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Toro:
The part you're missing here is there is no "me and you".. The folks who paid EXCESS into FICA created the accounting gimmick of a "trust fund". A "pay as you go" transfer from current workers to past workers does not REQUIRE a "trust fund". That's the way it worked for 30 years except for the SS surplus.
Now the same folks who made those excess contributions that were stolen are the same "me and you" that are on the hook for the missing money, the phoney interest, and the financing charges for generating debt instruments to cover the FICA shortfalls.
They KNEW that excess was the only way to cover future liabilities. And they mismanaged it. They used the fictional accounting to keep almost $3Trill of debt off of the General Accounting books. Deferred it without ANY vehicle of investment that doesn't involve MORE taxpayer contributions.
To equate THAT to a bond fund where there are 2 distinct parties taking risk and reward into account is just too simplistic..
Whether or not it requires a trust fund, or if there were excess contributions paid, or whatever, misses the point. SS works like how a government bond fund works. If you set up a government bond fund that bought and sold government bonds, the cash flow and economics would work the same as the system is set up now.
I have repeatedly said that SS is a bad system and should be changed. But it is not a Ponzi scheme.
It seems as though anytime you try to inject a shade of gray into any debate around here, you get slammed as being a yin or yang.
Doesn't bode well for the country if this is the case outside of this forum.
US government funds and the trust fund are separate entities. They are not one and the same. By law the S.S. trust is held in trust for the surviving beneficiaries. By law, the funds must be invested in government bonds or be paid to beneficiaries. If the trust fund is depleted, the benefits will be reduced to S.S. payroll taxes. There is no provision in the law that allows the government funds to be used to supplement S.S. funds.The 2.5 trillion dollar balance is fully invested in US treasuries as required by law for over 70 years. Most of the money in the fund is from interest, not contributions.
The mechanics are pretty simple. The treasury issues benefit checks directly out of payments receive from payroll taxes. Excesses are reinvested. Any shortage is covered by selling bonds in the portfolio.
In 2009 and 2010, receipts were about 5% less that benefits. This was due to higher unemployment and the temporary reduction in payroll tax rate. By 2012-14, the CBO projects the shortage to be less than 1%. After that contributions are expected to surpass benefit payments for a few years then begin a rapid fall resulting in a zero balance by around 2038. At that time payment of benefits will come 100% from contributions and benefits will be about 25% less than they are now. This is if Congress does nothing which seems unlikely.
You can't pay yourself interest, and you can't loan money to yourself.
Why is it so hard for leftwing nitwits to understand that?
US government funds and the trust fund are separate entities. They are not one and the same. By law the S.S. trust is held in trust for the surviving beneficiaries. By law, the funds must be invested in government bonds or be paid to beneficiaries. If the trust fund is depleted, the benefits will be reduced to S.S. payroll taxes. There is no provision in the law that allows the government funds to be used to supplement S.S. funds.The 2.5 trillion dollar balance is fully invested in US treasuries as required by law for over 70 years. Most of the money in the fund is from interest, not contributions.
The mechanics are pretty simple. The treasury issues benefit checks directly out of payments receive from payroll taxes. Excesses are reinvested. Any shortage is covered by selling bonds in the portfolio.
In 2009 and 2010, receipts were about 5% less that benefits. This was due to higher unemployment and the temporary reduction in payroll tax rate. By 2012-14, the CBO projects the shortage to be less than 1%. After that contributions are expected to surpass benefit payments for a few years then begin a rapid fall resulting in a zero balance by around 2038. At that time payment of benefits will come 100% from contributions and benefits will be about 25% less than they are now. This is if Congress does nothing which seems unlikely.
You can't pay yourself interest, and you can't loan money to yourself.
Why is it so hard for leftwing nitwits to understand that?
Get this straight. THERE IS NO MONEY. SS is IOU's. Period.Someone still needs to explain to me how, if there is all this trust fund money still around and the system is so solid, that President Obama would make the kind of statement he did during the debt cieling crisis.
How is it possible that he could not be sure SS checks would be in the mail if the system is safe for the next 25 years.
Looking for some help !!!
The trusts don't own marketable bonds. Nothing can be sold. Instead, you have an account in the trusts in your name which is credited with your contributions and deemed interest.
It's like me borrowing from you except that I give you my word. You can't sell my word to anyone but I still owe you money.
The critics of SS argue that it is a pay as you go system. From an operational standpoint, that is correct. Money coming in is used to pay money going out.
