Social Security!

“simple solution for SS is for the goverment to pay back all that it has borrowed from SS. Think that will happen...not”

“In Michigan, we have several state run pension systems that invest money in the market admirably. I think that's true in many states.

We also have an MET program that invests in the market with great succes.

Government pension systems run very well, for the most part. I think that it would be a great idea to allow the social security administrators to invest the contributions.

Why doesn't Bush just agree that social security contributions will not be touched by the rest of the government and a bipartisan group of financial experts will invest in moderate to conservative stocks and bonds?

This would certainly save social security for eternity.

Actually, the Democrats should consider proposing that 100 percent of social security contributions should be placed into "private" accounts managed by the SSA administrators.

Call Bush on his bluff. Take all his spendable cash away. Completely destroy his ability to do ANYTHING else during his four years in office.”

“You could have three investment alternatives for your Social Security account:

Low Risk- US Treasuries

Moderate risk- S&P Index Fund

High Risk- PowerBall! (oops, they already do that one...)”

“Oh Nigal... Next time you want to parrot Hannity and Rush, at least have the integrity to give them credit: http://mediamatters.org/items/200502080003”

“Lisa Simpson: "Where'd you get all that money, Grampa?"

Abe Simpson: "The government. I don't need it, I don't want it, but if they miss one payment I'll raise bloody hell!"”

“I can't believe Rush would lie to us. It's just so unlike him to be so partisan!”

“Um, violink, I didn't get that info from either one of them. Now pull your head from your ass stop assuming.”

“he must have been on drugs =)”

“I agree with, I guess it was Bison, that I would be happy to pay into an insurance plan to help out those who need it because they are disabled or lost their savings or whatever, but that everyone shouldn't get a cut of SS whether they need it or not. I only differ with Bison by saying, I thought I was already paying into that plan - Welfare. We could restructure Welfare so that there are two classes of recipients - short-term assistance for younger impoverished people who need some help so that they can get back on their feet, get a new job, etc, and sustaining assistance for disabled and elderly who will need to be on it all their lives. Move the rest of the social security fund into that Welfare fund, tighten requirements for how long people can be on the short-term assistance, Voila, two problems solved. Then you wouldn't even have to raise the payroll taxes that go to Welfare all that much because you've got more principle inthe fund, and people won't mind because they won't have to pay social security tax anymore. But you'd also have to do it in line with Medicare reform and get the prescription benefit plan fixed so they don't have to spend so much on medications. So they average person, like Abe Simpson, who doesn't need his Social Security check, won't get one anymore. If we'd just stop playing Bad Cop to the UN's Good Cop we would have the money to fix this and balance the budget.

Although, I know this will never happen, so I will get a piddling little SSA check in addition to the money I wisely invested because I don't believe the government should have to wipe my a$$ for me, and I'll spend the SSA check on lots of Gold Bond Powder and a new pair of Sans-a-belt slacks that go up to my ribcage every month.”

“You were not misled. In grad school I took an engineering finance class and my professor worked at the Dallas Federal Reserve. It was the first time I ever learned how to calculate Time Value of Money, and when he got into how to calculate annuities forward, it became so clear to me. SS never was an annuity. The current generation of workers is paying for the current generation of elderly, always have been. That's not conducive to sustainable growth of a fund in line with inflation and population demographic which is skewing older.”

“Which is why we started paying into a trust fund in 1983.”

“Which trust fund? The one the government is borrowing against with no ability to pay back at the current spending rate? That trust fund? So for the past 22 years of a 70 year-old fund, we actually have started trying to save, meanwhile the Baby Boomers are all starting to retire. Whew, I was worried for nothing.
last edited: 2/09/05 1:49:56 PM”

“The US Treasury is defaulting?”

“There's an old saying: when your outgo exceeds your income, your upkeep will be your downfall.

But you're right, we're the US, we can just keep on racking up the national debt and our creditors won't mind. I'm sure there's nothing to worry about. And I've never even heard of a large Fortune 500 company, or even a state or local government defaulting on its pension plan, so I'm sure the US government won't either. I'll just hang onto my IRA and 401K for amusement.”

