Tom McLaughlin

A former history teacher, Tom is a columnist who lives in Lovell, Maine. His column is published in Maine and New Hampshire newspapers and on numerous web sites. Email:

Tuesday, December 27, 2016

Not A Party Pooper

Happy Birthday Lila

“I like birthdays,” said my granddaughter last year. “You get presents. You turn another number.” She had just turned five. “Next year, I’ll be six,” she added matter-of-factly and that day comes Saturday. She’s a New-Year’s-Eve baby who arrived just in time to give her parents a tax deduction for 2010. I’ll be in attendance, bringing her a present — the Calico Critters Hazelnut Chipmunk Family Playset. It’s a box of four tiny anthropomorphic chipmunk figurines for $25. If I were shopping blindly for a present to give her and saw this on a shelf somewhere, I would never have purchased it. It looks overpriced, but that’s what she wants according to her mother. It’s not the $25 because that’s not a big number for us; it’s the objective value — but then I’m not objective when it comes to my grandchildren. She loves those little critters.
It so happens that I turn another number soon myself: 66. I’ll be entering my late sixties, one could say, and I’m going to start collecting Social Security. I’ll only be getting 30% of what I would have otherwise been entitled to because of a law signed by President Reagan thirty years ago to prevent double dipping by teachers in states like Maine. As a career public school teacher in this state, neither I nor my school district paid into Social Security for my teacher salary over 34 years. We both paid instead into the Maine State Retirement System. Because I worked other jobs all during that time, I paid into Social Security for those salaries, and I still do in the form of self-employment tax because I still work part time. If I’m only going to get 30% of my SS benefit, I should only pay in 30%, right? But no, I have to kick in the entire amount. Will I get back what I paid in? Well, that depends on how long I live, and who knows how long that will be? I don’t want to know.
Will the checks continue if I make it past 80? Probably not unless serious changes are made. There are simply too many people collecting and not enough paying in. Any dummy knows that can’t go on forever but neither President Obama nor President-elect Trump have any announced plans to address that. There’s nothing but IOUs in the Social Security Trust Fund. More than 90 million Americans are out of the workforce and obviously not contributing.
Meanwhile, there’s more than $12 billion in the Maine Public Employees Retirement Fund. It’s over 80% funded and Governor LePage has made provisions to steadily increase that percentage. Compared to retired teachers in other states like California and Illinois, my pension is meager and I can’t survive on it alone. Teachers and other public employees there get defined benefits that are two, three, and in some cases ten times what mine are, but those states are close to bankruptcy because of it. According to Forbes Magazine, Illinois has a $111 billion pension shortfall in 2016. Chicago’s alone is $9.5 billion. California had an unfunded pension liability of over $500 billion in 2014. It’s worse now despite Governor Moonbeam’s rosy reports on California fiscal situation.
Democrats have been running those states for generations. They’ve made commitments to public employee unions they knew couldn’t be kept. They also knew they’d be gone when the bills came due and they didn’t care. It’s called “kicking the can down the road.” They’re still kicking, but the end of the road is approaching fast. Should the federal government bail them out? Over my dead body.
I’m at that stage of life during which many of my contemporaries are dying or becoming debilitated with various aliments. I’m not what I used to be, but I’m doing well compared to most, and so is my wife. We both hate to exercise, but we do it anyway and it’s paying off. She also nags me about eating vegetables. Life is good, for now. I’ve been on Medicare since my last birthday and she goes on it in 2017when she turns 65. But Medicare is another kind of Ponzi scheme like Social Security. More and more are collecting it but the number paying in isn’t nearly keeping pace. Are our “leaders” in Washington addressing that? You know the answer.
President Obama has been patting himself on the back as his administration is about to end. When it does, he will have more than doubled our national debt from $10 trillion to $20 trillion. All I can do about that issue and the others outlined above above is write about them. I’ll keep on pointing it all out to people, most of whom don’t want to hear it. When I attend my granddaughter’s birthday next Saturday where all my other grandchildren will be, I’ll think about it but I won’t say anything. Why ruin a good party?

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Blogger Charles Martel said...

If Donald Trump fires up the sluggish economy left to him by Obama, millions of jobs will be added. This will help provide money to those receiving social security benefits. However, one long term solution is to GRADUALLY increase the retirement age.

I haven't felt optimistic about the economic future until this last election. Time will tell, obviously, but I think America will become solvent, safe, united, strong, ethical and great again.

12/28/16, 2:50 PM  
Blogger Tom McLaughlin said...

Yes, economic stimulus and more people working will help, but there's still a cap on how much income is subject to FICA. Raising that would help too. Raising the retirement age gradually would do more though to keep SS viable, as you suggest.

As for Medicare? That's another story.

12/28/16, 3:41 PM  
Anonymous Andy in Utah said...

My Dad warned me in 1979 not to count on Social Security. So I socked away as much as I could in investments, 401k's, etc. And I chose a profession that was underpaid but provided a pension, such as it is. I retired as an educator this past September at age 62. I'll continue working my 2 side jobs, as I've always done (reference 'underpaid,' above) until I'm 66, when, like you, I hope to collect. Since I have always worked under the assumption that it won't be there, whatever I get I'll consider gravy. I've given my kids the same advice my Dad gave me - we'll see if they listen....

