WEBVTT

NOTE Retirement and Social Security: The Case for Abolition

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First, I'm going to talk about the 1983 social security reforms and how they were conducted and what came out of them should make you greatly fear future reform.

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There's three radical reforms that have been recently proposed by an advisory panel appointed by the Clinton administration in June of 1994.

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And we'll look at those proposals. We'll look at the Chilean system, which those proposals are based on.

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And then last of all, we'll look at the social and economic destructiveness of the institution of retirement.

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This topic really interested me for some time, but it wasn't until last Christmas Eve that

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I was pleasantly surprised to see that more people are aware of the problems facing Social

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Security than I thought.

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It was Christmas Eve and I was just sitting home waiting for my brother-in-law and sister

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to arrive and so I turn on the TV and well you know what do you know I stumble upon one

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of the more crass and inane shows on the broadcast spectrum, Married with Children and Al Bundy

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Al Bundy and his neighbor are in their shoe store, Jefferson Darcy, and Darcy tells Al

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Bundy that he can sue them all for a stress-related injury and earn easy cash. He says, you know,

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law set aside millions for this type of thing, Al, and if we don't get it, it'll go to Social

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Security and then no one will get it. Well, you know, I kind of chuckled. But I was really

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surprised by the reaction of the studio audience. Their reaction was the same one that would

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be given to just the same run-of-the-mill bathroom humor sex joke on the show. Given

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that the show is aimed at about a standard deviation below the mean of the Hearnstein-Murray

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bell curve, I think it's significant that this group of people not only knows that the

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The Social Security Emperor has no clothes on, but he's bending over to moon all of us.

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And so, even while brain-dead Fox viewers can now see through a Ponzi scheme,

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most Americans have no idea what to do with the Social Security problem.

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This year's political campaigning has been anything but helpful.

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As you probably heard, Dole was bashing Forbes in Iowa for his reckless idea

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to privatize social security. Well then when he retired from the Senate on June 11th and also to the Republican Convention on August 18th, he bragged that one of his proudest achievements was saving social security in the early 1980s.

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Well, what did this achievement consist of? The 83 reforms were undertaken to fix social security's long-term financial problems.

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Well, interestingly, the 1977 reforms were undertaken for the very same reason.

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These problems were in turn produced by another reform passed in 1972 that indexed benefits to the CPI.

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Well, the National Commission on Social Security Reform was formed on December 16, 1981,

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and Dole was appointed to the commission by then Senate Majority Leader Howard Baker.

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and it was it was a Republican controlled Senate remember well on January 20th 1983 the Commission

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chaired by Alan Greenspan released its report and and most of the Commission's recommendations

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were adopted or slightly watered down but they were all you know heavily weighed toward tax

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increases rather than spending cuts the main provisions were that payroll tax increases

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The only significant non-tax provisions were a half-year delay in the COVA, expansion of

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the program to new federal employees, and raising the retirement age to 67.

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The raise in the retirement age was practically the only good measure. This was a wise attempt

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to adjust for increased life expectancy, but it turned out to be practically worthless

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for most of us because the full increase to 67 doesn't occur until the year 2022. So,

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the forced inclusion of new federal employees and also this excluding state and local government

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from Opting Out, was practically just a mass hurting of every worker in the economy into this leviathan, and the six month delay in the COLA was practically the only benefit cut that was undertaken.

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I was going to get into the political maneuvering on the Commission, which is very revealing, but I think I'll skip that for now.

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I want to come back to it because it's a heck of a story in and of itself, but there's a lot to fear in the current movement for radical reform.

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The New Dealers and their patchwork are pretty much, that type of patchwork is off the table, but several proposed market reforms could be a lot worse.

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One model that's been really looked at is the Chilean model.

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Chile, in 1924, was the first nation in this hemisphere to adopt a social security system.

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Well, by the late 70s, it was going bankrupt, creating huge deficits, eating away the budget,

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starting to look, well, it was looking like ours was starting to look.

