GorT is an eight-foot-tall robot from the 51ˢᵗ Century who routinely time-travels to steal expensive technology from the future and return it to the past for retroinvention. The profits from this pay all the Gormogons’ bills, including subsidizing this website. Some of the products he has introduced from the future include oven mitts, the Guinness widget, Oxy-Clean, and Dr. Pepper. Due to his immense cybernetic brain, GorT is able to produce a post in 0.023 seconds and research it in even less time. Only ’Puter spends less time on research. GorT speaks entirely in zeros and ones, but occasionally throws in a ڭ to annoy the Volgi. He is a massive proponent of science, technology, and energy development, and enjoys nothing more than taking the Czar’s more interesting scientific theories, going into the past, publishing them as his own, and then returning to take credit for them. He is the only Gormogon who is capable of doing math. Possessed of incredible strength, he understands the awesome responsibility that follows and only uses it to hurt people.
So amidst the Coronavirus, companies are struggling – particularly travel and hospitality industry ones, including bars, restaurants, etc. Various discussions around government bailouts have been started and a stimulus package is making its way through Congress. Former presidential candidate, Elizabeth Warren waded into the fray with a set of requirements that she would levy upon companies accepting federal government bailouts:
- Companies must maintain payrolls and use federal funds to keep people working.
- Businesses must provide $15 an hour minimum wage quickly but no later than a year from the end
- Companies would be permanently banned from engaging in stock buybacks.
- Companies would be barred from paying out dividends or executive bonuses while they receive federal funds and the ban would be in place for three years.
- Businesses would have to provide at least one seat to workers on their board of directors, though it could be more depending on size of the rescue package.
- Collective bargaining agreements must remain in place.
- Corporate boards must get shareholder approval for all political spending.
- CEOs must certify their companies are complying with the rules and face criminal penalties for violating them.
Let’s get this out of the way, none of these were ever floated as requirements when previous administrations did bailouts. Regardless, let’s take apart the various, stupid ideas above:
Maybe out of all of these, I could agree with number one the most. Still, the idea of the government dictating how a private sector business should operate is insane to me. Changing employment levels is a routine course of action for companies. Under this provision, a company that was already planning on ramping down efforts that accepts the bailout, would have to keep those employees on…for some unspecified amount of time. What are these employees supposed to work on? Sit around and play games, watch the news, or pick their noses?
Number two has been a rallying cry among Democrats recently. Requiring a $15 minimum wage only increases costs on the books of the company. In order to address this, companies will raise prices to customers and therefore drive up costs to consumers. For those not at the very bottom of the wage scale will see increased prices but no increase in wages to offset the costs and therefore most savvy consumers will start to reduce spending and be more selective in purchasing. Basically, a tightening of consumer spending will take place. This isn’t good for the economy and reduces the growth at a time when we need to quickly recover from this set back. This advocacy by the Democrats only reinforces my belief that they really do not understand economics*
I just don’t get number three. There are a few reasons why a company would engage in stock buybacks – for example, for larger companies, it can be a preferred way to return cash to its shareholders rather than issuing a dividend. But in the end, the decision is really about trying to tune the company’s key financial metrics. This affects how it gets evaluated by investors. Having the federal government remove this lever it absurd and, again, goes back to the understanding the economy point I made in the previous paragraph.
“Companies would be barred from paying out dividends or executive bonuses while they receive federal funds and the ban would be in place for three years” Sigh. They really don’t get how the economy works, do they? There are a number of aspects to this one. While bonuses sound like a luxury, people should remember that at a lot of companies for financially conservation reasons, employees reaching high levels of salary compensation might be frozen at a certain salary level and annual bonuses make up any additional take-home pay growth. Dividends are paid to investors. That could be your 401k fund, a mutual fund you own, or maybe part of your non-retirement investing strategy. So what Elizabeth Warren is saying here is that she wants to take away money from you and your retirement funds.
Again, these requirements largely have nothing to do with good economic practices or recovery steps from the situation in which we find ourselves. Putting one or more employees on the Board of Directors for a company is this idea that liberals have where they think there’s this big “us” vs “them” within companies. I really question whether they understand what a Board of Directors does and what is expected and required of a board member. I doubt a random employee could effectively do the job mostly do to a lack of experience.
Of course, the Democrats echo what they know and seek to protect unions through ensuring collective bargaining agreements stay in place. Hey, while we’re at it, Sen Warren, let’s end and ban all public sector unions and really dig into union leaders who have outrageous salaries. Ready to go there? No? I didn’t think so.
