good afternoon to welcome to prime interest i'm kerry and boring here and in washington d.c. and here's the headlines that we're tracking today. when it comes to currency devaluation the words of a central banker or gold or tungsten rather this morning the head of the european central bank mario draghi said there are things historic rate cut to half a percent was just the beginning the euro fell sharply and speaking of market plunges today of the three year anniversary of the flash crash the day of and for me when high frequency trading algorithms gummed up the works at the new york stock exchange and a single day the dow crashed into the red by one thousand points we'll talk about the reading of social security later with royale. also jamie diamond displacing head wins a shareholder advisory firm has suggested that he be stripped from his role as the

chairman of the j.p. morgan board the bank is facing a slew of regulatory investigation everything from failing to detect bernie made off suspicious trading to bilking states for millions in extra energy fees the bankers resident swap expert of light the masters is also under fire masters who is most famous for inventing credit default swaps is accused of lying under oath to regulators about this energy scheme one of j.p. morgan's most famous investors one buffett isn't discouraged he says he's one hundred percent for jamie we'll see how mr dimon holds up in our bankers cut do at the bottom of the show. and at the annual shareholders meeting for berkshire hathaway buffett promise burning or he praised bernanke in calling four and a half years of near zero interest rates in two trillion dollars in bond purchases smart policy bizarrely he distance leverage calling it heroin and catnip mr buffett where do you think. he's not optimistic on gold or big going and saying all of our

forty nine billion dollars. we haven't moved any of it today calling for the sage of omaha did report a substantial profits from derivative what he used to call financial weapons of mass destruction well maybe you would be amenable to that point option all right let's get to what's in your interest. we often hear that social security is not broken but the social security disability insurance program is starting to face major difficulties this program pays benefits to workers who have lost earnings due to

a disability and the social security administration itself projects the fund to be depleted in just three years here's what brian goddess the chief actuary of the social security administration has to say about that. for this would be trajectory cannot be sustained not only cannot be but it will be i mean that's that's that's pretty clear and the projections were made. today over ten million americans currently collect disability insurance from the government which is three hundred percent higher than what it was just forty years ago but at the same time we have seen advancements in working conditions and medical technology to cruising the causes of disability so why is it that so many more americans are receiving disability payments from the government while on one side they claim that the biggest factor driving the expansion of disability is demographics this can most notably be attributed to the aging baby boomer population but others claim that statutory requirements relaxing the definition of what

a disability is has targeted the program to higher instances of fraud and abuse now earlier i spoke to overgrow a senior fellow at the manhattan institute for policy research about the solvency of the s s d i program. the late one nine hundred eighty s. there has been rapid growth within the program that was not predicted by the office of the actuaries what has caused this growth and beneficiaries and can this growth be sustained. so what happened was there was a crackdown on people who were abusing the system in the early eighties and there was a backlash to the crackdown so what end up happening is as people were taken off the disability rolls who were misusing the system a couple of people who were genuinely disabled to work in the middle of that and so there was a public outcry and congress passed a law called the social security disability benefits reform act of one thousand nine hundred four which changed dramatically the eligibility criteria for social

security disability so it used to be you had to prove that you were really in capacity you had a stroke you had cancer or something like that but to the new rules if you had back pain if you had mental distress you can qualify for disability benefits also you could use your own doctor's opinion your own assessment of your own health as opposed to the government's physician examination of your of your health so a lot of those things combined meant that a lot of people started saying well i have back pain or i have mental distress and they started taking advantage of the system also the actual size of the benefit increased so the amount of dollars you got for being disabled increased over time and the value of the health insurance that you would receive would also increase so if you're on social security disability you also get medicare health insurance so it's a pretty generous insurance package and that also has driven up the interest in applying for the program but how much has the natural course that aging played into that as well. yeah so that's one of the arguments that the left makes is that well you know

society is getting older the baby boomers are retiring as you get older more people are going to be disabled more people are going to be sick and that's true to a degree but economists who've looked at this show that only about six percent of the growth in disability spending in disability enrolment disability program is driven by ageing of the population the vast majority of it about forty percent. is driven by the relaxation of the criteria and then another thirty percent or so is driven by the increase in the value of the benefits and how women statistics changed. so women statistics have changed because women have only entered the workforce relatively recently so for women a larger proportion of the growth in the realm of disability because more women have been in the workforce because more women have been in the work force more women have been paying the social security taxes and therefore have been eligible for disability insurance if you're not working you aren't eligible for the

