Let's Play With Some Numbers, Social Security Edition

Boy howdy, but did I make a mistake this morning. I made the mistake of allowing myself to become distracted while I was "multi-tasking" and surfing the cable channels at the same time I was checking my emails AND getting a phone call. All of a sudden, I realized I was on MSNBC and listening to Moanin' Joe where the topic of the day appeared to be whining about how those dastardly libruls just wouldn't get with the program and worship at the altar of Pete Peterson (as Joe declared he does.)

Then I saw someone by the name of Rick Stengel talking about how "entitlements" needed to be cut in order for everyone to show how "serious" they are with the "fiscal cliff."

Of course, everyone that was on that show this morning (it included Harold Ford, Steven Rattner, Michael Steele, Disco Dave, Tweety, and Chuck Todd) as well as everyone on all the various talking head shows watched by the Beltway Village Idiots Courtiers are people who will never have to worry about living on Social Security as the only thing keeping them from poverty and homelessness, so they are all fine with most any and all changes being discussed. After all, they are all Very Serious People, often wrong but never in doubt. Why, we could almost call them all "economists" they are wrong so often.

A couple of years ago, I wrote this post, "Let's Play With Some Numbers" as a "what-if" about the mythical person working the mythical full time, minimum wage job and what that person might be able to afford as far as a place to live, and associated costs.

Why is this pertinent?

Well, the current average monthly Social Security payment (for October 2012) is $1,237 per month which works out to be $14,844 per year. This will go up to $1,261 in 2013. Where I had my mythical full time minimum wage earner paying FICA/Medicare taxes, other taxes (and some healthcare costs) and missing work on the "Big 6" holidays (New Years Day, Memorial Day, July 4, Labor Day, Thanksgiving, and Christmas) before getting into the actual available funds to pay bills (lowering the income from $15,080 by $2,570 to $12,510), the mythical average Social Security recipient pays $99.90 per month for Medicare Part B starting at age 65, going up to $104.90 for 2013.

The point of all this is that a mythical person collecting average Social Security benefits is in roughly the same position financially as the mythical person who works a mythical full time minimum wage job. My WAG is that for every person who is collecting Social Security and also has the benefits of a defined pension, 401K, or robust savings, there is another person who is relying solely and completely on Social Security and Medicare to stay alive. With the Great Recession having taken its toll these past few years, I imagine there are many people just trying to hold on until they reach age 62 and can start collecting something. I imagine there are many more, like myself, who have had to cash in their 401k/IRAs early just to try to stay alive for these past few years.

So let's remind the Beltway Village Idiots Politicians, Pundits, and Courtiers that there are real world consequences when they so blithely toss around "cut entitlement spending" as a "solution to the deficit." As Mr Pierce puts it so eloquently, "Fck the deficit. People got no jobs. People got no money."

And because I can:

The More Things Stay the Same

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Well, instead of being "surprised" by the June (lack of) Jobs Report, it seems the economists were "stunned" by the numbers (via Bloomberg):

Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said he was “stunned” by today’s U.S. employment report.

He wasn’t the only one.

Not a single economist among 85 surveyed by Bloomberg News correctly forecast the 18,000 increase in payrolls in June reported by the Labor Department. Estimates ranged from a low of 60,000 to a high of 175,000. The median was 105,000 -- almost six times the actual number.

...snip...

It’s not unusual for payroll figures to fall outside of the range of economists’ forecasts. The same thing happened last month, as well as in October, November and December of last year.

That last paragraph should become a mantra for economists looking for excuses, but it most likely will not. As I've mentioned in earlier posts, there are always extraneous reasons for things happening within the economy. Like bad weather. And there will always be extraneous impacts that should be accounted for in any economic forecasting.

The Very Serious People Missing the Interconnectedness of Everything

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As we see the various articles today about President Obama and the "grand bargain" being offered to get Republican votes for raising the debt ceiling, we also see further indications of the total cluelessness of so many of the folks who live inside of the beltway village.

A few weeks ago, I wrote this post explaining how good jobs would attack the so-called deficit problem. This is without addressing the $3.7T plus costs of our wars since 2001 nor that the cost of the Bush/Obama tax cuts are far larger contributors to the "problem."

The last few days, I have seen a couple of articles reinforcing for me that Pete Peterson and his acolytes are winning the battle. Just last Friday (July 1), Bloomberg had this article on the Government Accountability Office releasing a study (pdf) on how people are going to have to delay collecting Social Security and "buy an annuity" in order to pay for their retirements:

“The risk that retirees will outlive their assets is a growing challenge,” according to a study from the Government Accountability Office released today. Increased life expectancies and health-care costs coupled with declines in financial markets and home equity over the last few years have “intensified” workers’ concerns about how to manage their savings in retirement, the report said.

...snip...

“The risk that retirees will outlive their assets is a growing challenge,” according to a study from the Government Accountability Office released today. Increased life expectancies and health-care costs coupled with declines in financial markets and home equity over the last few years have “intensified” workers’ concerns about how to manage their savings in retirement, the report said.

Of course, the study does not and cannot explain how we are all supposed to be able to come up with the cash to buy an annuity nor does it explain how we're are supposed to find insurance companies that will actually be around to pay off on the annuities, even if we could afford them.

They Really Think We Are Stupid

Whew! A bit dusty over here. I hadn't realized it had been over three months since I last posted something here but with all the news this week I guess I figure it's time to throw out my 2¢ once again.

The official unemployment rate is now at 9.8%. Nine point eight per cent. And this is just the "official rate" reported by Labor is the "U3." The truer rate is probably contained in the U6 which is over 17%.

It is December 2010 and this is the longest sustained stretch of unemployment over 9% since the Great Depression. While ADP in their monthly reporting of jobs added for November showed an estimated 93,000 new private sector jobs for November 2010, the official Department of Labor report showed only 39,000 jobs added in total for November 2010. This is in an economy that needs to add 100k - 150k jobs per month just to maintain status quo. Now we add in that two million people currently collecting unemployment will be losing their unemployment insurance benefits during December 2010 and another uptick in initial jobless claims for the last week of November and it is going to be a horrendous Christmas season for a lot of people in the United States.

Jobs and the Cat Food Commission

Have I mentioned recently that I NEED a FREAKIN' JOB?

Well, I do. As do many millions more of my fellow citizens. I'm feeling a bit too lazy to go get the official figures but just last week, the official Unemployment rate was 9.9% (roughly 15 million). Add in another few million for the Underemployed and a few million more to cover the folks who have given up, "self-employed," and the other groups not counted and the figure is probably doubled or more.

So what do we get? Scaling back of the so-called Jobs Bill to appease the Deficit hawks.

Under fire from rank-and-file Democrats worried about the soaring national debt, congressional leaders reached a tentative agreement Wednesday to scale back a package that would have devoted nearly $200 billion to jobless benefits and other economic provisions while postponing a scheduled pay cut for doctors who see Medicare patients.

Nothing about scaling back on fighting two wars of choice. Nothing about raising taxes on Hedge Fund managers who pocket Billions and pay taxes at the Capital Gains rate. (Parenthetically, why is "unearned income" felt to be so much more valuable than "earned income" that it is taxed at less than half the rate of earned income? Doesn't that fly directly against the traditional Horatio Alger effect that hard work is one of the primary positive attributes in the US and should be rewarded?)