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Well, in 1981, the government allowed workers to leave the system for a new system comprised

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of 21 private investment companies called AFPs.

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AFPs stands for, I think the Spanish is, Administradoras de Fondos de Pensiones, something like that, administrators of pension funds,

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but they're just private companies and Chilean workers are required to give at least 10% of their earnings,

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but no more than 20% to these private companies and these companies are required to provide a minimum return to investors

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and the return as well as the accumulating earnings are guaranteed by the government, insured by the government.

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At retirement, the Chileans can liquidate their accounts in one of three ways.

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They can purchase a government-approved annuity from a private insurance company.

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They can have the AFP administer a government-approved pension or they can combine the two approaches.

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The systems admirers in the US are mainly conservatives who are claiming that the rate of return in this new system is higher than the old and they're pretty much right about that.

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For 10 years the Chilean economy grew at a real rate of about 7% while the assets of these private investment companies returned in real terms about 20% on average.

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And the payments to the old system are one-third higher than the new, but the benefits that are provided by the new system are 40% above the old.

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But the problem with these figures is that they don't tell the full story about the new system.

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First of all, the AFP portfolios are very strictly regulated by the government.

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They can't hold less than 50% of their assets in government securities. What a coincidence that is.

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And no more than 30% of their assets can be held in common stocks.

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This is basically just a one-size-fits-all system.

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Any decent financial planner will tell you that if you're between 20 and 50 years of age,

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about 80% of your savings should be in stocks, 20% in bonds.

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Savers between 50 and 59 should have about 60% of their savings in stocks, 40% in bonds.

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And then if you're 75 or older, about 20% of your savings in stocks, 60% in bonds and 20% in cash reserves.

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So basically this is a portfolio. This mandate portfolio by the Chilean government is really a portfolio that's appropriate to savers 75 or older.

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and this imposes high opportunity costs on the youngest savers in the population.

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Second, the impressive returns are really no more than a normal upswing in the value of the portfolios.

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And the average AFP portfolio contains about 62% of government securities and 11% of common stocks.

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So real returns are projected to drop somewhere in real terms in the 2 to 3% range.

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The AFPs are also, there's a financial protectionism being practiced here too.

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They're forbidden to purchase foreign securities, which means that they're limited and reducing risk to international diversification.

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And then there's a number of other paternal aspects of the system.

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There's a government mandate for and on benefits.

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The retirees can't collect lump sums from their accounts.

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and Early Retirement is forbidden unless your benefit payments are no less than 50% of earnings over the previous decade and they have to be at least 100% of the Chilean minimum wage.

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But despite this, this system has been much discussed by this advisory panel that I told you about earlier.

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and after two years of work they recently released a report that recommends three systems. The first one was developed by, the first proposal was by Carolyn Weaver, an AEI economist, and Sylvester Scheiber, who's some pension expert, whatever that is, from the Wyatt Company.

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and basically what they want to do is take 5% of the current 12.4% payroll tax and direct that to individual IRAs

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and the government would guarantee a pension for two-thirds of the poverty line to all retirees

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and then the additional benefits would come from worker-selected stocks and bonds.

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The Transition would be paid for. Here's the stick that's coming. A new 1.5% payroll tax that would allegedly be phased out after 70 years.

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And also what they want to do is borrow an additional $1.2 trillion in what they call, what these two people call, liberty bonds.

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The second proposal is not really much. It's made by an economist at the University of Michigan named Ed Gramlich, and he wants to just reduce benefits slightly and implement another new tax to fund the IRAs and the new system.

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And the third proposal comes from a Social Security Commissioner that joined the system, joined the Social Security Administration under Roosevelt.

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And he wants the government to take 40% of the trust fund and use it to buy stocks, and while the remaining 60% is used to buy corporate bonds.

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In real terms, the amount invested in just stocks could be around $800 billion by the year 2015.

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So you can imagine them going in and buying that much. The consequences of that would be.

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It's basically a backdoor nationalization of the economy.

