I often hear complaints from the well-to-do about how their hard-earned taxpayer money is drained from their paychecks so as to pay for the welfare system of government. Ironically, many of these middle and upper middle-class people are on a public pension system of some sort as government workers, from military to police and firefighters, judges to teachers, and mayors to laborers.
This irony stems from the fact that these public pensioners never comprehend that their pensions are in fact set up in the same way as the Federal welfare system. So let’s compare these two investment schemes…
1) Welfare is paid for by Federal and State taxes collected from all taxpayers and placed into an investment fund.
1) Public pensions are partially or wholly paid for by all taxpayers of the State, local, and Federal governments as “matching funds” and placed into an investment fund. Government employers are taxpayer funded, thus “matching funds” is taxpayer money.
2) The people (taxpayers) have no equity in the employer (taxpayer) contributions (taxation) to the Welfare system. That tax money is property in the trust of government.
2) The people (taxpayers) have no equity in the employer (taxpayer) contributions (taxation) to the Public pension system. That tax money is property in the trust of government.
3) Welfare pays benefits to people who qualify for it under certain criteria.
3) Pensions pay benefits to people who qualify for it under certain criteria.
4) Welfare is a trust run by government.
4) Pension funds are a trust run by government.
5) The taxpayers who never claim welfare benefits never get a return on their investment.
5) Taxpayers cannot claim pension benefits and therefore can never get a return on their investment.
6) Taxpayers are funding the benefits paid to welfare recipients with no benefit to themselves.
6) Taxpayers are funding the benefits paid to public pensioners with no benefit to themselves.
7) Welfare benefit recipients contribute their own tax money into the welfare system.
7) Pension benefit recipients contribute their own tax money into the pension system.
8) People who use welfare system benefits are knowingly mooching from the public tax-base.
8) People who use the pension system are either knowingly or unknowingly mooching from the public tax-base.
9) Welfare is an insurance pension investment fund that pays benefits for a certain amount of time for “un-employment”.
9) Pensions are insurance pension investment funds that pay benefits for a certain amount of time for “post-employment”.
10) The welfare system can be shut down and liquidated at any time by its owner, which is government, and pay no future benefits.
10) The pension system can be shut down and liquidated at any time by its owner, which is government, and pay no future benefits.
11) Benefits paid in both systems are a way to collect revenue as “contributions” for government that no longer belongs to the people, which is taken from the entire taxpayer base and invested in stocks, bonds, derivatives, foreign currencies, real estate, commercial paper, toxic debt contracts, mortgage backed securities, credit default swaps, and everything else that is ruining the financial structure of the world, its markets, and the livelihood of all the people.
So what is the difference between the public pension system and the welfare system?
Perhaps the illusion and false-paradigm of integrity is the only thing that comes to mind…
For while welfare recipients (who paid for this insurance through taxation) collect benefits without pride and feel no certainty about their future, public pensioners brag about being on public welfare at the expense of taxpayers and feel justified in their arrogance and future financial security. Ironically, the average pensioner has no idea of his or her disposition of being on welfare at others expense. They believe that just because they themselves paid some of their own money into the pension system (though some do not contribute and these pension schemes are fully funded by taxpayers), this gives them entitlement to receive benefits without even a fleeting consideration that they are actually collecting welfare at their retirement or disability (post-employment).
While welfare recipients get the worst kind of horrific taxpayer-funded health care, pensioners enjoy the benefits and choices of mostly taxpayer funded private insurance-based health care.
While pensioners enjoy buying food, welfare recipients enjoy redeeming food stamps. The difference here is not palpable when considering that both are taxpayer funded and that food stamps represent tax dollars or debt funded by taxpayer debt. Either way you look at it, the taxpayers are feeding both welfare recipients and public pensioners.
All of this pride is based on the illusion that these benefits are based solely on years of personal contributions and savings by pensioners, while not comprehending (or not knowing) that most of their benefits are indeed publicly paid for.
And to be quite frank… I personally have much more resentment that for my whole working life I have been paying for the pensions of government workers while knowing that I will never receive any benefit for doing so, and that at my own retirement I will only have what I saved myself and anything I can scrounge from Social Security. In fact, I really have no problem contributing to the welfare system because some day it might actually save myself, a friend, or a family member from becoming homeless and totally destitute – I may actually receive a benefit from my own tax if I need it. And the fact that complete strangers that would otherwise suffer and starve without this subsistence certainly doesn’t create the same feeling that it does to think of public pensioners living high on the hog after taking early retirement and receiving monthly stipends for life simply for not working as long as all the taxpayers funding that pension fund.