disability insurance but we have here a graph from the social security administration office of the actuary that shows the correlation between the unemployment rate and applications submitted for disability how has the fate of the economy affected the program. was you see from the chart it's pretty self-explanatory every time the unemployment rate goes up every time we have a recession there's a huge spike in applications for disability insurance or disability benefits and so what does that tell you it tells you that a lot of this isn't actually people who are physically disabled it's people who can't find work and are looking for an alternative source of income and the problem with this is that because all these people are putting a strain financially on the system as the trust fund goes broke the disability insurance trust fund is is meant to go broke and twenty sixteen what's going to happen is a lot of people are truly disabled are going to lose a significant amount of benefits because of these less disabled or undecidable people who are taking advantage of the system so they can win confederate turning

into a welfare program. it defacto appears to have replaced the traditional welfare that was reformed in one thousand nine hundred six so when bill clinton signed the welfare reform law over the welfare reform bill into law in one thousand nine hundred six people thought that was going to end welfare as we know it a reformed welfare what seems to have happened is a lot of people have been shifted their uses. welfare programs through the disability insurance system or here is what stephen guy's the chief actuary had to say about how to fix the program. the forty trajectory cannot be sustained one not only cannot be but it will be i mean. that's pretty clear and the projections were made. and in one thousand nine hundred four the disability insurance trust fund which just one year away from being depleted and at that time congress enacted every allocation of the payroll tax but they didn't increase overall tax aid is

a federal restructuring required to fix the disability program. there's no doubt that congress has to step in here and restructure the program but the most important thing to do is rein in some of these loose eligibility requirements or eligibility standards that have allowed a lot of non-disabled people to get on the program you might not necessarily want to throw existing people off the rolls because that's just going to be politically very challenging but at least you want to tie it up for future and really is to make sure that the people who are on the program in the future are truly disabled and there are a lot of other reforms you can do to make sure that the legal process by which we get people out of the rolls is standardise so what happens now is through that one thousand nine hundred four law i was mentioning the federal government the social security administration pays spends one point nine billion dollars a year on lawyers whose sole job is to help people appeal negative rulings for disability benefit so if you apply for disability benefits you don't get them the government hires a lawyer for you so that you can appeal that ruling and get on

a disability and benefits so there are things like that that we can reform to make sure that the program spends less money in the future or in terms of its growth rate than it does today you know i saw some of those web sites and i was researching this issue so do you not think taxes that should be on the table increasing taxes is the way to fix the program. i don't think you need to increase tax i think a better way to do it is to make sure that the growth in disability in rome it is tempered by some of these rollbacks and the eligibility criteria well there are plenty of people who insist that social security is not broken but then we have others such as yourself who say that we have this problem looming and it needs reforms why do we see that a difference in opinions among. either side of the aisle sure so it has to do with the way people are interpreting the numbers so if you look at growth in social security spending as a percentage of the economy as a percentage of g.d.p.

it's not growing that rapidly actually compared to things like medicare medicaid the big health care and title that's the social security disability program is separate that is growing pretty significant social security spending overall is is not growing massively as a share of the economy the big problem with social security is that we're going to have a lot more old people who are collecting benefits and a lot fewer young people who are in the workforce paying social security taxes so that problem is still there so when when the left says that while there's no real problem with social security they're referring to the fact that spending on social security is not continuing to grow as a share of the economy but it's still a problem in the sense that the people who are younger are not going to be generating enough income in order to fund future retirees benefit so that's going to require either benefit cuts or tax increases in the future so someone in my age bracket and they're in the millennial generation do you think people my age should expect to receive social security benefits or do you think that we should use

either method methods to prepare for retirement. well you're going to get perhaps some social security benefits but not nearly enough to fund your retirement because benefits are going to have to go down and taxes are going to have to go up at least if it's a bipartisan compromise right if one party or the other is in complete control you might see something else but by. as a compromise if we look at the one that that ronald reagan and tip o'neill signed into law in the eighty's there was a tax increase and a benefit cut and i think that's what we're likely to see i think young people today need to save for their own retirement not rely on the government and did anyone put forth a solution in this year's budget. not of this year's budget actually republicans have stayed away from it there was an effort in the bush presidency in two thousand and five to allow people to opt out of traditional government run social security and invest their money in private accounts like a four hundred one k. sell private accounts but now with having we having seen the stock market crash of two thousand and seven two thousand and eight i think