Sen Warren also wants to mandate that companies must have shareholder approval for any political spending. So she wants companies to have to spend more time and effort in coordinating a shareholder vote for any political spending? Right, companies should have to work more inefficiently is exactly what we need at this time. I don’t think I can face-palm any hard than I am already. Is there any question why she isn’t in the race for president anymore?
Look, I’m no big fan of government bailouts. I get that we need to do something when the country faces crises like this where for public safety, national security, or other major reasons companies are negatively impacted. Individuals should strive to have some personal safety net but even then for some it’s really hard to build that up in the light of medical issues, tragedies, and other unexpected circumstances. Having said all that, any restrictions that are placed on companies should be done in the light of making sure that we reduce the recovery time as best as possible and encourage quick growth. Elizabeth Warren should stay out of this – she clearly doesn’t understand it.
* I’m looking at you, Paul Krugman
Божію Поспѣшествующею Милостію Мы, Дима Грозный Императоръ и Самодержецъ Всероссiйскiй, цѣсарь Московскiй. The Czar was born in the steppes of Russia in 1267, and was cheated out of total control of all Russia upon the death of Boris Mikhailovich, who replaced Alexander Yaroslav Nevsky in 1263. However, in 1283, our Czar was passed over due to a clerical error and the rule of all Russia went to his second cousin Daniil (Даниил Александрович), whom Czar still resents. As a half-hearted apology, the Czar was awarded control over Muscovy, inconveniently located 5,000 miles away just outside Chicago. He now spends his time seething about this and writing about other stuff that bothers him.
You’ve heard the expression a bunch of times by now: “Get woke, go broke.”
This simple four-word social media response often follows news stories about popular media events suffering huge financial losses after bending to Leftist diversity stereotypes. You heard it with the financial collapse of comic books, ratings dumps for popular television shows, and poor critical response of tentpole pictures. You’ll be hearing it a lot (a lot) with the upcoming James Bond movie, which is already rumored to be beyond subpar in quality.
Basically, what happens is this: 21st Century Diversity wardens swoop into an enjoyable or harmless franchise and immediately demand More Inclusion!!! at every step, even if it doesn’t make sense. Suddenly, the swashbuckling hero is replaced with a transsexual Muslim Filipina with a harelip. Or the smart-as-a-whip princess with the gorgeous figure becomes a corpulent Latina with a sassy attitude and an endless supply of meme phrases and hand gestures. All villains had to be good-looking white males.
Much of this started almost 20 years back, when the producers of the rebooted Battlestar Galactica series elected to replace the male comedic relief sidekick (Dirk Benedict, playing every character he’s ever played the same dopey way) with a tough-as-nails, scrappy woman with a drinking issue (Katee Sackhoff). There was good news and bad news: the good news was Sackhoff played the character way better than Benedict ever did, with a fascinating story of abuse and neglect turning the character into a driven survivor who never gives up. The bad news was she did such a great job that there was now a race to see what other changes producers could bring into tired storylines.
The Czar really liked Sackhoff’s brutal performance, and would have been okay if other franchises made changes of a similar nature.
Alas, this was not to be: from now on, producers and directors wanted to see just how much More Inclusion!!! they could jam into everything they could, whether or not it made sense or, in some cases, it was even plausible. See, it’s not just enough to consider replacing one of the Ghostbusters with a female; we had to replace all of them with three identical white females and one stereotypical black female.
But that’s nowhere near enough to ruin a franchise or even bomb a movie, because there’s no inherent reason that premise couldn’t work, or to put it the other way, there’s no reason that premise was certain to fail. The Czar thinks he knows why all these More Inclusion!!! books, films, shows, and series are all tanking.
The reason: because the viewers know it’s all horseshit.
Hollywood, whether it’s a movie, a show, or whatever, is the last freaking establishment that should be lecturing us about inclusion.
When a director or producer tries to sell us on the idea that women are every bit as good as men in a commanding or leadership role, well, it’s tough to accept this in the Me Too era. Yeah, we can buy a talking raccoon and a walking tree shooting apart alien spacecraft, but hearing about a fictional woman using her strength and intelligence to overpower the sexism of men is a little far-fetched when the movie was produced by Weinstein.
A couple of films starring a mostly-black cast tank at the box office, and it must be our fault because we’re all so racist, says Hollywood, whose record at hiring, using, starring, trusting, or rewarding black talent in the motion picture industry is worse than an Alabama Woolworth in 1950. Surely that’s our fault.
Perhaps what the last Terminator movie needed was a racially diverse cast, decided a room full of aging producers who are all white men that attend Temple Israel on Hollywood Boulevard.