If SS were a real pension fund, money coming in would be used to buy bonds, and bonds would be sold or redeemed to fund money going out. But SS effectively cuts out the middleman and skips the buying and selling of bonds, and instead credits and debits accounts as if it were buying and selling bonds in the trusts. This is why people say SS is an accounting gimmick or there's nothing there. It's because SS is structured like a bond fund but it isn't a real one. Practically, SS is a pay as you go system.
But the economics of the SS trusts are exactly like a government bond pension fund. It works the same way. The critics say "you can't sell assets" for when we have incidences like the debt ceiling debacle. That's true. But the flip side to that is by selling bonds to fund the payout, you would lower the assets in the trust, making it more underfunded, requiring it to raise contributions in the future. It's this kind of shit that politicians play at the state level with government workers pension funds. One could argue that by SS not being a real pension fund, it ties politicians hands and does not allow them to play games like selling assets to pay recipients which just have to be paid for by later generations.
Please!!!!!US government funds and the trust fund are separate entities. They are not one and the same. By law the S.S. trust is held in trust for the surviving beneficiaries. By law, the funds must be invested in government bonds or be paid to beneficiaries. If the trust fund is depleted, the benefits will be reduced to S.S. payroll taxes. There is no provision in the law that allows the government funds to be used to supplement S.S. funds.The 2.5 trillion dollar balance is fully invested in US treasuries as required by law for over 70 years. Most of the money in the fund is from interest, not contributions.
The mechanics are pretty simple. The treasury issues benefit checks directly out of payments receive from payroll taxes. Excesses are reinvested. Any shortage is covered by selling bonds in the portfolio.
In 2009 and 2010, receipts were about 5% less that benefits. This was due to higher unemployment and the temporary reduction in payroll tax rate. By 2012-14, the CBO projects the shortage to be less than 1%. After that contributions are expected to surpass benefit payments for a few years then begin a rapid fall resulting in a zero balance by around 2038. At that time payment of benefits will come 100% from contributions and benefits will be about 25% less than they are now. This is if Congress does nothing which seems unlikely.
You can't pay yourself interest, and you can't loan money to yourself.
Why is it so hard for leftwing nitwits to understand that?
That's not true. Most places don't have laws which say that pension funds have to be fully funded. In fact, most aren't. Pension funds are bounded by laws in which they are supposed to operate. But they don't have laws that say "You have to have $X in assets to pay $Y in liabilities."
I am hung up on the bond buying part because a pension plan comprised entirely of government bonds does transfer payments from one set of workers to another. In fact, all government debt - or all debt for that matter - transfers assets from one group of people to another.
I'll give you an example. Lots of people say that "The SS trusts are just filled with IOUs." Never mind that all bonds and debts are merely IOUs with different legal standings, that doesn't change the economics and cash flows of the funds. Let's say I borrow money from you. We can do it two ways. I can promise to pay you back (an IOU) or we can write a contract saying I will pay you back (a bond). Then I pay you back. Between the time when I've borrowed money from you and the time I've paid you back, in the first scenario, you have my promise, the second, you have a bond. That doesn't change the cash flows and economics of the transaction. The only difference is the legal standing of the asset and liability and perhaps the liquidity.
I get why this is confusing, but if you drill into the economics, the cash flows are all the same. The government could set up an individual mutual fund administered by a private company for every one on social security which can only invest in government bonds, and the economics and cash flows would be exactly as they are in the SS trusts.
You do understand that's how SS makes interest on the money, right?
Yes I do
Now pay close attention........................................
Government - Interest Expense on the Debt Outstanding
Refute it if you can!!!
The interest earned on the trust fund in 2010 was 108 billion.
2011 Trustees Report: Section IV.A, Short-range estimates
Paul Krugman thinks it has Ponzi Game Aspects (which is one of those, if it quacks like a duck things):
Social Security is structured from the point of view of the recipients as if it were an ordinary retirement plan: what you get out depends on what you put in. So it does not look like a redistributionist scheme. In practice it has turned out to be strongly redistributionist, but only because of its Ponzi game aspect, in which each generation takes more out than it put in. Well, the Ponzi game will soon be over, thanks to changing demographics, so that the typical recipient henceforth will get only about as much as he or she put in (and todays young may well get less than they put in).
And Paul Samuelson thinks it is a Ponzi scheme:
Social Security is a Ponzi Scheme that Works
The beauty of social insurance is that it is actuarially unsound. Everyone who reaches retirement age is given benefit privileges that far exceed anything he has paid in exceed his payments by more than ten times (or five times counting employer payments)!