a lot of people look at that as a relatively dead or dormant idea right now people don't think it's politically salable to try to give give people their money to invest for themselves so you're not going to really make major changes to social security in that sense and have a more privatized system i think what you're likely to see is as i said either increasing social security taxes to fund the system and or a cut in future benefits so there was one thing that they did include the president obama included in his budget which was this change in the inflation metric so using what's called chained c.p.i. or chained consumer price index as a way of slowing the amount of inflation that's being implied or imposed upon the social security system so that future benefits would go down and taxes would go up and that's one way a more accurate measure of inflation to maybe rein the program in a little bit. that was over growing from the manhattan institute for policy research of next i will dig into the fine print of the social security trust fund

to take a look at where your payroll taxes are really being spent and then a prime interest producer bob english and i will talk about congressional insider trading and we'll follow up on friday's show to reveal the winner of the banker's cup stated. download the official publication yourself choose your language stream quality and enjoy your favorites from alzheimer's if you're away from your television well it just doesn't matter how would your mobile device so you can watch r.t. any time anywhere. yo sutras of the disappearing newbies along with their civilian news. yes.

i'm sure your show that you. do really really would do you know there was a good investment you know who was already forced to. come or like.

continuing our conversation about social security was investigate the social security trust fund and look into the fine print of its financing here's what president reagan told the nation and eight hundred six thousand nine hundred eighty three our nation's ironclad commitment to social security it is sure as the elderly that america will always keep the promises made in troubled times a half a century ago it assures those who are still working that they too have a pact with the future. but just seven years later the nation's commitment to social security came under scrutiny. that the treasury department. hi guys. take norman. money. out of the trust fund the sums are theirs could be so of the money that there is so large that they are indicted for. nobody can be indicted for

removing twenty six billion dollars from fraud so how are the funds really being used well social security started as a pay as you go system meaning payments going into the fund and benefits roughly going out were about equal but in one nine hundred eighty benefit started to outpace tax revenues and social security was in the red so then president ronald reagan appointed none other alan greenspan to overhaul the system greenspan's commission decided to increase taxes to cover the increasing cost of the retiring baby boomers as these funds are to accumulate they were by law invested into what's called a special issue us treasury bond special issue meaning they can be redeemed at any time at face value now a common misconception is that since the taxes have been invested in t. wants the social security trust fund doesn't actually have any cas cash assets in it so what did the government do with all that cash well i've got news for you the

government is nearing seventeen trillion dollars in debt and the money has been spent on a range of other programs that are unrelated to social security now in two thousand and twelve the trust fund had two point seven trillion dollars where the t one was starting and two thousand and ten tax benefit paid out exceeded tax revenues so the government had to start cashing in the team bonds to pay for current benefits in order to pay back the special issue to social security begin to have to borrow further which means we're literally borrowing to repay previously tax money which is why some claim that the fund is an accounting device filled with i have you. someone our country thinks of social security as a trust fund you know there's a pile of money being accumulated. that's just simply not true. the money payroll taxes going into social security are spent are spent on benefits and are spent on government programs there is no trust. in one nine hundred thirty seven two years

after the social security act was passed it was ruled unconstitutional by the first circuit court of appeals because it violated the general welfare clause and the case davis vs boston went all the way to the supreme court where it was overruled on the grounds that the payroll tax cannot be earmarked for social security but only use for the general support of the government and that is why payroll taxes are invested in the team lines and there is no cash assets in the trust fund your payroll taxes have already been spent by the treasury for the general purpose of the government such as on education the military spending and that's what's in the fine print of the social security trust fund.

and it's time for the daily joining me is bob english our producer thank you let's get off to a special start this week with interesting things to talk about today now the stock act was signed into law last year this was to prevent members of congress and senior congressional staff staffers from buying and selling stocks based on non public information that they would gain at congressional briefings and such in there and their role. last month the provision of the bill was quietly right field and what happens you know you got to love because congressmen are always so vocal except when it comes to stuff the benefits so how did how did it how did this work i mean how did we end up with a bill that was supposed to prevent insider trading in congress and that substantially. deuced all those and almost we had something that's toothless notice all the stock act had several provisions to it the portion that was repealed last month is what required members to report financial transactions to be available to

the public online right so we have a public database we know who is buying selling what maybe we have some time stamps and we could figure out you know are they using this information for instance in the health care company when there's a important vote coming up or a nomination or you know payments being suspended or again you know is this going to be part of the public record and i think that was the issue and that's really well the argument against why they did this was because it posed a security threat to put members and staffers information on the internet so they wanted to stay alive back because it you know is not a silly thing to put all that information online with all of what we security issues are facing that there is that argument but this report was actually done by an independent agency and what they said is it threatens individual or national security if this information is made public and apparently the people who wrote that report they didn't interview anybody who could have actually made that statement so there is some doubt there well the issue with the stock act i think to begin with is that it requires that members numbers and staffers to