And don’t get the Czar started about racist complaints about putting black actors in lead roles in the Star Wars or Marvel franchises when it’s soon revealed the so-called complaints started within (and were largely limited to) the films’ distribution offices as a way to fire up controversy and ticket sales.
The Czar could go on and on, and probably will, later when he’s been drinking and you’re already asleep. The point is that the people behind the Woke messaging—not just Hollywood, but the whole Woke movements—are such blatant hypocrites that it’s like hearing an overt atheist lecture you on why you need to attend religious services more often. It’s so out of character that it immediately rings hollow.
And it’s easy to point to a book, movie, or show after the release and say “Well, its preening lectures turned me off so I gave up on it.” That’s understandable enough. But audiences have been so beat up by this obvious hypocrisy that they already know to give up on something before giving it a chance. That’s why the Ghostbusters movie flopped on the first day: audiences already knew what it was going to be. That’s why the Picard show is getting such dismal reviews on Rotten Tomatoes: we don’t need sexist, racist, homophobic bastards screaming at us repeatedly about how awful we are as viewers when it comes to women, minorities, and gays.
Because we’re way ahead of you, there, guys (the Czar is pretty safe on using that word). And just like we don’t need Bernie Sanders lecturing us on how economics works, we really don’t need pop culture lecturing us on how society works. We’ve been part of it a long time, ourselves. So we skip your movie, your show, your book, your musical, or your concert and instead do things we’d enjoy. And that’s why you go broke.
Social Security. To even mention the words in other than the most laudatory tones is to invite the wrath of Democrats and old people. ‘Puter, of course, cares not what Democrats or old people think of him. ‘Puter cares only for the truth.
So what’s the truth about Social Security? Which truth? There are a whole bunch of inconvenient truths as one wag once said. Here are but a few.
Truth 1: Social Security is a Ponzi scheme.
Ponzi schemes are where an “investment manager” takes “investors’” money, promising them great riches and wealth because he’s found the perfect, foolproof investment. The “manager” collects the funds, spends them, and pays out “investors” with funds taken in from future investors. The scheme can work for a time, even a long while, but eventually the scheme crashes. And when the inevitable crash comes, the only people who get their money back are the first investors who request their money back, if even them.
Social Security’s been this type of con from the start but one that was cleverly structured to work for a time. There are a few reasons it’s worked this long.
Unlike the usual Ponzi scheme, participation is mandatory. Con men have to go find marks and convince them to participate. Government simply forces all employers and all workers to participate. Much easier to find marks when you can require everyone be a mark.
Initially there were far more workers paying into Social Security’s so-called trust fund than were elibile to receive benefits. It’s tough to go bankrupt when way more money’s coming in than going out, so Social Security self-funded for a time. In fact, it threw off scads of excess money. More on that later.
Also, the eligibility age for Social Security was set such that more than half of Americans died before reaching the eligibility age. So long as there were way more people paying in than taking out, Social Security’ Ponzi scheme rolled on.
The hook New Deal Democrats used (and it was a brilliant hook) to sell Social Security to the public (aside from it being the Great Depression when everything sucked and pretty much everyone was broke) was everyone pays in now and everyone gets out way more than they ever paid later.
Truth 2: Social Security is flat broke.
The dirty little secret is Social Security’s pretty much always been bankrupt. But now Social Security’s officially broke. Costs will exceed income in 2020 and the so-called trust fund will be depleted by 2035. This is going to take some ‘splaining.
This is how Social Security works. You and your employer each pay 6.2% of your income in Old Age, Survivor, and Disability Insurance (OASDI) tax, docked straight out of your paycheck. Hence, OASDI’s often referred to as a payroll tax. When all your sweet, sweet Benjamins roll in the door, the Social Security Administration (SSA) spends every last penny in one of two ways. It’s either spent on benefits and administrative costs or, if there are any excess funds, those funds are by law invested “in special Treasury bonds that are guaranteed by the U.S. Government. A market rate of interest is paid to the trust funds on the bonds they hold, and when those bonds reach maturity or are needed to pay benefits, the Treasury redeems them.” Got that?*
“But ‘Puter! There are, like, totes US Treasury bonds in the trust fund! Social Security’s, like, completely not broke at all! MUH LOCK BOX!!1!,” Al Gore shouts from high above the Atlantic on his private jet returning from Davos to his energy-guzzling 10,000 square foot eight bedroom mansion outside Nashville.
Calm your tits, people. ‘Puter’s going to explain.
