“Don’t steal, the government hates competition.” Ron Paul
Social Security beneficiaries received their COLA notice recently, which explained that 2022 benefits will be increased by 5.9% to keep up with the cost-of-living; this was the highest COLA increase since the 2008 Financial Crisis. This may seem like a considerable increase in benefits until you read on and compare to the prior year, current inflation and the historical record of COLA increases and inflation.
Back in 09/19/19 I wrote a post entitled “What is the Worst Ponzi Scheme Ever?”; in it I outlined why Social Security was by far the worst of such schemes, beating all others with a total of $42.1T in unfunded liabilities. According to the Oxford dictionary, “A Ponzi scheme (also a Ponzi game) is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources.” As the whole purpose of the Social Security Act was to require Americans to invest in the future when they retire, or are otherwise limited or disabled from earning an income, such a scheme qualifies as particularly onerous.
Considering now the current COLA adjustment, we find a further sleight of hand. Inflation as of the notice was running about 6.2% and rising. It is estimated that this will increase to 6.7% by years end. Further consider that the two most affected and essential areas for consumers are food and energy, accounting for 5.3% and 30% respectively for this inflation. Please remember that when you go to the grocer or gas station and experience even higher inflation, understand that these are government figures that are intended to fit a narrative and not reality.
Now it’s not just the .3% shortfall and counting at issue, we need to consider what they did to the Medicare deductions; for 2021 that was $148.50/mo., but for 2022 that will increase to $170.10/mo., i.e. an increase of 14.5%. Please note that this is not IRMMA, just the standard; depending on what your total earnings are you will be assessed additional deductions that will also be at a higher rate than last year, but let’s ignore that for now to keep this simple.
In effect, considering what inflation and increased deductions do to the COLA, but ignoring IRMMA as that will vary, the net effect is an increase in benefits of 3% to 3.2%, or less than half of what you need to keep even. If you are fortunate to make enough income to get you on the IRMMA charts, you will net even less. To add to these concerns, keep in mind that this does not consider what inflation will likely be in 2022, and it’s not what the Fed tells us. What’s even more an insult on injury is to hear our Chair of the Banking Subcommittee on Economic Policy and the Finance Subcommittee on Fiscal Responsibility and Economic Growth (now that’s a government title for you), Senator Elizabeth Warren, tell us that inflation is simply price gouging by corporate America. Obviously an understanding of basic economics is not what got her the chair on that group.
Inflation’s all-time high was 13.5% back in 1980; the COLA then was 14.3%, and there was no IRMMA or income taxes on benefits. Since 1980, not only have FICA deductions increased and IRMMA added, but 85% of benefits are subject to income tax. Imagine the outrage if a private insurance company operated such a scheme as what our government does; the only difference is Social Security is mandatory.