This new election cycle is the perfect opportunity to evaluate if our politicians from all political parties embrace the concept of free markets and individual liberty or promote the tenets of collectivism and wealth redistribution.
As case in point is the Republican, Chris Christie, promoting the idea that Social Security, here after referred to as SS, should have a means test, as well as raising the age one is eligible to receive Social Security.
TRANSLATION: SOCIAL SECURITY IS BROKE.
Christie correctly points out that SS being bankrupted is a problem that neither party wants to address. However, he then goes into somewhat of the age old deception by calling Social Security “insurance” against poverty in our old age.
Remember when Social Security was called Old Age Survivors and Disability Insurance and that our payments into the system were called “contributions”?
However, in the Fleming vs Nestor ruling, the Supreme Court accurately held that Social Security was NOT insurance, nor an entitlement.
The Court ruled: “To engraft upon the Social Security system a concept of ‘accrued property rights’ would deprive it of the flexibility and boldness in adjustment to ever changing conditions which it demands. It is apparent that the non-contractual interest of an employee covered by the Act cannot be soundly analogized to that of the holder of an annuity, whose right to benefits is bottomed on his contractual premium payments.”
In other words, SS is not a right, nor insurance, but merely another government program to be administered at the whim of politicians.
The fact that Social Security is nothing more than a wealth redistribution program is reinforced in another Supreme Court case, Helvering v. Davis when it ruled, “The proceeds of both the employee and employer taxes are to be paid into the Treasury like any other internal revenue generally, and are not earmarked in any way.”
Do you comprehend the meaning of this ruling? The Court characterizes that rather than SS “contributions” being set aside for personal retirement, it is actually a payroll tax that goes into the general fund, and more importantly, NOT EARMARKED FOR ANYTHING. This is another way of saying that politicians will tax your earnings, then redistribute your taxes in any manner they deem appropriate.
At the same time, without realizing it, Christie exposed the true nature of SS when he commented, “do we really believe that the wealthiest Americans need to take from younger, hard working Americans to receive what, for most of them, is a modest monthly social security check?” In other words, SS is not financed by individuals paying into personal plan over the years to be utilized at retirement, but rather SS is financed by younger workers paying for the benefits of the retired. Is this not a form of wealth redistribution? And like all wealth redistribution programs, it cannot be sustained as we are now discovering. Remember, CONSUMPTION CANNOT EXCEED PRODUCTION.
I give credit to Christie for again bringing the Social Security and Medicare system to the limelight. What I object to is Christie’s solution to the problem, when he states, “I propose a modest means test that only affects those with non-Social Security income of over $80,000 per year, and phases out Social Security payments entirely for those that have $200,000 a year of other income. We should apply the same concept to Medicare.”
Christie says it better another way: – if you can afford to pay more for your health benefits you will and if you can’t, you won’t.
TRANSLATION: From Those According to Their Ability; To Those According to Their Needs.
Christie goes on to say that SS retirement age should be raised to 69,(Why not raise it to 90. If most people die before they collect, SS would be solvent in no time) but this is not really the point. The solvency of Social Security and Medicare is a problem that needs to be addressed. However,rather than identifying the root cause of the problem, mainly that Social Security and Medicare are wealth redistribution programs, which by Nature are unsustainable, Christie ignores the cause and proposes the solution to be means testing. In essence he is suggesting redistributing the wealth of a wealth redistribution program.
You have heard me say many times“When wealth redistribution has been deemed moral, all that is left is to decide who is to be plundered and who is to receive the plunder”. It appears Christie, for one, has deemed wealth redistribution to be moralbecause his solution to SS going broke is more wealth redistribution.
How does this affect real estate and notes? Just be aware that government’s unfunded liabilities are technically bankrupted. When reality takes over and politicians come to realize there is no more money to fund these programs, you want to make sure you have good exit strategies, as well as sound ownership. I suggest purchasing properties at deep discounts and own them free and clear, or purchase with seller financing with favorable terms.These two methods give the best options for adapting to the inevitable chaos of consumption exceeding production.
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