“These charts come off the Senate Joint Economic Committee website, and cite the Social Security Administration as their source. Chart 1 says that SSA will not be able to pay promised revenue. Chart 5 shows how SSA costs will exceed revenue by a large margin. I'm not sure how anyone can argue with that and say we're fine the way we are. If you want to know why this is happening, Charts 4 and 6 show you: The worker to retiree ratio has been dropping precipitously and will continue to do so, and that Americans are living longer.

http://jec.senate.gov/index.cfm?FuseAction=Charts.Detail&Image_id=102&ImageGallery_id=11

But hey, this is just the Senate and the Social Security Administration telling us this, what do they know?”

“. I'll just hang onto my IRA and 401K for amusement.”
reefmonkey
2:02:48 PM
2/09/05


that is what your suppose to be doing in the 1st place!!

What is it about SS that you don't get. It is like an insurance policy that pays out when you retire. It is an extra.

Quite a few retired people lost a lot of money when the markets fell. They had expenses that still came around each month that had to be paid. There is no way they can makeup what they lost because of spending they had to do. If it wasn't for SS quite a few may not have made it.
Unfortunately a lot of people are just surviving by it.”

“Right Ewker - that's why you should reread my first post, about it just being an insurance policy for people who need it, and only be paid out to people who need it. You call in an insurance policy, and say I don't "get" it. If you take out an insurance policy on a car, a house, any item, does the insurance company pay you if you don't have a loss that meets the requirements of the policy? No! You call Social Security an insurance policy, and you are right, it should be. It should ensure against being impoverished in your old age. If you aren't impoverished, you don't need it, you shouldn't get paid out.

That's how insurance policies work, pooled risk. The insurance company is assuming they won't have to pay out to the majority of the people who have a policy. When insurance companies do have to, such as in Florida after major hurricanes, they often go broke. See a parallel?”

“that's why you should reread my first post, about it just being an insurance policy for people who need it, and only be paid out to people who need it.
reefmonkey
3:03:09 PM
2/09/05

so those retired folks who lost half of their savings due to the crash would get nothing. They saved for their retirement. It isn't their fault the market crashed and cut their retirement in half. That is where the money they paid into SS helps them out. That money was fairly safe (except for what the gov't has borrowed)
last edited: 2/09/05 3:26:13 PM”

“Ewker, I said there should be an insurance policy, but it should only pay out to a retired person who needs the money. If your hypothetical retirees lost so much money that they could not retire comfortably, they would be eligible, so you and I are in agreement.

You must remember, though, Ewker, while there should be a safety net for people like that, there can't be a guarantee that they will be able to live at a standard of living well above comfortable. If couple A only had X amount of money to invest in their retirement when they were younger, and they can live comfortably on what they saved, but couple B was able to invest 4X amount of money because they had more lucrative careers, is it the government's responsibility to give couple A 3X amount so they can live at the same livestyle as couple B? Plus, your hypothetical couple should have invested aggressively when they were younger and more and more conservatively as they got older, so that if a stock market crash occurred around the time of their retirement, their bonds, T-bills, and CDs would not be grossly affected.

As for a couple saving for their kid's college, Social Security doesn't cover that. No federal program covers that. The only non-government investment you can make that has an insurance policy is to put your money in a CD or moneymarket or other bank administered account. It's called FDIC.”

“I've been paying into this system for 29 years. According to the SS Trustees, if nothing is done and the economy grows fairly slowly, when I'm 82 (2042) my payable benefits will be cut by 27% from what is promised today. If I belive the CBO figures (which assume a slightly greater rate of growth) if I live to be 92, I may have my benifits cut by about 20%.

That doesn't sound like a crisis to me.

I'd favor a gradually raising the maximum income subject to SS taxation from the current $90,000 to $140,000, slightly raising the payroll tax, creating 'incentives' for deferring retirement or any combination of all three.”

