The poor and low-income folks of America receive many government subsidies. But here’s one subsidy that few people are aware of.

Social Security retirement checks are HEAVILY subsidized for low earners. Moreover, for those whose earned income (adjusted for inflation) averages above about $126,000 (called “AIME”), they get ZERO money back on their 6.2% SS payments (12.4% for the self-employed) on that “excess” income confiscation.

Essentially, those annually earning more than $126,000 up to $160,200 in 2023 will find that 100% of their SS payments (6.2% each, paid by both employer and employee) above $126,000 are to help subsidize the low wage earners who pay VERY little for their benefits. The high-income payers will get not one dime extra for these higher payments. This 2:40 minute videois a good summary of the SS program, though the numbers are not up to date. There are three tiers of payouts, based on one’s annual earnings (though the specific figures in the video are… Read More

2021 figures – compiled by Richard Rider using OpenAI technology

Social Security calculations, including the “bend points”

At what level does your social security (SS) contributions no longer earn you more benefits? In 2021, that annual figure was $117,040.Any SS payments you and your employer paid on income above that amount (up to the $142,800 in 2021) will not earn you a penny more in social security benefits. But almost NO ONE knows about this rip-off of the upper middle class. Most people think that SS is a bad deal for the worker. But for most, SS is arguably a good to GREAT deal – IF you ignore the doomed nature of this Ponzi scheme. See below for details.

In the United States, there is no specific level at which Social Security contributions stop earning you additional benefits. Instead, the amount of benefits you receive is based on the amount of income you earned during your working years, and the age at which you start receiving benefits. But I’ve done the calculations for you.

Under the Social Security program, you earn credits based on the amount of… Read More

Weakening pensions is a choice, not an imperative. The crisis is political, not actuarial. – Susan Greenbaum,guest editorial, Al Jazeera America, October 20, 2014 With this thesis highlighted, Greenbaum, a retired professor of anthropology at the University of South Florida, has just published a guest editorial that provides in one place a useful example of the distortions, demonizing and inversions of logic used by those who fight against pension reform. To understand why public employees, and their union leadership, remain sincere in their delusions regarding pensions, Greenbaum’s missive may serve as Exhibit A. Because she has joined a chorus that is funded not only by the billions that are spent by public employee unions on political and educational propaganda each year, but also funded by elements of those same Wall Street financial interests they routinely deride. Let’s examine some of these misleading arguments and tactics, in no particular order: (1) Identify key reformers, demonize them, then accuse anyone who advocates … Read More

Last week yet another missive on the lessons to be learned from Detroit’s bankruptcy was published, this time in Forbes Magazine by Jeffrey Dorfman, an economist at the University of Georgia. Dorfman’s article, “Detroit’s Bankruptcy Should Be A Warning To Every Worker Expecting A Pension, Or Social Security,” clearly implies that future Social Security benefits are as financially imperiled as public sector pensions. This is patently false, and spreading this falsehood has dangerous consequences. Not only are the financial adjustments necessary to fix Social Security far easier to implement than what it’s going to take to rescue public sector pensions, but the sheer size of the public sector pension liability is actually bigger than the total liability for the entire Social Security fund. It is imperative that American voters understand this fact. In the United States today about 20% of workers are employed by the government (or public utilities that offer benefits on par with government). For … Read More

I speak often in these pages about things fiscal, financial and economic. Given that I am a CPA and sit on three committees in Congress that deal with money (Budget, Financial Services and Joint Economic), this is to be expected. But, I am not all about money. And, the nation’s problems are not all about money. As big a problem as our debts and deficits are, they are emblematic of deeper and actually more significant moral and cultural issues. For some time now, we have heard of those who Tom Brokaw dubbed “the greatest generation”, those who sacrificed through a world war to vanquish fascism and imperialism and leave a stronger America for their children. We can go back further to speak of the generation that took the risks to establish this country in the late 18th century or of the generation that fought the Civil War. In each case, said generation sacrificed in order to leave a better and more prosperous country of opportunity for their children. But, what are we doing now? What will be the legacy of my generation? Our debt and deficit crisis is largely caused by giving ourselves health care and retirement benefits without paying for them. But, we … Read More

The president says that we should just extend the debt limit, or cede the authority to him to expand it as he wishes. I’m sure he probably doesn’t think we even need such a discipline at all. He says he will not negotiate on this issue. He says that Congress has already approved all the spending that led to these deficits. Like on most things, the president is completely wrong. If credit cards had no limit on them, a whole lot of people would spend without end. The debt limit is like that. It is a discipline that reminds us – “Oh yeah…we’ve just borrowed $16.4 TRILLION. That’s kind of a lot. Maybe we shouldn’t spend so much.” We’ve borrowed 35% ($5.805 trillion) of that since Obama took office. Maybe we ought to think about it before we try to borrow $7 trillion more, which is an approximation of how much more this president wants to borrow in his second term. And, as I understand him, the president won’t negotiate on this. In fact, he has yet to negotiate on anything. No change here. And, as far as Congress already approving the spending….that’s not correct either, Mr. President. Sixty percent of all federal spending … Read More

Just the Facts, Ma’am – Fiscal Cliff Edition: This was the famous, at least to those of us who were alive then, admonition offered by the fictional LA detective, Sergeant Joe Friday, to witnesses who would engage in too much speculation about a crime. Well, I generally give you a lot of my opinion. Every once in a while, though, I give you just the unvarnished facts so that you can draw your own conclusions. You have probably heard the term “Fiscal Cliff” enough times to make you sick. But, do you really know everything it entails? Below, you will find a comprehensive list of every law that will expire at the end of this year, as well as the result of our returning to whatever the law was before. The accumulation of all of these things has been dubbed collectively by the media as the “Fiscal Cliff”: • Unemployment compensation will revert from a 73 week maximum to a 26 week maximum. This takes it back to the duration that existed in 2008 and prior. This will reduce spending by approximately $30 billion over 10 years. • For the past 2 years, there has been a “payroll tax holiday”. For this year, every … Read More

The President’s “”Offer””: That is not a typo. I intended to have two sets of quotation marks around the word “offer”. That’s because it is unspeakably absurd to call what the president proposed on the fiscal cliff an offer. It was more like a liberal wish list. There was literally nothing in this proposal for Republicans to like and a liberal (pun intended) sprinkling of elements that most Republicans absolutely hate. For example, the proposal (I will no longer flatter this monstrosity with the label “offer”) raises taxes on families making over $250,000 ($200k for individuals) by more than would result from going over the “fiscal cliff”. On top of that, Obama threw in some stimulus spending, an extension of the 99 weeks of unemployment benefits, and an extension of the payroll tax “holiday” – which means more and more Social Security benefits are borrowed. This package actually both increases taxes and increases the deficit because there is so much additional spending. As a false gesture towards something reasonable, the president says they will make some … Read More