Seven months…

About a week ago, I surpassed the point where the total amount I’ve socked away towards my defined contribution retirement plan (think 401k) this year finally outstripped the amount of federal taxes I’ve paid over the same period of time. For seven full months of every year, there’s more deducted towards the maintenance and upkeep of the federal government than there is for my own maintenance and upkeep in old age. By the end of the year, I’ll have stashed away about $600 more in my 401k equivalent than will be deducted in federal income tax.

If you extend this mental exercise to include Social Security and Medicare, the numbers get even more egregious since the reasonable assumption is to expect the big-ticket entitlement programs to either see payouts reduced, be means tested, or go extinct between now and the time I’ll be eligible to tap them as a source of income / benefits. It takes an awfully big leap of faith for someone in my age bracket to think of either Social Security or Medicare as anything other than an additional tax drag for which we’ll never get back out what we put in.

Uncle Sugar knows his flagship entitlement program is running out of cash. Social Security was “saved” in the 80s using a combination of accounting gimmicks and changing the “terms of service.” It’ll have to be “saved” again sometime between now and 2035, when the most recent projections say it will no longer be able to pay out its full promised benefit. Coincidently that’s right about the time I’ll otherwise be eligible to walk out the door after a 33-year career, so I have more than a passing interest in what fuckery our alleged leaders will get up to in order to avoid grabbing the political third rail with both hands.

It seems to me that we have a system intentionally designed to encourage reliance on big government generosity rather than personal responsibility and savings. God knows I’d be in a far better position now if every nickel taxed away under the FICA withholding had been invested conservatively in a broad market index fund rather than converted into a Ponzi-esque promissory note. Encouraging people to invest their own money responsibly, though, doesn’t keep them beholden to Uncle for doling out a meager old age pension. It’s easier to tax their income at the state and federal level, tack on a bunch of various “withholdings,” and make it incredibly challenging to carve out enough income over and above day-to-day bills to generate a credible, independent nest egg. It’s a sure way to guarantee people will scream bloody murder if they’re told their entitlements are in danger.

However it’s “fixed” in the future, I operate from the assumption that none of the changes will be to my benefit no matter how much cash I’ve poured into the machine over my working life. Like most games, this one is rigged in favor of the house and at this point, I just take it as a given that the money taxed away is lost and gone forever. The only advice I’ve found that feels applicable is to shelter what you can, stash as much as you can of what you can’t shelter, and accept that in all likelihood you’re going to need to self-finance your last act. It’s annoying as all hell, but once I accepted it as reality, it got a whole lot easier to plan for that particular future instead of just being pissed off… but rest assured it’s going to chap my ass every single time I see a pay stub and the reminder what’s going where and how deeply the political class have their hands in our collective pocket.

New Deal Revisited…

A member of Congress with a famous family name is proposing a simple solution to the bringing down the unemployment rate: Put approximately 15 million people on the federal payroll with a $40,000 a year salary. The proposal would revive concepts that saw a Civilian Conservation Corps plant trees, build dams, and forge roads and a Works Progress Administration that built airports and paid authors and photographers to ply their trade on behalf of the US Government. As fanatical as I am about the proper role of government, even I have to admit that the CCC and WPA probably represent the best instincts of government. Maybe I have a soft spot for the concept because I grew up swimming and camping at a place built by the CCC in the late 30s. Say what you will about it having been a “make work” project, but their efforts have held up pretty well under 80 years of continual use.

Maybe more importantly, the CCC and WPA made constructive work part of the requirement to receive federal assistance. In the 30s, your options were pretty much work or starve. I wonder, though, if those concepts would still hold up. How many people receiving federal assistance would be willing to go to work camps in the wilderness, to sweep their cities streets, or to lift a hand to earn what we now think of as entitlements? As a result of their experiences during the Depression, my grandfather saved soap slivers that he eventually pressed together into a new bar and my grandmother used the same teabag for cup after cup of tea despite the need for them to do these things being long past. When’s the last time any of us even thought about doing something like that?

I never in my life thought I could be convinced to line up with Representative Jesse Jackson Jr on an issue, but I think this one at least has academic merit. I don’t necessarily agree with all his reasoning or the total numbers he’s talking about, but I have to admit I really like the concept. Let’s face it, we’re going to pay unemployment, welfare, and a raft of other “entitlements” anyway, so why not make productivity a requirement for receiving unemployment and other funds from the government?

This is probably the point where someone is going to come to my door to collect my Republican Party membership card.