“the more money you had in the markets the more money you lost.
plus when you receive your SS it is based on what you have put in over the yrs. So the folks whose salaries were more than others will get more with SS.”

“Now Violin, I think you are totally on the right track about raising the SS taxable income cap.

I don't know how true this is, but I heard someone on NPR saying the reasoning behind the taxable income cap is that it is assumed if you make that much money you won't ever need SS anyway, so why should you have to pay for the income you make above the cap? This makes no sense to me, because if it is an insurance plan and they think that people who make too much money will never need SS and shouldn't have to pay extra taxes for it, why then tax them for the portion of money they make which is below the cap? The answer of course is if everyone puts in we will have more money in the pot, even for disabled people who are never able to work a day in their lives. The other point is, like Ewker said, there are plenty of people who make so much money that they could save enough never to need SS, but could lose their savings for one reason or another.

Yeah, raise the cap.”

“the more money you had in the markets the more money you lost.

Well Ewker, Social Security is a socialist system. I don't mean that as a McCarthyist slurr, I just mean it is based on socialist principles of redistributing wealth "from each according to his gifts, to each according to his needs," so its purpose is not to buoy someone up to the level of income to which they are accustomed, just to keep them from having to eat pet food to survive.”

“plus when you receive your SS it is based on what you have put in over the yrs. So the folks whose salaries were more than others will get more with SS.”


Not exactly true, Ewker. My brother's sister-in-law is about my age (29) and has Downs Syndrome. She has never worked a day in her life but gets a Social Security check which pays for all her expenses. There are plenty of people out there with disabilities, or people who went straight from Welfare to Social Security when they turned 65, or get the Earned Income Credit on their tax return, who, if their checks were based on a percentage of what they put in, would get squat, but they get enough to live on. All of our input subsidizes that. It would do a better job if those of us who don't need the money don't take it, which is my entire point.”

“when I'm 82 (2042) my payable benefits will be cut by 27% from what is promised today. If I belive the CBO figures (which assume a slightly greater rate of growth) if I live to be 92, I may have my benifits cut by about 20%.

This is just a question, not a refutation - can you tell me, what kind of inflation rate do they take into account for the next century? I mean, obviously I assume they are not saying if a person like you were getting $1,000 today you will only be getting $730 in 2040, more like if $3000 dollars in 2040 will have the same buying power as $1000 in 2005, then you'll only be getting $2490 in 2040, but I'm just curious how much the cost of living will increase at that time. Several times on NPR I have heard die predictions on the US economy. One reason they cite is the weak dollar and how it is affecting National Debt and other countries' trust in our ability to repay, and the other came this morning where an analyst speculated that the price of oil could easily go up to $150/bbl in the next few years.”

“It's in the Trustees Report: http://www.ssa.gov/OACT/TR/TR04/index.html


There are so many variables, the future projections are all guesses. I've read that due to the graying of the population throughout the industrialized world, when the baby boomers start retiring and cashing in stocks and bonds returns could well become negative due to a glut in the market. A lot depends upon the growth in the developing world and productivity growth here. I'd sure hate to have all of my retirement nest egg invested in declining assets.”

“Also Ewker: Generally, your Social Security benefit is a percentage of your average lifetime earnings. Low-income workers receive a higher percentage of their average lifetime earnings than those in the upper income brackets, so there isn't a straight correlation that the more you pay, the more you get.
last edited: 2/09/05 4:57:42 PM”

“I hear you. I'm going to invest in Hummel figurines.”

“It really seems like a no win situation. A long economic downturn could definitely make securities worthless, companies could go bankrupt, which would put lots of people out of work, so there would be few able to pay into SSA, and it would have to stop paying out. What a mess we're in.”

“Violin, you are right. There is no crisis. And I say this as an SSA employee. Anyone 40+ doesn't need to worry, nothing will change. Anyone in their teens/20's/30's now shouldn't need a brick to the head to know they need to save on their own. And when they do retire there will be a drop in their SS checks. A 30% reduction in the SS check which is itself only 5% of all retirement income isn't a big deal (the other 95% coming from the savings they should have made themselves). Making minor changes like raising the cutoff for FICA taxation would mitigate that bump.