What are bonds? They’re government issued IOUs. And how does the government repay bonds when they’re redeemed or mature? Well, the government uses tax money to repay them. And where’s that tax money come from? It comes from non-OASDI taxes. Basically, it comes from your income taxes.
When the SSA has to dip into its so-called trust fund, chock full of IOUs, it’s broke. It’s admitting that there’s more going out than coming in. It’s running at a loss. As we see above, we’ve arrived at this point in 2020. But what about the Treasury bonds in the trust account? Those bonds aren’t assets, they’re liabilities. They’re IOUs. The IOUs are being paid to the holder (the federal government) by … the federal government. It’s literally a zero sum (or perhaps negative sum, depending on interest costs, etc.) transaction. There’s no there there.
Think of it this way. You’re the federal government. You deposit a $1,000 check you wrote yourself to your checking account. The check is drawn from the same account into which you’re depositing said check. This account started with $0. You know insist to the bank that you now have $1,000 in your account. You have the same $0 you started with, no matter how big the check your write is.
Or maybe this way works better for you. Under counterintuitive government accounting, the SSA treats the Treasury bonds (IOUs, remember?) as assets even though it’s the government repaying itself for misusing your tax payments the first time by taxing you a second time to repay the funds you already paid the first time. Understand? Probably not. Go back and read the unintelligible sentence until you grok what ‘Puter’s laying down then come back. ‘Puter’ll wait.
You’ve paid into Social Security for years, maybe decades. That money’s gone, used to either pay benefits or buy Treasury bonds (which in this instance are functionally worthless to the taxpayer). Any dollar you pay in OASDI today is going to pay Boomers’ benefits and it’s still not enough to meet the total payout.
Even if you don’t buy ‘Puter’s totally awesome “the bonds are worthless” argument, the SSA admits it will rapidly cash in its trust fund bonds/IOUs government wrote to itself (which as ‘Puter just showed you are worthless in the first instance) to make up the difference. In the most favorable light to government,
Social Security’s somewhere between the “people getting wise to the con” stage and the “total collapse and bankruptcy” stage of this Ponzi scheme.
Truth 3: Social Security isn’t a national pension.
Social Security was never intended to function as a pension.** It was intended to be an insurance policy. It was intended to insure that elderly people who were unable to do any work wouldn’t be homeless and starve in the streets.
In the most favorable light, Social Security’s akin to term life insurance. You pay a low amount for a large benefit if you die during the policy’s term. The insurer’s banking that the rates it’s charging you and everyone else, invested at a decent rate of return, will be sufficient to pay out the claims as made. Insurers also figure that most people they’re insuring aren’t going to die during the policy term. This is why they can charge you a relatively small rate for a large benefit. It’s also why life insurance gets prohibitively expensive as one ages. Everyone dies, and you’re likelier to die in a given period the older you get so you’re going to pay way more for coverage as the insured against risk (you croaking) has a high probability of occurring.
Social Security’s like this superficially, but Congress hasn’t permitted the SSA to charge policy holders (taxpayers) sufficient rates to cover the risk (lifetime payouts). Nor is SSA permitted to raise the eligibility age (risk rate) to ensure there are sufficient funds to meet reasonably assumed obligations. Last, unlike insurers, the SSA’s required to invest in the lowest returning investment instruments known to man. US Treasury bonds pay ultra-low interest rates, generally below the inflation rate meaning over time the SSA’s “investment” is losing money. Insurers invest in a low-risk portfolio, but one that will exceed the rate of inflation by at least a few percentage points so their portfolios generally gain.***
The biggest reason Social Security isn’t a pension plan is because Congress is free to change the terms and conditions of the program any time it wants. If Congress can crater a program you’ve paid into for years in good faith, it’s not a pension. Congress can even cancel Social Security entirely if it so chooses. Here’s the language ‘Puter lifted from his Social Security statement.****
Your estimated benefits are based on current law. Congress has made changes to the law in the past and can do so at any time. The law governing benefit amounts may change because, by 2035, the payroll taxes collected will be enough to pay only about 80 percent of scheduled benefits.*****
If you thought the money you paid over the years and decades was invested in a kind of public 401k, you’re like most Americans: morons who didn’t read the terms and conditions of the program you signed on for. Admittedly, the government’s going to ding your paycheck (and your employer) for 6.2% of your salary every paycheck whether you consent to it or not. But you’re still an idiot if you believed Social Security was a pension.
Truth 4: Social Security is a bad deal for you and for everyone else.
‘Puter ran some numbers. For ease of calculation (if Gracie were here, he would’ve used more complicated ones because she’s like some sort of Excel idiot savant), ‘Puter used the SSA’s benefit estimator.