report all these transactions over a thousand dollars we have to report within forty five days and this applies over three hundred thousand federal employees who probably don't make that much money anyways i'm sure they're underpaid and they're public servants i mean why do we want to keep trying wasn't a resident of underpaid ok i mean insider trading is already illegal and this would necessarily mitigate insider trading ok well we could even get to the discussion is insider trading should it be a crime at all and you know well senator charles grassley and the f.c.c. are investigating another case i've been watching congressional aide might have given health care investors advanced information about a change to medicare provision and the staffer his name was stephanie carlson. i work for senator orrin hatch she possibly we political intelligence that ended up moving the market you know i think it was thirty minutes into the close there was a bit of information that came out and it was leaked by her so we got to market

market moving event and a lot of people made money off of this it's pretty common in congress and that's kind of what the stock you know the stock was meant to when this premise was that political intelligent and was it if. she knew she had there was a deal struck between the c.m.s. and the senate finance committee and she might have known about this they might have told somebody and this was public information but i think the question is when is it considered public information and when is it still insider information well besides political intelligence being the greatest oxymoron ever. you know when it comes to members of congress i don't know i don't really like to be able to trade on any sort of this information but when it comes to somebody like steve cohen who has a hedge fund i don't particularly care if he's paying people a lot of money to get some good information that he could trade on you know he just paid six hundred million dollars to settle a lawsuit with the f.c.c. over insider trading not that he admitted any wrongdoing of course but you know

when markets move all right there's money to be made and we're going to move anyway so why shouldn't people with a little bit closer access to that information be able to trade on it well obviously as you leave on that note because we got to move on to our bankers cup following up from last week. the kentucky derby came and went over the weekend on friday we announce that we're going to have our very own bankers cup and will actually have a race in just a minute let's let's recap what happened last ok we have two horses here bernanke his last stand might just be the final stud in his line because an errant statement about sterilization was unfortunately taken literally and he has some tough horse shoes to fill because his father irrational exuberance presided over the longest winning streak in the post-war period even though some of the alleged wanted to. regardless bernanke his last stand is more like his grandfather stanley's gone fishing at sea is a really thoroughbred who sired no fewer than eight champions at his quantitative

breeding stalls or not is the silver mane crowd favorite in his handicap to one. seven to one odds and your horse and your horse diamondback what about him so diamondback is handicapped but a bit better his odds are five to one but his racing team had a rough weekend he might not be in top form his owner who invented a new or suave derivative is alleged to have lied to raising investigators and who can forget the billions lost by diamondbacks jockey who blew the team's winning on a hedge even with eight hundred million dollars in mounting legal bills the team boast of a fortress balance sheet and we'd be foolish to count them out so here's the really let's get started. and they're off and here's where it looks like it might hyperinflated into the finish. is pulling ahead and it looks like. that. great well i'm not going there yes you are i guess that's all the time we

have for today thank you for joining me on the duel once again like you see if they're in. the cross winds were blowing strong today on prime interest mario draghi heated up well technically down the euro when he said he was so would not finish lowering interest rates by our count he has two opportunity to join bernanke yet the zero area we found the ballooning ious and social scene. he might just be filled with hot air jamie dimon was buzzed by a deford carrying news that shareholders would be wise to blow him off the morgan board and why have you got some slowing in to do the regulators culture bluff or

what some call it lies under oath and warren buffett took a head of big coins but had nothing but cat calls for her beloved chairman bernanke he was likeliness was featured in our bankers over to mentally he couldn't hold a candle to diamondback who stole the fractionally reserved prize with a photo finish and finally we talked about insider trading laws for congress which is about as mixed up as our metaphor and thanks for watching and make sure you come back tomorrow and be sure to follow us on facebook at facebook dot com slash prime interest from everyone here at prime interest i'm kerry and boring enjoy your evening.

let me let me or the world let me ask you a question. here on this network which we're going to debate we have our night show. the view this sunday which spans thing never get here it is the story where the united we talk about surveillance we. will see british signs. sometimes. things go. market why not i'm going to. find out what's really happening to the global economy

with my stronger for a no holds barred look at the global financial headlines tune in to kaiser report on our. talking about the same story doesn't make it news. no pocky says tough question right here. on. morning news today violence is once again flared up. in these are the images the world has been seeing from the streets of canada. giant corporations are on the day.