interruption.”

When the dust clears, “politicians” will claim victory, trillion-dollar deficits will keep their gravy train rolling.

The binge spending continues – until it stops!

The Washington Examiner updates the scorecard: (Emphasis mine)

“The federal deficit was $460 billion through the first four months of the fiscal year,…a 78% increase from the same period a year before.

Revenues…were 3% lower than during the same period,…while spending was 9% higher.

…. The U.S. borrowed $39 billion this January alone, while January last year saw a $119 billion surplus, a difference of 133%.

‘Today’s Treasury numbers confirm that, when it comes to unsustainable borrowing, our nation is quickly reverting to type. In just the first third of the fiscal year, we’ve already borrowed $460 billion, or $3.8 billion per day,’ said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.”

The US Debt Clock projects government debt over $44 trillion by 2027. The government will be forced to raise interest rates if they wish to continue borrowing to finance their reckless spending.

CNN warns:

“The US is paying a record amount of interest on its debt. It’s only going to get worse….

…. The Treasury Department paid a record $213 billion in interest payments on the national debt in the last quarter of 2022, up $63 billion from the same period a year earlier.

“The fourth-quarter tab was also nearly $30 billion more than in the prior quarter, which is the largest quarterly increase on record”, said Jerry Dwyer, an economics professor emeritus at Clemson University.

Borrowing costs are expected to become an increasingly heavy burden in coming years.

…. Until recently, it cost the federal government very little to issue debt to finance its operations.

“It was almost free money,” Dwyer said. “You could borrow a trillion dollars, and if you financed it with Treasury bills, you paid almost no interest. But interest rates weren’t going to stay there forever.”

…. The spike in interest payments also contributed to the federal government hitting the debt ceiling that much faster. And it adds to the pressure on Congress to raise taxes, cut spending or allow the government to borrow more to meet all its obligations.”

Interest on the national debt will soon dwarf the cost of social security benefits. When the party stops, does the government default on it’s debt, go to war and/or cut entitlement programs? Frightened politicians will go to extraordinary means to retain their power.

What about Social Security?

Despite the rhetoric, the politicians are consistently weaseling out of commitments they know they can’t keep. I recently wrote, Dealing With Reality – There Is No “Security” In Social “Security.”

We recently received our annual proclamation; they were raising our inflation adjusted benefits 8.7% Why did our net income only go up 5.4%, while our Medicare premiums increased 35%?

Over 66 million people receive Social Security checks, the politicians have to reduce benefits without causing voters to storm the palace.

The day of reckoning is looming near.

I loved Chuck Butler’s comments about interest costs affecting HIS social security:

“…. Those numbers will pale when compared to future costs… Hello, Mr. Butler? Yes, it’s me, how can I help you? This is the Soc. Security Administration, and we have some bad news for you. You see, the Gov’t can’t pay your Social Security payment, because our bond servicing costs have taken over all of our tax receipts…

And I respond… But, it was MY MONEY! I put that money in there per the requirements through the years, and it was for my golden years! And now you’re telling me that you spend MY MONEY? You rotten tomatoes, I hope you rot in… hello, operator….

…. Ask me no more questions. Please tell me no more lies.

OK, for those of you who are wondering if that really happened… No, it did not, it was just me playing out a future call that could happen, given our soaring bond servicing costs!”

Yes, 66 million Americans were told there is a trust fund and the government is saving OUR money for OUR retirement.

It’s a lie, they spent OUR money. In response to my article, subscriber Dan B. writes: (Emphasis mine)

“I doubt that 1 person in 100,000 living in America understands this article. But your article is correct and for reference please look up the SCOTUS decision made in 1937, written by Chief Justice Benjamin Cardozzo, who stated that the tax on an employee’s wages, plus the excise tax paid by the employer are not intended to be used as a retirement fund, but they are placed in the general fund of the USA to be used as congress directs every year.

FDR had campaigned earlier that the funds were to be used as benefits for retirees, but changed course during the hearing and argued the funds were to be placed in the general funds and used as directed by congress each year. The SCOTUS agreed with this argument, and allowed congress to collect these taxes ever since. Social Security payouts are included in the annual budget congress approves each year.”

Since Social Security’s inception all politicians reinforced the illusion that OUR money was tucked away safely for OUR retirement.

We can raise the debt ceiling until hell freezes over, while lenders demand even higher interest. The house of cards is collapsing; politicos and citizens alike will be forced to face reality; OUR retirement money is gone.

What can we do?

Despite the government offering incentives to wait before filing, there are no guarantees. The cookie jar is about empty, claim your benefits as soon as you can.

Chuck always asks the question, “Got Gold?” He sent along the following quote:

“Governments lie; bankers lie; even auditors sometimes lie: gold tells the truth.”

— William Rees-Mogg.

Who knows what desperate politicians will do? While politicos squabble over the debt ceiling, the debt is unsustainable, along with the buying power of a dollar. Expect benefit reductions, higher taxes and inflation. Get out of debt, budget accordingly, hedge your bets with gold and most of all – Don’t get sidetracked by the political shenanigans.

On The Lighter Side

Not too long ago we couldn’t get new cars into the US as they were unable to get chips – primarily manufactured in Taiwan. China refers to Taiwan as a “rogue province” and has threatened to annex it as part of China.

We welcomed the announcement that Taiwan Semiconductor will build a HUGE production facility here in Phoenix.

Construction is underway. No one is complaining that roads are periodically closed, traffic is much heavier, as they build the facility and the infrastructure to support such a massive project.

AZ Central tells us:

“The TSMC factory, or fab, is massive and will feature state-of-the-art technology when it begins commercial operation in 2024. …. The campus measures nearly two miles by one mile and has enough space to fit six fabs, though only one is currently under construction, with the second slated to go up and start operations around 2026.

…. Between the two fabs, TSMC is sinking $40 billion into the projects.

…. The company already has added staff to work at the new complex, and that was before TSMC announced that it will more than double its Phoenix workforce from 2,000 initially to 4,500 or so within a few years.

…. In addition to the 4,500 or so direct TSMC jobs and the 21,000 construction positions, TSMC expects that suppliers located in the region will hire another 13,000 people. A projection by the Greater Phoenix Economic Council estimates $770 million in direct tax revenue and $134 million in indirect tax revenue will flow to the state government over an 11-year period. It also projects the generation of more than $6 billion in personal income over that period.”

Jo and I saw Ross Perot campaigning for president in 1992. He warned about the “giant sucking sound” as jobs left America for Mexico and offshore. It’s time to bring those jobs back for our economy and national security.

Quote Of The Week….

“What is politics? It is a candidate standing before a crowd and thundering, ‘If you elect me, I will give you EVERYTHING you want, and you WON’T NEED TO PAY FOR IT! I will force the evil rich person standing next to you to pay!’”

… And the crowd cheers…

— Richard J. Maybury

And Finally…

Friend Tom G. sent along some tee-shirt humor:

And my favorite…

Until next time…

Dennis Miller

“Economic independence is the foundation of the only sort of freedom worth a damn.” – H. L. Mencken

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