‘Puter entered $50,000 for a hypothetical worker’s current year income, a birth date of January 1, 1970, and a retirement date of June 1, 2067 (67 years, 6 months of age). The SSA made income assumptions based on this information (lower early year earnings but $50,000 per year from now until retirement) and calculated a monthly benefit of $3,235 per month (in future dollars).
Even if we assume this worker made $50,000 for the entirety of her career (which the SSA did not assume), the total employer and employee contribution would be $279,000. ‘Puter’s best guess is that total contributions would be closer to $150,000 (probably even less) based on the SSA’s assumptions.
Assuming the higher OASDI tax paid amount, this worker would receive more benefits than amounts paid in a little over 7 years. The worker would be 74 years old and would have taken out every single penny she paid in, then transforming into a welfare recipient living off that sweet, sweet sucker taxpayer dime.
Assuming the lower OASDI tax paid amount, this worker would receive more benefits than lifetime OASDI tax paid in just shy of 4 years. The worker would be just 71 years old and already on the dole.
The current average life expectancy for an American male alive at 67 years old is about 83. A woman of the same age can expect on average to live until about 86. That’s about 9 and 12 years respectively of this worker living off the dole.
Or, using the assumptions on benefits, the male would get $349,380 in unearned benefits. The female would get $465,840 in benefits she didn’t pay for. This is 1.66x more than the woman ever paid in and 1.25x in the case of a man.
‘Puter assumes most of you would argue that while it’s a completely crap deal for the taxpayers, it’s actually a really good deal for the recipients. And you’d be right. Except it ain’t that easy.
If you invested that money yourself over the course of your career, you’d do much, much better.
If you assumed level annual investments of $6,200 (the $50,000 annual wage multiplied by the 12.4% OASDI tax over a 45-year period (the assumed career time) at a 6% rate (which is conservative), the person would’ve had roughly $1,400,000. Even without calculating any future compounding after retirement, it would take the assumed worker of either sex 36 years to burn through the money.
You’d have to live to be 103 to exhaust the fund and nearly all Americans ain’t getting there.
Even assuming average OASDI taxes of, let’s say, $4,000 annually (a $33,300 annual salary), you still end up with about $900,000. It’d take you 23 years to exhaust the funds which exceeds the life expectancies for a male or female 67-year-old.
Assuming an even lower OASDI tax payment of $3,000 annually (a $25,000 annual salary), you still end up with about $675,000. If you assumed you’d only live another 20 years after retirement at 67, you’d still have $2,800 per month which would equate to an annual salary of $33,600 which is more than you ever made in a year during your career.
And if you went crazy and invested in an S&P 500 index fund and assumed the average annualized total return for the index over the last 90 years of 9.8%, you’d have a lot more money than that. How much?
Under the $3,000 assumption, you’d have about $2,225,000. Under the $4,000 assumption, you’d have about $2,965,000. Under the $6,200 assumption, you’d have about $4,500,000. The power of compounding and investing smaller amounts over time for the long haul is for real, bitches.
So yeah. ‘Puter stands fully behind his assertion that both you and the taxpayers are getting royally screwed by Social Security.
Final Truth: It’s not the SSA’s fault you’re getting screwed.
It’s Congress’ fault completely and totally. Congress created this program.
If you’re angry after reading this, call your representatives and senators and light them up for creating a Ponzi scheme that’s bankrupting the nation and ultimately returns far less to you than if they’d simply mandated you invest the funds yourself.
* For purposes of this post, ‘Puter doesn’t address the dipshittery of investing funds in low-yield government instruments when you’re selling Social Security to Americans as a pension fund. That is, making one or two percent on 10 year bonds ain’t gonna get closing to meeting the needs of millions of people when considering inflation. The SSA really should’ve at least moved a portion of the portfolio into the market.
** ‘Puter’s using pension here even though it would be more accurate to use “retirement plan” since a pension’s technically not your money. It’s a contractual promise by an employer to pay you defined benefits on retirement. Employers are free to breach this contractual promise and many do so, especially through Chapter 11 bankruptcy restructures.
*** Don’t even get ‘Puter started on how quantitative easing and the Federal Reserve Bank holding interest rates extremely and arguably artificially low for more than a decade now have f*cked investors of all types looking for low risk investments with yields in excess of inflation.
**** If you haven’t looked at your Social Security eligibility and benefits, you really ought to go to their website, create an account, and take a gander. The site is quite well done and intuitive. Kudos to the SSA at least on this issue.
***** ‘Puter reaches full eligibility age (67 for ‘Puter) in 2036. So he’s got that going for him.