And for those pensioners who just cannot comprehend that what I am saying here is true; that pensioners are welfare receivers based on the collection of taxpayer money, I would like to show you just how much money is spent on the welfare system by all taxpayers and how much is spent on the public pension system by all taxpayers…
I was happy to find that someone else had actually done the research to break down how much taxpayer money is paid for welfare and public pensions by government. Of course, the term “paid for by government” means paid for by taxpayer money. And when this is reported in the financial reports of public pension funds, it is stated as being paid for by “employers” or by the “state”. The employer is government, and again government is funded by taxpayer money. Never forget this, pensioners.
So well written was this article that I took the liberty to copy this well sourced researched presentation here, and give full credit to this site: http://www.ourdime.us/102/budgetinfo/how-much-do-we-spend-on-welfare/
“How Much Do We Spend On Welfare”
Whenever you see a pie graph that is meant to represent all government spending, you will probably see a graph like the one at US Government Spending or the one at Wikipedia which shows that “Welfare” spending is 12% of the federal budget. The problem with that is that the government has no spending category called “Welfare”. Therefore, what somebody calls “Welfare” is somewhat subjective and undefinable.
The Office of Management and Budget(OMB) does have a spending category called “Income Security”. The two pie graphs I linked to in the introduction just take that entire category and divides it by total spending to get 12%. In 2009 accounts categorized as “income security” accounted for 533$ billion in spending. According to the government printing offices’ historical tables, table 3.2: Oulays by Function and Subfunction, that spending is broken down into 6 distinct subfunctions.
- General retirement and disability insurance
- Federal employee retirement and disability
- Unemployment compensation
- Housing assistance
- Food and nutrition assistance
- Other income security
But as I described in a previous post, 3 out of the 6 income security subfunctions go to pensions and unemployment – things that must be earned by working and paying into.
The 3 remaining subfunctions cost a combined 284$ billion dollars, but even that doesn’t tell the whole story. Over the last week I’ve taken a more detailed look at each of these subfunctions to get an idea of how that money is spent. What I found was that even in the remaining subfunctions, Food and Nutrition, Housing Assistance, and Other that not all of that spending was spent on the poor.
When I analyzed the “Other” income security subfunction, I graphed how that money was spent by categorizing that spending into 4 different categories:
- Not Directed at Poor\Earned: Welfare not targeted to poor. The poor may use these programs, but just being poor will not qualify you for these programs.
- Direct: Welfare that’s Direct money to the poor
- In-direct: Money paid to 3rd parties on behalf of the poor
- Poor & Middle Class: These are tax rebates that poor and most middle class people qualify for and use.
I would now like to extend that analysis to the entire 533$ billion that the U.S. government spent on “income security”. Here’s how the numbers break down.
(Click chart for Larger Image. See The Numbers for this Chart)
As you can see the vast majority of the money spent in the “Income Security” function of the government is spent on programs not directed at the poor or programs where the income must be earned. If you want to know how I categorized everything, here’s how I did it:
- Unemployment and Pensions are classified as not-directed at poor\Earned.
- For Food & Nutrition, WIC & SNAP(Food Stamps) are “Direct”, School lunches are “non-direct”, the rest are “not-directed at poor”
- For Housing Assistance, I categorized the temporary “new homeowner” credit as “Poor & Middle Class” and the rest as non-direct
- For the rest you can read my previous post on how I broke down “Other Income Security“
If you total up the direct and non-direct spending categories which are all the programs that are meant to help the poor, you will see that the federal government only spent 191$ billion on “welfare” for the poor. That would be 5.5% of the unified budget. I counted off-budget programs since the pie graphs in the beginning counted social security and other “off-budget” accounts. If you only want to go with on-budget expenditures it’s 6.4%, still a far cry from the 12% that most internet graphs will show you. Just for fun I decided to graph those numbers. Feel free to copy these graphs to show anyone who thinks we actually spend 12% of the federal budget helping the poor.
(Click charts for Larger Images.)
Source for all numbers is the Public Budget Database
Now, this is certainly not a complete picture of the amounts contributed to public pensions.
Cristopher Chantrill states on his website that:
“Government pensions spending started out at the beginning of the 20th century at zero percent of Gross Domestic Product (GDP). It increased very slowly during the first half of the century. It was only in 1931 that government pension expenditure reached 0.12 percent of GDP. By the beginning of World War II pension expenditure had doubled–all the way to 0.22 percent of GDP.
After World War II pension expenditures began to accelerate, reaching 1 percent of GDP by 1953 and doubling to 2.1 percent of GDP by 1958. Pension expenditure reached 3 percent of GDP by 1970 and 4.22 percent by 1974. Pension expenditure breached 5 percent of GDP in 1980.
The ramp-up in pensions expenditure began to moderate after 1980, reaching 5.3 percent of GDP in 1990 and 5.5 percent in 2000. Pension spending breached 6 percent of GDP in the recession year of 2009, hitting 6.56 percent of GDP in that year. Pensions expenditure is expected to stay in the area of 6.6 percent of GDP for the next few years.”
