Inflation Kills Social Security

     The ability of the United States Government to continue to provide Social Security benefits and when money will no longer be available to pay those benefits has been a topic of debate for longer than I can remember.  Lately, many remedies have been proposed for modifying Social Security.  Some of these include means testing, raising taxes on the wealthy and raising the age to receive benefits.  Unfortunately, I have not heard a plan to address one of the root causes of the benefit shortfall, inflation.
     The problem with inflation is simple if we look at the math.  Citizen John Q. Average gets his first job in 1972.  At that time, he earns an average salary, about $7500 per year.  That also means that he pays an average amount of about $550 per year of social security taxes.  Flash forward 40 years.  John Q. Average has now reached retirement age and begins taking his Social Security payments.  Because of inflation, his first monthly check is over $1200.  He receives more money in benefits in his first month than what he paid in his first two years!  In his first two years, he will receive as much in benefits as he paid in his first 20 years.  Because of the number of people that died before retirement age in the past and the baby boom,Social Security almost got away with this formula.  That doesn't work anymore.
     Since the time that John Q. Average started working, both wages and Social Security taxes have increased to address the solvency problem.  The math still doesn't work.  Young Susie Q. Public, who begins work this year, will pay about $2800/yr. in Social Security taxes (including her employer match).  If both inflation and Social Security benefits continue over the next 40 years as in the last 40 years, Susie's first monthly payment will be $7200.  Again, she will get more in her first month than she paid in her first two years.  We could reduce John's and Susie's benefits.  John's $1200/month in 2012 probably buys less than his grandfather's $200/month benefit did in 1972, especially of the items seniors buy most, food, fuel and medical care.  The problem with that is John and Susie should be able to expect a return after paying for all of those years.
     One of the keys to getting Social Security and Medicare costs under control is to control inflation.  Without inflation, John would get the same $200/month that his grandfather did.  That means that it would take three months for him to get back one year's worth of contributions.  His first twenty year's of contributions would make payments for almost five years.   By that time, natural attrition would make funding of future payments more likely.  As a Conscious Conservative, I can't believe that Social Security will ever be more than a Ponzi scheme unless the government first fixes inflation.

Conservative View of The Dog and Pony Show

     As I write this, an internet search for "United States 2012 Election News" brings up some interesting stories.  One is about a poll that explores how many Americans want politicians to talk about religion.  Another tells about Mitt Romney and an "Etch a Sketch" campaign.  Another reports the launching of a new Political Action Committee (PAC).  There is another about how much money Barack Obama is raising for his campaign and one about who former Florida Governor Jeb Bush is endorsing (hint: it's Mitt Romney).  Although these stories have some interest, the big question about all of these is:  Who Cares?  These articles only serve to draw the public's attention away from the real issues of this election.

     As a Conscious Conservative, I believe that here are only five questions which a presidential candidate must answer in this or just about any other election.

1.  How are you going to respect my body and property?

     

     We now have a government that spies on its own citizens, can imprison them indefinitely or kill them without trial and takes their property to give it to a private business interest.  This question is far more important than which famous person endorses a candidate.

2.  What do you believe about Taxes?

     

     By some estimates, the United States Tax code is over 15,000 pages long.  Why?  Because it is designed     less to raise revenue than it is to control behavior and grant favors to political supporters.  This is more important than an "Etch a Sketch" comment.

3.  How are you going to handle the issue of Us vs. Them?

     Typical political strategy in Washington D.C. is to divide and conquer.  Pit women against men, rural vs. urban, young vs. old, rich vs. poor, etc...  We need a President who refuses to categorize people.  This is more important than a candidates's religion.  In fact,a candidate stating a religion is just more Us vs. Them rhetoric.

4.  How will you protect the US Dollar?

     Inflation has been the largest curse that government has inflicted on the American people in the last 50 years.  Households have to earn more than ten times what they used to in order to keep the same standard of living.  People find that their life savings are worthless.  This is more important than how many donations a candidate is receiving.

5.  How will you restore faith in the election process?

     Voter turnout for Federal Elections hovers around 50%, even during Presidential election years. The President needs to do everything in their power to assure people that their vote matters.  This would include advocating open ballots and working more to help the United States than to win re-election.  Fair elections are more important than who supports which PAC.

     You almost never hear candidates talking about these issues.  They prefer to dodge real issues for easy fluff.  The press also fails to do its job for not asking these questions.  What is left is gossip, innuendo and a Dog and Pony Show.   

Conservative View Inflation Has Gone Insane

     I pulled up to the pump to buy some gasoline today.  The price was $3.85 a gallon.  The gallon of milk I bought earlier in the week was $2.69.  Mailing a package cost me almost $25.00.  Compare that with these prices from 1962:

Gallon of Gasoline                     $0.31
Gallon of Milk                           $0.49
First Class Stamp                      $0.04

     What causes the difference in prices?  The value of the US Dollar is disappearing because of inflation.  In its simplest terms, inflation is caused when a money issuing institution, in this case the United States government, creates more money than is justified by the wealth of that institution.
     Why would the United States want to print more money than is justified?  As a Conscious Conservative, I believe that one answer is that in an environment where money is worth less and less, whoever gets the money first gets the most value from it.  In the United States, that means that the government and bankers get the most use from each dollar and wage earners get the least.  Basically, government creates and spends the dollar when it is still worth a dollar, but by the time it ends up in a worker's paycheck, it is only worth $0.90 in an environment of hyperinflation.  This is an incipient "hidden tax" that Americans have been paying since the mid-20th century.  That we put up with it is insane.