12/28/16, 10:38 PM  
OpenID bc64a9f8-765e-11e3-8683-000bcdcb2996 said...

But..but...If I just save money in a savings account, or maybe a CD...
then inflation, and "management fees" will only outpace any "interest" by,...Oh, day one.
Maybe if I invest in property and such....
THEN, it will only have to be reassessed "for tax/transfer purposes" when I go, as WELL as the need to assess my estate to pay a "licensed assessor" to assess it "for tax/transfer purposes".
And so on, and so on.....
Of COURSE I utilize (legitimate)alternative venues.
of COURSE I need to pay "licensed professionals" to "expedite" that which I'm not allowed, by law, to do myself, despite the need for me to instruct the "professionals"

12/29/16, 7:18 AM  
Blogger Tom McLaughlin said...

Andy's experience mirrors mine very closely. Alway had two other jobs when teaching and kept them when I retired from the classroom as you did. I took the retirement option that gave me the lowest monthly pension, but which will allow my wife to keep getting it after I'm gone until she dies -- if state government continues to keep retirement account funded, that is. It's a pretty safe bet that she'll outlive me, given my medical issues.

12/29/16, 2:36 PM  
Blogger Steve said...

I think President-elect Trump has addressed entitlements, and he intends to leave them alone. I do genuinely hope they all come together to begin to address the national debt, but maintaining the entitlement status quo, increasing defense spending, spending a trillion on infrastructure and cutting taxes doesn’t seem like the needed recipe for a balanced budget, never mind paying down the debt.

12/29/16, 5:48 PM  
Blogger Tom McLaughlin said...

No, it wouldn't. If he's successful with the economy, however, tax receipts may increase even with his reductions. JFK did it. Reagan did it too. We'll see what happens after about two years.

12/30/16, 9:57 AM  
Blogger Steve said...

It would be great if a booming economy can be enough to get us on a more fiscally sound path, but if we had a reliable formula for a strong economy then we’d always have a strong economy. Even if we get to six percent growth like Trump hopes, we most likely won’t be able to sustain that. Every economy grows and contracts. We need to think universally and long term. It took us decades to get in this mess, we need to think in terms of decades to get out of it. This is going to be a gross over simplification, but we need to take a hard look at every dollar that flows into the government and every dollar that flows out. I think there’s sense in the caution of not doing something too dramatic that might shock global markets, but if we approach the budget/debt universally and incrementally, we could be better off. We should expect every dollar going into the government to be just a little bit more, and every dollar coming out of the government to be just a little bit less – very modest, across-the-board changes that impact everyone and reaches every corner – and let everyone adjust to those small changes. So if the 2017 budget is expecting to generate an $800 billion shortfall (my made-up amount as an example), we structure the budget so we settle for a $600 billion shortfall. Then in 2018, we make another series of small, modest, across-the-board changes and strive for a $400 billion shortfall. Then in 2019 we make more incremental, modest changes and structure a $200 billion shortfall. Then 2020, actually balance the budget. 2021, we have a $50 billion surplus. Again, I freely admit this is a gross over simplification from a layman, but the national budget is often compared to household budgets. But when a household is deeply in the red, the responsible people take a hard look at every dollar going into and out of the house. Cuts are made everywhere, and one or both parents pick up extra work until they get their finances under control. A slow, structured pace could also show the world that we’re serious about debt and making committed, responsible changes to fix the problem. We all have skin in this game. Every one of us will lose if we don’t balance the budget and begin to pay down the debt, so EVERYONE has to contribute something. We need to market this correctly also. It’s practically akin to buying war bonds to help the military protect our shores. Everyone has to pitch in to pay down the debt. We all benefited to some degree going into debt, we all have to sacrifice to some degree to get out of debt. It’s American. It’s patriotic. It’s Americans coming together against a common enemy for the long-term solvency of this nation. Best to all in the new year.

1/2/17, 11:55 AM  
Blogger Tom McLaughlin said...

Your formula makes sense. The deficit, and ultimately the debt, must be addressed. Putting it off makes it more painful, and entitlements must be curtailed. It's political poison, but it must be tackled. Perhaps a 5% reduction per year would be politically survivable, but it's not on Trump's agenda. It should be, and maybe some of his appointments will be able to convince him.

1/2/17, 1:16 PM  
Anonymous Brian said...

Tom said: "he (Obama) will have more than doubled our national debt from $10 trillion to $20 trillion.

HE did? May I point out that it is Congress that signs off on spending and taxation.

And, even if it were up to Obama, reining in government spending during the recession would have been a bad idea anyway, economists told us.

All I can do is keep on pointing this out to people, most of whom don’t want to hear it.

As for Charles' post, I nearly spit out my coffee when I read that he thinks Trump will help make the USA ethical again!!! Talk about swigging down the snake oil!! Step right up ladies and gentlemen, and buy a load of will make everything GREAT!!!!

There is a sucker born every minute.

1/3/17, 1:28 PM  
Blogger Tom McLaughlin said...

It's up to the president to submit a budget, but yes, Congress must approve it and thus deserves much of the blame.

1/3/17, 1:31 PM  

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