Eventually the Baby Boomer generation will pass and the worker-to-retiree ratio will improve again, and the "crisis" will be over. For the most part, leave the system alone.”

“if this passes I have heard that gov't employees don't have a choice in the matter. They will have to go invest into private account no matter there age.

Also I remember reading or overheard someone say that if you make X amount of money SS is no longer taken from your paycheck.

care to confirm or deny what I have heard.

I don't fit either example, just curious”

“First item - no, not true.

Second item - you're talking about the salary cap for SS taxation. The FICA tax on your paycheck goes to Medicare (something like 3%) and to SSA (something like 12%). The Medicare tax applies to everything you make. The SS tax is capped at $90,000 this year. Anything you make above that isn't taxed for SS.

That is the tax cap they need to eliminate. Let the rich pay SS tax all the way to the top of their paycheck and a large revenue stream will be created which would actually allow the total SS tax (including for the rich) to be lowered - while still completely fixing the "problem".

Amazing how one little fix would eliminate the need for a national tour, major overhauls, and incurring further debt to create new savings plans. But since it is a tax on the rich, there's no way Bush would support it.”

“As someone in my 20's techntrek, you are telling me I need to save on my own, which I've accepted for a long time. So if SS isn't going to fail the people who expected to be able to rely on it, but it won't be useful for people of my generation, what's my incentive to save the system? Why don't we just let it die a natural death, and stop perpetuating it? (I know you may be a little biased for the sake of job security)”

“What about old folks who pay taxes for programs that are designed for the young, Reef? Gotta look at it two ways...”

“reef, it will be just as useful for all generations. If you are over 40 you will be close to the big goodbye (or already gone) before problems start, so no problem.

With people under 40 (you) benefits will only get cut by 30% if nothing is done at all. Obviously something will be done. (If nothing changed you still shouldn't worry about it because it should be such a small % of your retirement income.)

Bush keeps saying the system will be "bankrupt" - which for most people implies it will have nothing left. That isn't true. It will still be bringing in 70% of what it needs from the current workers 40 years from now. Getting that last 30% requires far easier fixes than what Bush proposes. Like eliminating the salary cap on the SS tax.”

“Why save it? Because it's perhaps the most successful governmental program ever (which is why the Heritage Foundation and the like hate it so). Poverty among the elderly used to be a major problem. Today that is just not the case. Everyone who works hard and plays by the rules shouldn't have to face the prospect of living out their most vulnerable years in abject poverty.

If the economy should grow a little faster than the trustees or the CBO assume, there will be no solvency problem. If we make minor tweaks to guarantee the system now, the generation that is going to cause the problem will contribute to the solution as we have since 1983.”

“You all make a very strong case that Social Security is not in that bad shape and that Bush's plan is not very good. I really don't see why the govenment needs to set up personal accounts for us when we can and are doing that already with IRAs and 401Ks that already get a nice tax deferement. How do I jibe this with all the media coverage I am being bombarded with that makes the situation seem so dire? I mean, it's not just Bush's machine that is sending out this message, but people opposed to Bush's plan who want SS "fixed". Then, there are the charts on the Senate JEC website which source the SSA and say SS won't be able to pay promised benefits, and their gap between revenues and costs looks pretty wide. It's all kind of bewildering.”

“reefmonkey, it is just Bush trying to scare you. As long as people are working money will be going into SS. If we could get the gov't to pay back all it has borrowed it would be in excellent shape.

Instead of sending 95 million dollars to help out the people from the tidal wave put that money back into SS. It would be a partial payment from the gov't.

I for one and tired of the gov't giving money to other folks all over the world when it is needed here!!”

“Actually Ewker he is asking the relief to be raised from 350 mil to 950 mil. Add a zero.

Unfortunately even if that 1 bil (rounded up) was put into SS it wouldn't mean much...