How is it possible? It stems from the fact that the national product is growing at a compound interest rate and can be expected to do so for as far ahead as the eye cannot see. Always there are more youths than old folks in a growing population. More important, with real income going up at 3% per year, the taxable base on which benefits rest is always much greater than the taxes paid historically by the generation now retired.
Is Social Security a Ponzi Scheme?
Given how the lefties kowtow to Krugman and Samuelson, they should support Perry's assessment of SS.
No, I don't need another link. I have the law and the Social Security Actuarial Reports.US government funds and the trust fund are separate entities. They are not one and the same. By law the S.S. trust is held in trust for the surviving beneficiaries. By law, the funds must be invested in government bonds or be paid to beneficiaries. If the trust fund is depleted, the benefits will be reduced to S.S. payroll taxes. There is no provision in the law that allows the government funds to be used to supplement S.S. funds.You can't pay yourself interest, and you can't loan money to yourself.
Why is it so hard for leftwing nitwits to understand that?
Now your just making chit up. Because it's the Treasury that's pumping money raised by NEW debt issuance into SS books to make them balance.. Need a link for that?
Paul Krugman thinks it has Ponzi Game Aspects (which is one of those, if it quacks like a duck things):
Social Security is structured from the point of view of the recipients as if it were an ordinary retirement plan: what you get out depends on what you put in. So it does not look like a redistributionist scheme. In practice it has turned out to be strongly redistributionist, but only because of its Ponzi game aspect, in which each generation takes more out than it put in. Well, the Ponzi game will soon be over, thanks to changing demographics, so that the typical recipient henceforth will get only about as much as he or she put in (and todays young may well get less than they put in).
And Paul Samuelson thinks it is a Ponzi scheme:
Social Security is a Ponzi Scheme that Works
The beauty of social insurance is that it is actuarially unsound. Everyone who reaches retirement age is given benefit privileges that far exceed anything he has paid in exceed his payments by more than ten times (or five times counting employer payments)!
How is it possible? It stems from the fact that the national product is growing at a compound interest rate and can be expected to do so for as far ahead as the eye cannot see. Always there are more youths than old folks in a growing population. More important, with real income going up at 3% per year, the taxable base on which benefits rest is always much greater than the taxes paid historically by the generation now retired.
Is Social Security a Ponzi Scheme?
Given how the lefties kowtow to Krugman and Samuelson, they should support Perry's assessment of SS.
From the book with the Samuelson quote
This is important. Ponzi was a fraud because there was no economic foundation upon which to support the scheme. If you want to call SS a pay-as-you-go system, or a wealth transfer mechanism, that is all true. But a Ponzi Scheme is one in which there is no economic basis for the returns. That is different from SS, which is based upon the claims to the economy. As long as the economy grows, and the demographics are stable, then the system is sustainable forever. That is not true of a Ponzi Scheme. It may be that changes to demographics requires changes to the system, i.e. people are living longer so we should up the retirement age, but that doesn't mean the system is a fraud.The problem with the Ponzi scheme is that it quickly exploded beyond the capacity of any society to keep it going. ...
The future obligations under a system of the sort Ponzi devised simply compounded beyond the capacity of the economy to support it.
I think this is exactly right. All financial assets are claims against something. All financial assets rely on a growing economy to be fully funded. A declining economy will mean declining stocks, bonds, real estate, commodity prices, and SS obligations.
Social Security Is No More A Ponzi Scheme Than Is Anything Else That Relies On Future Economic Growth | ThinkProgressConsider something that nobody says is a Ponzi scheme your 401(k). What happens here is that you work while youre working age. You earn money. You take some of that money to buy shares in firms. Your expectation is that at a future date when youre not working anymore, youll be able to exchange those shares for money. More money than you paid for them in the first place. Why would that work? Well, it could work because you were just stupendously lucky. But the reason we anticipate that it will work systematically is that we anticipate that there will be economic growth. In the future, people will in general have more money, so assets will be more valuable. Save today, sell tomorrow.
Social Security is not a prefunded pension plan or a savings scheme. But its actuarial situation is just the same as a stock market investment in this regard. If future economic growth is lower than anticipated, it will be impossible to pay the anticipated level of benefits. On the other hand, if future economic growth is faster than anticipated, it would be possible to pay even more benefits than had been promised. As it happens, over the past 25 years economic growth has been slower than was anticipated a few decades ago. This does create a financial problem for Social Security. But its the exact same financial problem as exists for private sector savings schemes. But neither Social Security nor being mildly over-optimistic about your stock picks is a Ponzi scheme. A Ponzi scheme is a fraud where in the end the whole pyramid goes bust a bunch of people wind up with no money at all. The absolute only reason Social Security could ever go bust like that would be if elected officials decided they wanted to stop paying benefits.