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And what's really interesting is that by some estimates, the value of the trust funds in the next century could approach $12 trillion.

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So that's a pretty scary proposal.

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The Weaver Plan is just an attempt to emulate Chile.

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And this 1.5% payroll tax would undoubtedly be kept beyond 70 years, as a lot of you just implied or just figured out.

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The last horror is this $1.2 trillion that they want to saddle us. $1.2 trillion in debt in the form of liberty bonds.

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Really, the only true way to deal with problems created by Social Security is to examine the origin of retirement as an institution.

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Before the New Deal, living standards of older people were sustained largely by employment income, savings, and help from children.

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In 1930, a period of independent post-occupational leisure was virtually unheard of, except for maybe just a few millionaires who wanted to choose this type of lifestyle.

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In 1930, 54% of men, 65 and older, were still working, and today that figure is approaching

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about 20%.

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Removing older people from the workforce was basically a New Deal strategy of propping

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up the labor market by plowing fields of crops under and destroying livestock.

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The age to start receiving benefits was 65 in the Social Security Act of 1935, and from

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About every home is occupied by a retiree who sat on the subdivision board who has nothing

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more to think of than provisions to add to this already foot high book of rules that

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governs the subdivision.

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I remember when we first moved in there, I went to visit my parents and I committed the

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unpardonable sin of parking my car on the road and it was there for one night.

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Well, the next day around noon I get a call. No, the phone just rings in the kitchen. I

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pick it up and I heard, will you move your car? Huh, pardon me? Will you move your car?

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We're tired of looking at it. So I just, you know, put down the phone, go out, pull the

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car in the driveway and I walk in and I say, what's going on here? She says, oh, they're

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on the March again.

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And so last summer she changed the color of the trim two shades lighter.

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It was peeling and cracking and she changed the color to two shades lighter to kind of

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almost a lighter red and the people in the entire subdivision wouldn't speak to her for

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like a month.

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And someone wanted to have a digital satellite dish and I think most of you know what these

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are.

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These are not the eight, you know, five feet eyesores.

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These are just these one and a half foot in diameter dishes and one person on the board

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didn't want it.

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So now no one can have it.

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And he, the person that wanted it, you know, wanted to put it, you know, behind the house.

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He said, look, I'll just put it behind the house, away from street view, can't I just

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do that?

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I can hide it behind the chimney or behind the roof or just somewhere.

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And they still wouldn't let it, still wouldn't let them have it.

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Dyingly across the road is a military retiree, and he can't find anything to do at this time.

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He's volunteered at the hospital, but they restrict what he can do there because he's

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He's always trampling on someone else's turf. So he's kind of gotten into making stained

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glass and that really didn't work. And so now he basically sits home and plays a Sega Genesis

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all day. He's thinking of moving and going to a community near Hilton Head where they

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have far more activities for retirees. But the best of all is this retired cop who lives

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at the end of the street. And they figured out that basically what he's doing is listening

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in on people's phone conversations. He has this scanner in his house and he's been listening

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in on cellular phone conversations and cordless phone conversations. Someone was called one

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of their children in Florida and was talking about, you know, I'm going to come down to

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The Theory of Money and Credit

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He's moved to the end of the street. He's gotten out of his one-story house. He was

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living in this one-story house and he's wanting to fish into this man-made lake that this

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row of houses are on. He was always in people's yard fishing off of it. So he got a house

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on the lake that was two stories. Well, now he can't use it because he was hit by some

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teen learning how to drive and now he has this bad limp. He just purchased this huge

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and had a lot to contribute financially, but also contributed intellectually around here as well.

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And I think these people in Huntsville would be absolutely floored for anyone to imply to them

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that they had anything intellectual to contribute to the world. People only want to seem to use them for their money.

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But that's some of the destructive aspects of retirement on a social level.

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But here's some on the economic level in terms of opportunity costs imposed on individuals.

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Part one is basically consider a man working for 40 years at $50,000 a year.

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He pays 15.3% tax, FICA plus Medicare, or $7,650 in tax each year.