"Total income in 2003 was $632 billion and benefits paid were $471 billion. Total assets held in Social Security's special issue U.S. Treasury securities at the end of 2003 totaled $1.53 trillion"”

“If the economy should grow a little faster than the trustees or the CBO assume, there will be no solvency problem.

Another point to add to this is that for years they have been erring on the side of caution while trying to predict the state of SS into the future. Typically the economy does much better than what is figured into those calculations.”

“techntrek, I thought he was asking for an additional 95 million over what we have already sent..yikes didn't know he meant another 600 million...sorry but phuck em the money is needed here”

“He has me scared enough of the "evadewers", I don't need one more thing.”

“Social Security's worse than they say
Thursday, February 17, 2005

On TV once, I saw a citizen being interviewed about some screwup by politicians.
"I don't think the taxpayers should have to pay for this," the citizen said. "The government should pay."

The idea that the government can get money from some source other than the taxpayers is a common misconception and one that is at the heart of the debate over the future of Social Security and Medicare. This misconception was on view in recent letters to the editor of this newspaper about Social Security.

The readers assert that the system is not in crisis. If the payments ever do exceed payroll taxes, the Social Security trust fund will support the program for the foreseeable future.

This seems to make sense on the surface. There's a flaw in the reasoning, however. The trust fund consists of debt that the government owes to the Social Security system. But the government has only one source for getting the money to pay back that debt: the taxpayers. When you hear someone say that future Social Security benefits will be paid "out of the trust fund," just substitute the words "out of taxes" and you will understand the problem. There is no goose laying golden eggs in the treasury building in Washington. The only goose eggs are the zeroes in that trust fund.

It therefore follows that the crisis in Social Security will begin not in the distant future, when the trust fund is entirely paid back, but in the very near future, when those payments start. By 2018, so many Baby Boomers will be retiring that the outlay in Social Security payments will exceed the revenue in Social Security taxes. The federal government will have to make up that difference by taking money from income taxes and other revenue sources.

This won't be much at the start, a mere $27 billion or so. But by 2030, when all of the Boomers are retired, the taxpayers will have to come up with a half-trillion dollars a year to subsidize Social Security. By 2041, the shortfall will be a full trillion.

There are a lot of ways of looking at this, all of them bad. I discussed this with Jogadeesh Gokhale, a senior fellow at the Cato Institute. Gokhale is one of the pioneers of a new field of economics known as "generational accounting," which is based on the idea that no generation should impose undue burdens on another.

Gokhale points out that by 2030 every two workers will have to fund, through one form of taxation or another, the entire Social Security and Medicare costs of one retiree. Let's assume that the median household income in 2030 is the same as it is now in real dollars, about $50,000 a year. With current benefit levels, that household will have to pay about $20,000 a year in taxes just to support retirees. On top of that, of course, the family will have to pay state and local taxes as well as other federal taxes. If there's anything left over, it might be able to bring a few bags of rice and cans of beans into the tent it'll be living in right next to that luxury senior citizen condo complex.

At that point, says Gokhale, "we will essentially have an economic meltdown. Skilled workers will start emigrating to other countries."
And at that point, it will hardly matter how the feds raise the money to support us greedy geezers. (I myself hope to be sipping subsidized margaritas in the sun by then.) So much of it will be required that there will be almost nothing left for the younger generations.

This isn't fair. The myth of the trust fund is just a means of making us Baby Boomers think it is.
"The trust fund is just this accounting gimmick that provides people ... a claim on future revenues," said Gokhale.
In fact, we Boomers aren't saving any money. We're running up huge deficits, about $400 billion a year under the big-spending Bush administration. And not only does President Bush refuse to balance the budget; he added a hugely expensive prescription drug benefit for seniors.

