Nikola Drobac – 9/8/06

This page was last updated on September 10, 2006.

What about the boomers?; Nikola (Nick) Drobac; Beaver County Times; September 8, 2006.

This is the 24^th anti-Bush and/or anti-Republican rant by Mr. Drobac since July 1, 2004. As usual, Mr. Drobac doesn’t let facts get in the way of a good rant. In a letter entitled “GOP messing things up” (October 29, 2002), Mr. Drobac expressed a wish to be able to laugh as all Republicans face financial ruin in retirement, calling them fools because they may have more confidence in themselves than in government bureaucrats and politicians.

FYI, Mr. Drobac is a current or former high school business teacher. Given that background, it’s hard for me to believe the misrepresentations in his letter are not intentional.

Below is a detailed critique of the subject letter.

“Sunday, on ‘Meet the Press,’ U.S. Sen. Rick Santorum stated that he would not change Social Security benefits for people born before 1950. What about those born in 1950 and after 1950?

“Let’s say you were born in 1950. In 1966, you turned 16 years old. That means in the year 2006, you have been paying into the Social Security System for 40 years. If you were born in 1980, you turned 16 in 1996. That means in 2006, you have been paying into the Social Security System for 10 years.”

[RWC] Why does Mr. Drobac assume everyone has some kind of job at age 16? I started paying Socialist Security taxes when I was 15, but I had some friends who didn’t have jobs until they graduated from high school.

“The average annual income in America today is around $40,000. Workers pay 6.4 percent of their salary into the Social Security System. At $40,000, that’s $2,560 per year. Over the past 40 years, adjusted for inflation, let’s say a person has paid $25,600 every 10 years.”

[RWC] The figure Mr. Drobac wanted to use is 6.2%, not 6.4%. Using either figure, however, is wrong.

Employees pay 12.4% in Socialist Security taxes and 2.9% in Medicare taxes, for a total of 15.3%.

“In this case, over 40 years, the total would be $102,400.

“Your employer has also been contributing 6.4 percent. That’s another $2,560 every year, $25,600 every ten years and $102,400 over 40 years. For a 40-year time period, the total employer and employee contributions would be over $204,800.”

[RWC] Once again, the 6.4% figure is wrong.

The idea that employers pay half of your Socialist Security (and Medicare) taxes is a deception intended to make employees feel better about having a total of 15.3% of their wages confiscated before they have a chance to cash their paychecks. If Socialist Security taxes didn’t exist, that other 6.2% would either show up as higher wages or some other benefit.

“Now Santorum wants to change the rules for people born after 1950.

“That’s not fair. You don’t change the rules when a person is 10 to 40 years into a retirement system. Imagine what would happen if 401(k) administrators tried to pull that stunt.”

[RWC] Uh, Socialist Security “rules” have been changing almost from the day FDR launched this Ponzi scheme in 1935. When Socialist Security tax revenue greatly exceeded benefit payouts, politicians had no problem increasing benefits.

In addition to benefit increases over the years, the max taxed earnings cap increases every year by law. Since 1950, Congress increased the Socialist Security tax rate 20 times! A 12.4%, the current level is 6.2 times its original rate.

“People are being told that they should not expect Social Security benefits to be there for them. If I paid into the system for 10 to 40 years, I better get some type of a return on my investment. Imagine what would happen if 401(k) administrators looked at you and said, ‘Because the president of the company was not fiscally responsible, don’t expect a return on your 401(k) plan investments.’”

[RWC] Frankly, I don’t know what Mr. Drobac means by a “401(k) administrator” the way he’s using it. With my employers, the “administrator” merely processed the paperwork.

Earth to Mr. Drobac. In a 401(k) plan, the money is yours. As a result, you determine the investments and the balance of your 401(k) remaining at your death can be left for your heirs. That’s not the case with Socialist Security.

For those of you not familiar with 401(k) plans, here is how the two plans I was in worked.

I told my employer how much of my paycheck to deposit into my 401(k) account. In both plans, our 401(k) accounts were with third parties like Fidelity Investments.

Both employers also provided some level of matching contribution, though that’s not a 401(k) requirement.

Once the employer deposited my contribution and the matching contribution in the 401(k) account (once per month), the employer couldn’t touch the funds in that account anymore than it could take money from my checking account, savings account, et cetera.

Depending on the plan agreed to by my employers and the institution holding the 401(k) account, I had a selection of investment options (bonds, mutual funds, stocks, et cetera).

Finally, you’ll note Mr. Drobac didn’t suggest a solution to Socialist Security’s looming insolvency.