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We're placed in a fund earning 10% interest over 40 years, $25.65.

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It would grow to about roughly $3.4 million a year.

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A person on minimum wage earning $4.25 an hour, working 40 hours a week, 50 weeks a year,

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2 weeks unpaid vacation would earn about $8,500 a year and pay $1,350 in tax revenue.

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Well, place an account at 10% for 45 years, he'd have about a little more than $900,000 to retire on.

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For the new $515 minimum wage brought to us by the Republicans, figured to be about roughly $1.1 million.

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In part two, these are some statistics that Bill Shipman came up from State Street Advisors.

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A high-wage individual born in 1930, retiring in 1995, would have received $1,200 a month from Social Security,

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while he would have received almost $4,000 a month from private investments.

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A high-wage individual making $62,100 a year born in 1970, who retires at $67,000, would

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receive $1,908 a month from Social Security.

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With half his savings in stocks and half in bonds, he receives $11,729 a month from private

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markets.

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The rest of the handout is basically some of Peter Ferrara's material.

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He basically looked at 12 categories of households and the following assumptions were made.

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All workers started work in 1983. Low-income workers were assumed to be 18 years of age at the start of work.

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Average income workers, 22, those who get a bachelor degree, and maximum income workers, 24 years old.

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All married workers were assumed to marry when they started working and retire at 67,

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which is when they would have to retire under the current law.

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Married couples were assumed to have one child when the oldest worker reached 26, another child two years after that.

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Well, you can see in table one that you turn to the side here.

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Rates of return were calculated for some of the household types by comparing expected benefits from Social Security to the taxes paid in the system.

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These rates of return are overstated for two reasons.

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One, workers who became disabled sometime during their work career were assumed to never return to work, but on average they usually return after a few years.

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Second, the taxation of benefits adopted in 1983 reform was ignored.

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All families with maximum income workers receive zero or negative real rates of return.

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Singles get an average 0% real returns on average and 200 couples get about 1% or less.

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On the second page in Table 2, if you look at the second column titled Accumulated Assets

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at Retirement, this basically displays the amount provided by a private IRA at retirement.

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The third column shows the benefits that could be gained by just interest alone that's under

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perpetual annuity.

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If any of these category households were to live just on interest and not touch principal,

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The Next Two Columns denote the benefits that would be paid if the accumulated assets in column 2 were entirely drawn down during retirement.

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And then finally the last two columns show the benefits paid by Social Security to each family according to whether one spouse is still alive or not.

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Table 3 basically takes these same concepts and displays the results of lower real rates of return that can be earned in private markets with a more conservative investment strategy.

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and Social Security.

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As you can see, in many cases the most conservative investment strategy still beats Social Security.

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I think in real terms the stock market since 1926 has returned about 6.4 percent and from

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1946 to 1994 about roughly 6.9 percent in real terms.

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So these are our lower returns than could be earned by buying equity, and that's pretty

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much all I have.

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I hope you like these numbers.

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So what I should say tonight is we should get rid of Social Security and not worry about

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all the people that are dependent upon it because retirement is actually hurting these

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people.

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Well, that's not going to be politically successful or anything, but, you know, it's very difficult.

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I mean, we've gotten into this situation and it's very hard to get out.

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You know, you have all this whole group of people, like these people in Huntsville, that, you know, have nothing to do.

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and CNN watching. That's fine, but just not do it by a Ponzi scheme. That's imposing these types of opportunity costs on the youngest people, young workers.

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Social Security to me seems to be the classic example of a government program. Take its name and what it does is generally the inverse.

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It seems to me that it's a purveyor of social insecurity in the following sense.

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As a rule, and you mentioned it only briefly, a lot of folks retired in the past,

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depended upon the income and well-being of their children, etc., etc.

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It seems to me that there was a very explicit, if not implicit bond, between young people and old people.

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You didn't beat your kids because you knew you were going to depend on them when you were older,

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When you were younger, you didn't beat your elders because they had the title of the farm, etc., etc.