Don't turn to the Democrats for help, however. They want to throw even more gold at those in their golden years. Teddy Kennedy referred to the drug program as "just a down payment," and John Kerry pandered to Boomers by pledging that he would never raise the retirement age.
Meanwhile, Medicare's projected deficit for the next 75 years is an astronomical $28 trillion. The government's own Web site tells us that either benefits must be cut to a quarter of their current level or taxes must be raised to four times the current rate. But who looks 75 years ahead? Anyone who cares about the future prospects of a baby born this week, that's who.
No one, in other words.

Paul Mulshine is a Star-Ledger columnist.”

“I have a question concerning Social Security.

If Bush believes that private accounts will be so great why doesn't he take some money from Social Security (they take it for everything else)and put it into those safe trust funds. They would make a whole lot more money than an single person putting his little 4% in each payday.”

“Paul Mulshine is full of it (still).

This push to destroy SS is an attempt to piss on FDR's grave. Trouble is, it will make Ronald Reagan into a huge liar too. Here are his remarks upon signing the Social Security Amendments of 1983. A promise I've relied upon as I paid a significant part of my income into the trust fund for most of my working life.

"This bill demonstrates for all time our nation's ironclad commitment to social security. It assures 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. From this day forward, they have one pledge that they will get their fair share of benefits when they retire.
[...]
Today, all of us can look each other square in the eye and say, ``We kept our promises.'' We promised that we would protect the financial integrity of social security. We have. We promised that we would protect beneficiaries against any loss in current benefits. We have. And we promised to attend to the needs of those still working, not only those Americans nearing retirement but young people just entering the labor force. And we've done that, too."


Will the Republican Party honor the contract their patron saint made to my generation, or will they smear crap on the Gipper too?
last edited: 2/17/05 4:28:38 PM”

“I’m pretty much all for just letting it go and then enjoy a big fat “Told ya so” years down the road. I’m not depending on SS. I have no children who will be left with the mess. Let Violin’s kids deal with it.”

“Nigal, I hate to break it to ya but SS will be there yrs from now. If it isn't you can tell me so like I will care then ..lol

We can be hobbling down the trail with a walker cussing those dang rocks and roots in the way.”

“Actually V, the gipper showed how to keep SS AND keep taxes low.

It is called a deficit and that is the only way to keep FDR's ponsi scheme afloat.
And LBJ's addition to the FDR ponsi, Medicare which is losing even more money.

Just keep writing IOU's, run a huge balance of trade deficit, sell everything to overseas interests.

and then ..

do what the Arabs did

Nationalize everything, confiscate all foreign owned assets.

Whoo hoo, the foreign invester is screwed.
As good socialists you should be very happy with this scheme to shaft the rich. Or is only domestic rich that you despise?

Or if you are too ethical to confiscate property, do not sell but devalue the currency like the South Americans, Post War Germans, Russians, and others have done.
One mega-quadrillion old dollars equal one new dollars.

Instant settlement of the National debt, all taxes are collected in new dollars and SS is solvent again.

This can be done as soon as the baby boomers die out and the payer/payee ratio is in balance again, until then just float the IOU's.”

“Sorry chief - Rule #1 in trolling is never post an honest opinion on a topic if you think you'll be writing flamebait at a later date: http://www.thebackpacker.com/trailtalk/thread/35270,-1,1.php#1058634”

“Where is the inconsistency V ?

Either dilute benefits and balance the account, or borrow the deficit.

None of the politicians will address diluting benefits which leaves borrowing against future income as the chosen option.
The only action taken, and it is a positive step, is adjusting the commencement age as the average longevity increases to balance contribution years with drawing years.

How do you eventually retire the ballooning deficit? increase taxes to an unsustainable level as in the Mulshine article, or declare bankruptcy and write off the debt by devaluing the currency the debt is written in.

My honest opinion in the earlier article is that SS should not be abolished in favor of personal accounts, because we already have the personal account option with 401k's and IRA's, and agreeing with others that SS is an insurance, and should never be more than 1/3 of your retirement plan.

And the increase in the age before drawing is still unfair to those who have a predisposition to die earlier, either by genetics, or type of work they do. This unfairness is eased by people having choices in their SS commencement age, lower benefit but still the option to take a retirement.”