Total Government Spending
|Government Pensions||$1.1 trillion|
|Government Health Care||$1.1 trillion|
|Government Education||$0.8 trillion|
|National Defense||$0.9 trillion|
|Government Welfare||$0.6 trillion|
|All Other Spending||$1.6 trillion|
|Total Government Spending||$6.2 trillion|
|Federal Deficit||$1.0 trillion|
Again, this is translated as taxpayers from all over the United States are paying taxpayer money to fund pensions.
The GDP for the United States for 2012, according to the IMF, was $15,684,750,000,000 or $15.68 trillion dollars.
At 6.6%, pensions made up approximately $1,035,193,000,000 or $1.035 trillion dollars of taxpayer expenditures to fund pension funds.
So who is on welfare?
Are pensioners 3-4 times more angry with themselves for collecting post-employment benefits than with the poor who collect un-employment benefits? Can it be that this collective delusion by pensioners is self-induced? Are they the first to step up and complain that legal requirements for pre-funding of public pensions is literally driving Cities like Stockton, Ca and so many other governments to declare bankruptcy based on that pre-funding requirement? Does it bother public pension welfare receivers that the United States Post Office has had to borrow money every year to cover this legal requirement of pre-funding pension funds with taxpayer money, and has now reached its debt borrowing limit while Congress sits back and watches it happen without changing the law?
Can it be that pensioners refuse to bite the hand that feeds them because it would mean they would not receive welfare payments for post-employment? And they think welfare recipients and unemployed are the bad guys?
CalPERS responded to false rumors that pensions were funded solely by taxpayers by stating:
Myth: The State of California and taxpayers pay the total cost of public pensions.
January 26, 2011
Fact: Investment earnings pay the majority of the costs of public pensions. For every dollar paid in pensions, 64 cents comes from investments.
Public employees pay for pensions as well. Each month State employees contribute a percentage of their paychecks toward their pension. Through agreements so far, State employees are paying 2-5 percent more out of their paychecks toward pensions for a total of 8-10 percent each month. This has saved California up to $400 million. In addition, more than 175 local governments have decreased pensions for new hires.
In this very clever response, CalPERS has just stated that California taxpayers used to pay $400 million more in taxpayer money than it does today. This is like a store telling you that you just save money on your purchase instead of spending it – the latest selling point of grocery stores. Spending is saving; in true Orwellian style.
Of course, if the over $240 billion that is being held by CalPERS in liquid assets were cashed in (liquidated) today for their market value, this would pay for the total costs of this public pension for the next 10-15 years without ever collecting another employee or taxpayer dollar. And if that money stayed invested, for which the return on that investment is stated above to pay 64% of all pension costs, this public pension would likely last 20-30 years depending on investment return without ever having to collect another dollar from employees or taxpayers (employers). Trust me when I say that employees alone could never have built this fund up to this value without California and Federal taxpayer contributions.
Last year, taxpayers of California paid $7,834,616,000 dollars into the CalPERS fund, while employees paid $3,727,600,000 (according to the 2012FY Comprehensive Annual Financial Report for CalPERS, Page 41).
I constantly ask myself why the taxpayers of California – the entire base of taxpaying citizens – would agree to pay so much money for the sole purpose of supporting the lavish retirements of just a small percent of that population? And my only conclusion is that this information is simply not comprehended by the vast majority of people who have no idea that their government is spending their tax money on pension funds for its employees. And this goes for all States and the Federal government, which means all taxpayers in America. Why do you allow this to happen… even as the result of this spending is financially ruining your well-being and creating the need for more taxation that is ultimately being created through DEBT???
At some point, even those benefiting form these public pension funds as welfare recipients must see the folly of this madness. But most fall into temptation and will not be delivered from evil. The haves very seldom give up what they have to the have nots, even to save themselves or to save the very system that makes them the haves.
For government is raiding these public funds as we speak, and placing more indebtedness on the taxpayer base to support this looting for “future pension payments”.
In truth, the Federal Government pays more taxpayer money for public pensions than it does for the National Defense budget. More for pensions than for Education. And a lot less for public welfare than we think to support a whole lot more people that need it.
In conclusion, the difference between welfare and public pensions is just one – everybody pays for welfare and everybody qualifies for it. But while everybody pays for public pensions, only a few qualify to withdraw it at all others expense.
The public pension system is the worst kind of welfare subsistence because it is based on privilege, not need.
So why don’t you public pensioners fund your own damn retirement and quit being such parasites on the taxpayer’s back? Isn’t that what you continuously demand of welfare recipients?
–Sunday, April 21, 2013