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Now, I mean, these are sort of ugly things that folks don't like to talk about, but it seems to me at the von Mises Institute,

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one of the things that you ought to champion is the cause of how what happens when the government destroys the implicit bond.

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I think that if you really wanted to be a good economist, take all the nonsensical psychology and sociology literature,

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Take all the things that they say explains elder and child abuse, and then come in as an economist and refute that.

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I'm just curious whether you've seen any of that done.

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Not really. There's a letter here today that came from Bill Deal, and he says social security is an old issue.

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But this look at retirement is something that he never even thought of.

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And how old is this gentleman? Is anyone? Is he retired? It seems to be implied here. But he says, you know, this discussion of the change that resulted in the way people regard their employment, the growth of the mentality that retirement is the aim of life and the drain of experience and talent that accompanies the thought that it's somehow immoral to work beyond 65.

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And then he goes on to say, I've sensed on numerous occasions when people ask if I'm still working, their unexpressed resentment that I haven't joined the clan of idle, restless, country club set.

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So, this is a, you know, a retiree out there that this is apparently, you know, relates to this, some aspect to it.

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I'm curious as to what the debate that went on when it was first formed, what kind of questions were raised, how did, my guess is this was not simply just a universally popular thing that went on.

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I don't think the camel's nose under the tent is supposed to max out of like 30 bucks.

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Some ridiculous and small percentage of income.

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There's an article in the Fremont reader that goes through it.

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The first one talks about social security and the initial benefactor and stuff and the initial response.

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The actual initial response is that people didn't like the idea of social security, they saw it as an intervention and were not pleased with it.

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And the first person actually received more in the benefits than she ever put in.

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What I mean that's the whole glory of a Ponzi scheme though is the initial

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recipients make out like bandits. I mean you put in very little money but

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there's not many you know not many people actually receiving the money and

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So the people who get the money initially, get the system started, are you know very very happy with the system and I think that's probably true up until you know up until this time when the rates of returns are falling and then now people are just starting to look to the end of the scheme and seeing things aren't quite as bright

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The proponents sold it as this harmless, involuntary program. What could possibly happen? And as

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always the case, this is what we end up with. It's like this new tax they want to impose.

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We're going to only keep it for 70 years. And well, we're only going to saddle you with

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an additional $1.2 trillion in debt. But some of these numbers are just amazing on table

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2.

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You know, two maximum income spouses, at retirement they have a nest egg of roughly $1.7 million,

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well roughly $1.8, you round it upward.

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And then if they just live off the interest, they obtain around $106,000 a year.

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If they completely draw down that nest egg and leave nothing to their heirs, it's almost

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$200,000 a year with both spouses alive and $100,000 with one spouse alive, but under

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Social Security they get $27,521 a year if both spouses are alive and only $13,761 with

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one spouse alive.

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If you look at these different returns in Table 3, under the first type of household, under a real return of 5.5%, the nest egg is roughly $1.5 million, perpetual annuity, $84,000, and then you look at life annuities, you look at the comparison of life annuities, $167,917 compared to $27,000,

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521. And then you kind of look out in the future, our savings rate is about, national savings rate is about four percent.

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Everyone born in or after 1993 is going to face an average effective tax rate of about anywhere from 82 to 84 percent throughout their entire lifetime

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to pay for the entire system of promises that the government has been making for the last 40 years.

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for People who have been sold a bill of goods, or if we keep going, we just, you know, this is what happens.

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We saddle people born, people who are now three years old, with 82 to 84 percent effective tax rate.

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I think in Bill Clinton's last budget it was 84 percent, but in 1995 it was 82.

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If the Gingrich Army plan had passed, it would have gone down to 73.

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So those Republicans really had some big cuts in store, didn't they?

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Perry Brown suggests that we could sell off any of the federal lands that we could sell off.

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And all the obligations that I'll add to the numbers.

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Well, the obligations are three to four trillion. No one knows somewhere in there.