Paul Krugman thinks it has Ponzi Game Aspects (which is one of those, if it quacks like a duck things):
Social Security is structured from the point of view of the recipients as if it were an ordinary retirement plan: what you get out depends on what you put in. So it does not look like a redistributionist scheme. In practice it has turned out to be strongly redistributionist, but only because of its Ponzi game aspect, in which each generation takes more out than it put in. Well, the Ponzi game will soon be over, thanks to changing demographics, so that the typical recipient henceforth will get only about as much as he or she put in (and todays young may well get less than they put in).
And Paul Samuelson thinks it is a Ponzi scheme:
Social Security is a Ponzi Scheme that Works
The beauty of social insurance is that it is actuarially unsound. Everyone who reaches retirement age is given benefit privileges that far exceed anything he has paid in exceed his payments by more than ten times (or five times counting employer payments)!
How is it possible? It stems from the fact that the national product is growing at a compound interest rate and can be expected to do so for as far ahead as the eye cannot see. Always there are more youths than old folks in a growing population. More important, with real income going up at 3% per year, the taxable base on which benefits rest is always much greater than the taxes paid historically by the generation now retired.
Is Social Security a Ponzi Scheme?
Given how the lefties kowtow to Krugman and Samuelson, they should support Perry's assessment of SS.
From the book with the Samuelson quote
This is important. Ponzi was a fraud because there was no economic foundation upon which to support the scheme. If you want to call SS a pay-as-you-go system, or a wealth transfer mechanism, that is all true. But a Ponzi Scheme is one in which there is no economic basis for the returns. That is different from SS, which is based upon the claims to the economy. As long as the economy grows, and the demographics are stable, then the system is sustainable forever. That is not true of a Ponzi Scheme. It may be that changes to demographics requires changes to the system, i.e. people are living longer so we should up the retirement age, but that doesn't mean the system is a fraud.The problem with the Ponzi scheme is that it quickly exploded beyond the capacity of any society to keep it going. ...
The future obligations under a system of the sort Ponzi devised simply compounded beyond the capacity of the economy to support it.
So what you're saying is that SS is not a Ponzi Scheme because the government can force unwilling participants to continue to contribute to it against their wills.
IMO, that makes it even less moral than a Ponzi Scheme.
Boedicca should give the complete comment: "In practice it has turned out to be strongly redistributionist, but only because of its Ponzi game aspect, in which each generation takes more out than it put in. Well, the Ponzi game will soon be over, thanks to changing demographics, so that the typical recipient henceforth will get only about as much as he or she put in (and today's young may well get less than they put in)."
In other words, any Ponzi-like effects will go away, according to Krugman (writing in 1996 ~ did she tell us this was 15 years old?), and did she mention that in the very next paragraph Krugman describes Freidman's policies of being flatly redistributionistic.
So, (1) according to Krugman FIFTEEN years ago, any Ponzi like effects will be remediated, and (2) Friedman is a redistributionist.
In other words, Boedicca, on this issue, can be ignored.
Get this straight. THERE IS NO MONEY. SS is IOU's. Period.Someone still needs to explain to me how, if there is all this trust fund money still around and the system is so solid, that President Obama would make the kind of statement he did during the debt cieling crisis.
How is it possible that he could not be sure SS checks would be in the mail if the system is safe for the next 25 years.
Looking for some help !!!
The trusts don't own marketable bonds. Nothing can be sold. Instead, you have an account in the trusts in your name which is credited with your contributions and deemed interest.
It's like me borrowing from you except that I give you my word. You can't sell my word to anyone but I still owe you money.
The critics of SS argue that it is a pay as you go system. From an operational standpoint, that is correct. Money coming in is used to pay money going out.
If SS were a real pension fund, money coming in would be used to buy bonds, and bonds would be sold or redeemed to fund money going out. But SS effectively cuts out the middleman and skips the buying and selling of bonds, and instead credits and debits accounts as if it were buying and selling bonds in the trusts. This is why people say SS is an accounting gimmick or there's nothing there. It's because SS is structured like a bond fund but it isn't a real one. Practically, SS is a pay as you go system.
