No COLA for SS Beneficiaries = Lower Benefits?
There will be no COLA this year because officially there is no inflation. But in reality, many prices — above all healthcare costs — continue to rise.
What is your experience? Are your costs of living going up? Should COLA be redefined so that it is more consistent with reality?
Mr. Shepard Smith: For many, many years, some would argue when it’s politically expedient to do so, critics on both sides of the aisle have claimed that Social Security was going to go completely bankrupt. I mean, bankrupt, it’s over, unless the entire system is drastically overhauled. We’ve all heard it.
Well, today, there’s a preview of things to come again. For the first time since the 1970s, the Federal government will not be giving seniors a cost of living increase (COLA). The amount on the checks will instead stay the same, but as healthcare costs rise, what this basically amounts to is a smaller Social Security check for seniors. I mean, if you look at it, that’s what it is.
Complicating matters, millions of babyboomers are now preparing to become senior citizens and it’s the babyboomers that we’ve known all about for decades and all of a sudden, it’s a crisis. With us now is financial consultant and money manager, Rodney Anderson. Rodney, it’s great to see you. Thank you.
Mr. Rodney Anderson: Thanks, Shep.
Mr. Shepard Smith: It’s not as if we didn’t know that babyboomers were about to get older, they are. We’ve known it for decades that it was coming. I mean, please don’t tell me this is the end of Social Security because we all know better. Every time they say it, they just find more money for it and make it work. Otherwise, they’d get voted out of office, right?
Mr. Rodney Anderson: Well, the decision to freeze Social Security is like putting a band aid on a compound fracture. We’re seeing where seniors are having their benefits cut and their cost of healthcare go up. We’re seeing them where they’re having their investments, which are the 401ks or IRAs just plummet down but not only that, we’re seeing their investments such as their CDs and their savings rates go down and this is where they lived off of. But many of these seniors through healthcare are having to finance their debt, debt that they’ve never had to finance before and that is being taken on by credit cards and then we have the banks raising everybody’s credit card rates and it’s killing the seniors and that’s why more and more are going into bankruptcy right now.
Mr. Shepard Smith: Well, it’s killing everybody to bankruptcy. And quite frankly it’s killing the seniors, but I don’t know… I don’t know how that leads us to say that this is the beginning of the end of Social Security because I’m not going to listen to it for a long time anyway because I’ve been hearing it for so many decades and it never happens. I mean, why would it happen this time?
Mr. Rodney Anderson: Well, in 2016, we don’t have enough money going into Social Security to fund it. But in the year 2037…
Mr. Shepard Smith: Yeah, well, in the previous administration, it was a different year, then in the administration before that, it was different year. It doesn’t matter if you have an R or a D after your name. They say this every few years, here it comes, and then we fund it. I mean, what’s different? Help me.
Mr. Rodney Anderson: Well, what’s different this time is truly because this healthcare crisis is going out of control that they have two major crises in front of them; one of them is healthcare. We’re hearing about it every day every minute of the day. The next one is Social Security. They keep wanting to print money, but pretty soon, Shep, the money is not going to be printed anymore.
Mr. Shepard Smith: And so because we’re not printing anymore money, Social Security is going to go away?
Mr. Rodney Anderson: No, Social Security will not go away, but what seniors will see is they’ll see no cost of living adjustment and what they’ll see is those paychecks, those monthly checks go down.
Mr. Shepard Smith: So…
Mr. Rodney Anderson: It may not go away, but it’s just going to be like Medicare where the benefits are cut every year.
Mr. Shepard Smith: So are you saying that an overhaul of the healthcare system is urgent and must happen to keep Social Security from falling apart? We’ve got the cost down?
Mr. Rodney Anderson: I think it’s a must happen… yeah, it’s a must happen. We have to get the costs down because seniors are being hurt from every side right now.
Mr. Shepard Smith: Well, it sounds like the President agrees with you on this, right? He’s the one who said we got to get the costs down. We’ve got to overhaul. We’ve got to overhaul the whole healthcare system and we’ve got to have a government option in there, that is what he used to say. Is that your sense that that would help save Social Security?
Mr. Rodney Anderson: Well, yeah, I think it will help Social Security in a lot of ways, Shep. But here’s what’s going to happen. I talked to my mom on my way here and mom knows best and mom says, “People can’t even or buying food right now, instead of buying medicine. It is a problem and right in my own family, because the fact of the matter is none of us or we’re all living older and that’s going to bankrupt Social Security.”
Mr. Shepard Smith: Well, I’m not well. We’ve known this was coming. This is not brand new information. We’ve known babyboomers were going to get older. We’ve known it forever. Now, all of a sudden, it’s a crisis. Well, yeah, it is. Babyboomers, they’re getting older. We got to do something about it. The President says he has a plan and the Republican say it’s a bad plan and we’ll see what happens. Rodney Anderson, let’s hope something happens. It’s good to see you. Thank you.
Social Security Scare Tactics?
One commentator in this video describes Social Security as a “multi-generational Ponzi scheme that has no end”.
Even if the SS trust fund runs out of money, the government can always print more money to send out Social Security checks.
The only question is, will the money still be worth something? The more money they put out there, the faster its value goes down. And once other countries (like China) recognize that the dollar is losing its value, they will stop buying the US government’s debt.
But even then Social Security doesn’t have to fail. A Ponzi scheme can last for a very long time if it’s supported by a government that can print new money as it sees fit.