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So, I don't know how we could sell off all those federal lands for that.

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The environmentalists would be right there.

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I mean, we just gave away how many acres of Utah to the federal government?

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1.7 million.

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1.7 million.

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A trillion tons of coal.

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They bought that land, I believe.

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They had to purchase that land from the coal companies.

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What about the leases?

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with the leases. So we're moving in the opposite direction, if anywhere.

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I want to sort of...go ahead, Ludwig.

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Well, how do...I'm going to miss this, but suppose you move to the...I'm not...

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Suppose we move to the two-way system. How do they...the people that have paid in and are now retired,

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do they take that out of the current, quote, privatized funds?

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Well, the old system is being phased out gradually. There's only like five...

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How is the taxing to pay for people that are in the old system?

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That doesn't go into their sole account. Some of that can be used for...

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Here are some bonds that were issued, to find out exactly what it was, the transition, it was detailed here, yeah, the way they funded the transition, I was going to put that in, but yeah.

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15 years before the baby boomers really throw it out of the back. So, you know, that's the cut-off point.

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If anyone wants to opt out below that, and never receive another dime, that's it.

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I once heard Jonas Hovind describe the British buyout system as being exactly that.

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That you forget all benefits and you're no longer taxed.

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I don't know if he was telling the truth about that. Does anybody know about the British system doing that?

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I think their tax rates were lowered in order for them, in order to bribe them to get out of the system.

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They, in return for foregoing future benefits from the system, what happened was that their effective tax rates in the future were lowered.

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So that was, I think, a solution by Thatcher.

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Right. Is the reason this hasn't been proposed here because the system is much worse, we're much further along this?

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Probably so. I mean, we have three to four trillion of liabilities that, of obligations that the government has promised and I don't know how they're going to deal with that.

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situation is much worse off than either Chile or Britain. Oh, I think so. I think

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so. It's getting worse. It's a much larger problem. It's a much larger economy and

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plus we have that demographic bubble, essentially, that we're looking

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forward to hit, I guess, peaking out in the first or second quarter of the next

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century. You can't look at just the size, you know, in dollar terms and then, of course, hit

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they basically gave away bonds to people who had obligations under the old system

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that's what it says and they're available to any worker who had at least 12 months

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of contributions and look at for any sort of substitution effects when you start

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Yeah, that was looked at. Ferrara didn't really, he still concluded that the rates of return would be greater under a private system than under Social Security.

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There would be a huge increase in savings. The amount of money available to invest would be greater and interest rates would fall, but that interest rate that would exist would still be greater, you know, especially as you go along in time than social security.

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One of the things that, I mean we're getting that same sort of effect here in the United States, we've got a macroeconomic effect of the fact that the social security system has taken in more revenues than outlays since 1990-1991, and they've sunk almost a half a trillion dollars into government bonds.

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Okay, so they're going into government bonds. That money's coming from someplace and going into the bond market and keeping down, essentially keeping down the interest rate on a long-term bond.

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You know, people don't understand why interest rates are so low, how can they stay so low, and so on and so forth.

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Well, part of the reason is that extra half a trillion dollars almost, four or five hundred billion dollars have gone into there and have made the Fed's job and everybody's job a lot easier.

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And of course, those low interest rates are one of the things that is keeping the stock market going and all the rest, so it's not just that private money that's going in the stock market, it's also that social security money that's keeping the deficit.

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Right, when the money stops inflowing into essentially in the overall bond market, public-private

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bond market, and they start cashing the bonds in and not renewing them, once the flow starts

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going the other way then interest rates would be the social the effect of the

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social security system and social security tax on the market for longer

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funds would be the opposite direction interest rates would be pushed higher

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than the otherwise would be and you know you get the exact opposite effect you

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know in the Chilean scheme they there's channeling the funds into private

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investment firms, so that they're investing in the scheme.

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Was there a scheme that channeled money to the government so that the government would

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invest it?

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Well, they dictate AFP portfolios so they can reward their friends and punish their enemies

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by deciding where investment is directed.