But the economics of the SS trusts are exactly like a government bond pension fund. It works the same way. The critics say "you can't sell assets" for when we have incidences like the debt ceiling debacle. That's true. But the flip side to that is by selling bonds to fund the payout, you would lower the assets in the trust, making it more underfunded, requiring it to raise contributions in the future. It's this kind of shit that politicians play at the state level with government workers pension funds. One could argue that by SS not being a real pension fund, it ties politicians hands and does not allow them to play games like selling assets to pay recipients which just have to be paid for by later generations.
You people can spin shuck and dive until Aunt Bessie calls the cows in for milking.
One thing your pontificating about trust funds, bonds, interest etc. cannot get past is Obama's statement that he was unsure SS Checks could be sent out for August payment.
If there's all this coin hanging around, why did Obama threaten SS recipients with non-payment?
That no one can prove it is is all the proof of a negative one needs.
It's been proven over and over to a critical mind. Social security is just a clear Ponzi scheme. The problem is you're waiting for someone to prove it without violating liberal rule #1, liberalism is inherently true. Some people agree with that rule, liberals, and blindly accept social security is not a Ponzi scheme. For anyone else it just so obviously is, we don't care to prove it without violating the inherent truth of your liberal religion. That's why you're not getting anywhere.
A Ponzi scheme is fraud. There is no fraud in Social Security. Social Security operates openly and in full compliance with the law.
In a Ponzi scheme, someone is stealing money for their own personal use. No one is stealing money from Social Security. All the money is accounted for.
A Ponzi scheme eventually falls apart because money was stolen and the new money runs out. Social Security can only 'fall apart' if either the US treasury defaults on its obligations or if the Congress and the president fail to make the easily made adjustments to income and outgo that are needed to rationalize SS's future finances.
But, hey, 'Ponzi scheme', like 'death panels', is the kind of 2 word simplistic talking point that the Right loves,
mostly because it doesn't put a lot of pressure on their brains to actually function.
It's been proven over and over to a critical mind. Social security is just a clear Ponzi scheme. The problem is you're waiting for someone to prove it without violating liberal rule #1, liberalism is inherently true. Some people agree with that rule, liberals, and blindly accept social security is not a Ponzi scheme. For anyone else it just so obviously is, we don't care to prove it without violating the inherent truth of your liberal religion. That's why you're not getting anywhere.
A Ponzi scheme is fraud. There is no fraud in Social Security. Social Security operates openly and in full compliance with the law.
In a Ponzi scheme, someone is stealing money for their own personal use. No one is stealing money from Social Security. All the money is accounted for.
A Ponzi scheme eventually falls apart because money was stolen and the new money runs out. Social Security can only 'fall apart' if either the US treasury defaults on its obligations or if the Congress and the president fail to make the easily made adjustments to income and outgo that are needed to rationalize SS's future finances.
But, hey, 'Ponzi scheme', like 'death panels', is the kind of 2 word simplistic talking point that the Right loves,
mostly because it doesn't put a lot of pressure on their brains to actually function.
You prefer euphemisms.
Social Security is a fraud because people are being told they are saving for their own retirement when they are not, the money is being spent as it's brought in just like any other tax. .
Since all S.S. funds are invested in US debt, any money needed to pay benefits not covered by payroll taxes must come from redeeming Special Issue Treasury Bonds held by by the Trust. That amount was less than 5% in 2010. It should be a bit less this year. If the treasury did not have sufficient funds to cover this redemption, then it would take the funds out of current sales of treasury bonds.You people can spin shuck and dive until Aunt Bessie calls the cows in for milking.
One thing your pontificating about trust funds, bonds, interest etc. cannot get past is Obama's statement that he was unsure SS Checks could be sent out for August payment.
If there's all this coin hanging around, why did Obama threaten SS recipients with non-payment?
Yes I do
Now pay close attention........................................
Government - Interest Expense on the Debt Outstanding
Refute it if you can!!!
The interest earned on the trust fund in 2010 was 108 billion.
2011 Trustees Report: Section IV.A, Short-range estimates
The interest on the debt was $413 trillion. Do you see a problem with those numbers?
You say he's right and you also say government loaning money to itself is an asset.
That you claim to not be a liberal Democrat is funny, but that you claim to have been an ideological libertarian and went to an unaffiliated socialist is even more ridiculous. As critical minds grow they start to realize government is not an effective solution to more and more of our problems and in fact the "solutions" actually make things worse then they were. Nobody who knows government is stupid and screws up everything one day wakes up and discovers it actually is the solution to all our problems as you claim to have done.
I'm not a socialist. You're just so far on the extreme edge of the political spectrum, it all looks like socialism to you.