The result might well be hyperinflation. In such a scenario, Social Security checks won’t increase every year, but every month. They just won’t buy a whole lot.
If we are to be angry, who should be the target of our wrath?
Mr. Neil Cavuto: Senior citizens are already upset about the direction of healthcare reform and just when you thought they couldn’t get angry, now millions of elderly face shrinking Social Security checks. Trustees who oversee the programs say that the payments will not rise for the first time in a generation. So do seniors have a right to be riled up? Tom, what do you think?
Tom: Absolutely, Neil. They definitely should be angry. There’s a couple of things to look at here. The cost of living adjustment (COLA) is pegged to inflation, which is negative this year. However, the basket that is used to calculate that adjustment is actually calculating things such as the price of DVDs, movie tickets, BluRay machines. They’re now looking at spending patterns that seniors are actually using and that is… there should be a separate basket that is used to calculate that adjustment. That just not there yet.
Mr. Neil Cavuto: But Jonathan, I mean, many of these little rules are going in, right? This is how we’re going to calculate. Now, the two-year thing might be a new deal, but by and large, we always knew we’re going to keep this attached pretty much to the CPI and with very little variation, it’s been working just fine, so what changes things now?
Jonathan: Well, I don’t know, if it’s been working so fine. I mean, Social Security accounts are 20 percent of federal budget. All the entitlements, Medicare, Medicaid, Social Security account for 75 percent of all federal spending. I think what’s….
Mr. Neil Cavuto: No, really, my point is that we knew this math was there and now when it turns up that it’s not generous enough, we want to change it.
Jonathan: Right, well, what it does is it pits one generation against the next, right? So those who paid into the system, of course, feel that they’re entitled to get what they deserve out of it. So we have this multi-generational Ponzi schemes essentially that have no end and if you’re frustrated about your Social Security being cut, just wait until the government gets ahold of your healthcare.
Mr. Neil Cavuto: Liz.
Liz: Yeah, I agree. Jonathan is absolutely right. You know, I feel like that people who really should be riled up are the babyboomers. Boomers should be having their own town halls. They’re not going to see this Social Security benefits like the seniors are getting and you know, Social Security, when it was built in the 30s, the life expectancy was 65, and that meant you’re like, you know, you wouldn’t get any pension benefit from Social Security. Now, you know, babyboomers are expected to work until they drop dead and they’ll take a load off of Social Security and won’t get their benefits and you know, what the seniors are expecting, I get it.
But Medicare too was built in the 60s when we didn’t have MRIs, PET scans, CAT scans, all sorts of cancer treatments. Now, the taxpayer is paying for all sorts of those kinds of treatments and also all sorts of advances in stem cell research and neurology and the like. I think the reality check has bounced a long time ago with this.
Mr. Neil Cavuto: Mike, what do you think?
Mike: You know, I bet Jonathan is one of those people that wanted to give Social Security to Wall Street geniuses, so they can lose 50 percent of the money within two years as soon as they got it. I can just hear it. Government doesn’t have a place, but here’s the point, all of this is about, it’s about the fact that the drug…
Mr. Neil Cavuto: By the way… by the way, Mike, you might be surprised to learn that Jonathan was against all the bailouts in the last administration’s rescue.
Mike: Well…
Mr. Neil Cavuto: He wouldn’t rescue his own grandmother. So I’m telling you. I’m telling you he’s been very consistent on this.
Mike: I’m not saying this…
Mr. Neil Cavuto: So that’s an unfair shot, but continue.
Mike: All right. All right. Well, the AAR people better be pleased that government is still in control of Social Security. Here’s the problem. Here’s what happened. The drug industry can charge people whatever they want and because of that, you have something called the Medicare Prescription Drug program. That’s the only thing that has been affected here because the drug industry is able to charge…
Liz: Mike, Mike. Let me ask you. Before…
Mike: Is able to charge the elderly $50 for two…
Liz: Yeah.
Mike: Wait, let me finish what I’m saying. They were able to charge the elderly $50 for a $2 pill and what that does is raise his premiums.
Liz: Right.
Mr. Neil Cavuto: It’s okay. Jonathan, let me ask you.
Jonathan: Right. Right, well, I mean, you want to blend the drug industry and this industry in this business.
Mike: Give it to Wall Street. Orchestrate it. Give it to Wall Street.
Jonathan: And give it to Wall Street. But let me ask you, Mike.
Mike: Yeah.
Jonathan: Are there any of these big entitlement programs that you love so much that aren’t broke? I mean, this isn’t me. This is CBL. This is an estimate all of those that or eat Medicare. Are there any that are not broke?
Mike: Yeah, I would say. What do you think of the VA? What do you think of the VA? What do you think… what do you think of VA? Do you think VA works?
Jonathan: Social Security, Medicare, Mediaid.
Liz: Mike, you know, Mike…
Mike: You know, maybe Social Security is broke is because your GOP took $1.6 trillion out of Social Security while you were saying give the program to Wall Street. Let the elderly invest the money with Wall Street.
Mr. Neil Cavuto: Right, okay.
Jonathan: I’m saying… all I’m saying is…
Liz: You know, Mike, you know, again, the history lesson, the Democrats let the Congress to get their needs on Social Security for the first time in the 60s.
Mr. Neil Cavuto: All right. All right. All right. I wish we have more time. Thank you for talking over one another. Let’s save a hell of a lot of time; otherwise, we’ll have moments of proverbial break.
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