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I was just kind of curious about this, but think about the different kinds of incentives

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that a bureaucrat would have over managing a portfolio that would have a person just

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striving solely for profit.

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Yeah, because they lean toward low risk.

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The maximum amount of stocks that they've, they're forbidden to invest more than, I think,

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30%? Yeah, 30% in common stocks. Well, how much they have in there right now is 11 and they can hold no less than 50% in government securities and they're holding about 60% now.

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So, I'd be very interested, I mean, everyone holds up shillies to do this model of how to kill inflation and so on and so forth, saying they have these policies. I wonder how much of it is just due to the fact that what they have is a forced scheme where you're forcing people to buy government bonds and therefore you don't have to use money supply and that sort of thing to meet your, you know, what are you doing to get this automatic deficit? Well, that's what we're doing right now. We've got a forced scheme and we're forced to buy government.

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One of these plans went through, like the EXO Security Commissioner was suggesting.

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To buy stocks.

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Buying stocks.

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I remember after the PESA collapsed and the US was considering a sort of bailout package,

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one of the justifications given was that a lot of very important mutual funds were invested in Mexico

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and that of course we can't allow these to decline.

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So, you know, imagine if a good part of the retirement benefits were invested in the stock market, by force, the U.S. stock market.

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I mean, it could be a sort of deposit insurance for the entire, for all of Wall Street.

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And it's no wonder they're lobbying so hard for this.

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It's incredible to think what ramifications that would be.

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And a moral hazard.

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In Chile, only the employers, excuse me, only the employees contribute to the system, and what the socialists down there have done is paint this picture of employers, you know, not paying their fair share, and so, you know, when the returns start dropping in the two to three percent range, you know, there's going to be this hue and cry for employers to pay their fair share, and

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When the returns drop, there might be some call to return to the old government pyramid.

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This is what happened under S&L deregulation in the 80s, where the market took the heat when the regulation was reculverized.

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You've been looking at and talking about the requirements and in particular how much people are going to make and what they can do privately.

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Does this study or anything you've done look at the social security benefits to people

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other than retirees or if you have medical access, whatever, or benefits, all the other

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payments, is that included in here?

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I mean, you've got people who could be our age and collecting social security, if your

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If your parents, if you're a teenager, your parents die, do you think you can get social security payments if you have some sort of medical ailment that keeps you from going to work, if you're below retirement age, you can collect social security benefits, and so forth. Are these sort of things incorporated here or are they strictly looking at retirement?

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The real rates of return that people who became disabled wouldn't return to the workforce.

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If you were, on average, people do return.

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And so what that's done is overstate the returns.

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The people who get injured go back into the workforce and the benefits are reduced and they pay more to the system.

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The second thing that they didn't include was this tax-on-a-tax implemented in the 83 reforms where we're going to tax your benefits if you're single and over $25,000 a year and for couples over $32,000 a year we're going to tax a certain amount of your benefits.

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What's interesting is what goes into the government formula for determining the level of benefits to tax is interest from tax-free bonds.

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That was another little interesting thing they put in the 83 reforms.

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It just depends on the set of assumptions.

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The first one looks at what you pay into FICA and Medicare.

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The

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you really have to examine each of the assumptions.

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Security initially was...

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This is obviously not a problem, but it initially was to be for retirement.

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These were benefits to retirees, and then you collected security benefits in a...

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I skimmed my mean, I had a bad day.

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Or if you're a problem child in school,

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your parents can receive checks for that.

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If you have attention deficit disorder and that kind of thing, your parents can receive a check for that as well.

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So the money is flying out of that system in a number of different ways.

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Alcoholism, heroin addiction, anything you can get a check for basically.

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Although I think they have kind of cut back on some of those disability payments

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The SSI program is a real scam. You could do three brown bags on that. Just the unbelievable

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amount of scams going on there.

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Okay, well we've got to volunteer for next quarter then.

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Thanks a lot Dale, appreciate it.