The "raiding" of the Social Security Trust. What you don't know, and why you're probably an idiot.

[Flash]

[


Social Security is different from other programs supported by Trust Funds. The government has no liability for SS, beyond the bonds held by the Trust Fund. If the government has a Trust Fund for the superfund or not, is irrelevant. The government has to pay for the clean-up. The Trust Fund is simply an accounting devise to move the cost of the clean-up into a different FY. The assets of those trust funds do not change the level of cost one way or another.

Your claiming that the government has liabilities but that is not true. The government can do anything it wants including stopping the Social Security checks. If the right circumstances presented itself the government would cut off the checks or change the rules to be a means test to see who gets it or whatever.

The government has our money and as citizens we really have no leverage to get it back if the elected (by special interest groups) officials decide to take it away for whatever reason.

Just look to Greece to what happens when a country over extends themselves and runs out of money. It is not pretty and the government will not protect your assets including the hundreds of thousands of dollars you and your employer may have paid into SS over the years.

You seem very naive about the government. The government is not our friend and these jackasses we elect to leadership positions lie to us. Would you like some examples?

.

 

[Siete]

pretty easy way to circumvent the Government.

Pass the plate and take up a collection big enough to pay for everything considered government. Pay your own way rather than bitch about it.

end of problem.

 

[JoeTheEconomist]

[


Social Security is different from other programs supported by Trust Funds. The government has no liability for SS, beyond the bonds held by the Trust Fund. If the government has a Trust Fund for the superfund or not, is irrelevant. The government has to pay for the clean-up. The Trust Fund is simply an accounting devise to move the cost of the clean-up into a different FY. The assets of those trust funds do not change the level of cost one way or another.

Your claiming that the government has liabilities but that is not true. The government can do anything it wants including stopping the Social Security checks. If the right circumstances presented itself the government would cut off the checks or change the rules to be a means test to see who gets it or whatever.

The government has our money and as citizens we really have no leverage to get it back if the elected (by special interest groups) officials decide to take it away for whatever reason.

Just look to Greece to what happens when a country over extends themselves and runs out of money. It is not pretty and the government will not protect your assets including the hundreds of thousands of dollars you and your employer may have paid into SS over the years.

You seem very naive about the government. The government is not our friend and these jackasses we elect to leadership positions lie to us. Would you like some examples?

.

The government has bonds that it has to repay. That is trivial compared to the promises which SS cannot keep. The promises of SS are not guaranteed, and are a liability of no one. The bonds held by SS are a liability of the government. We are citizens are responsible for the idiots that we elect.

 

[Fishlore]

[Q


The money you pay in FICA is not invested. Your SS account is not an investment. It is merely an estimated minimum of the income assistance you will be entitled to receive. The actual amount, like the FICA tax rate is a federal law, not an investment.

No shit Sherlock. It suppose to be a Trust Fund but that ship sailed a long time ago. People like Obama needed the money to pay the UAW pension funds and to buy the vote of illegal aliens with welfare so that money is kaput. That is why we are in trouble.

You should be ashamed of yourself as an American to say things such as "If you are irresponsible then that is your problem." Apparently, you have no imam, rabbi or pastor who is around to teach the basics of humans society and the United States Constitution. Your views are not stupid, they are simply wrong. I feel sorry for you.

I am ashamed of the country becoming an out of control oppressive debt ridden welfare state that caters to the welfare queens and discourages personal responsibility.
The trust fund
If you really understood what religion teaches you would know that charity should come from the heart, family and church, not from the power of some corrupt politician trying to buy the votes of special interest.

Personal responsibility is a concept that a Libtard has a very difficult time understanding.

It is your responsibility to provide for your welfare. In my generosity I may chose to help you but it is despicable to have an oppressive government that steals money from those that earn it and gives it to those that didn't earn. I am sure that since you are an American that believes in liberty you would agree.

My dear Watson,
There are two trust funds operated by Social Security. The name "trust fund' creates the false impression in the minds of the uninformed that these funds are supposed to function like the family trust funds set up by wealth people in their wills. This is not the case, as you will learn if you examine the law. To cite just one, critical difference: the SS funds are required to hold only interest bearing non-negotiable Treasury securities backed by the full faith and credit of the federal government. Your family trust fund couldn't buy one of those securities if it wanted to and SS cannot buy anything else.

I can sense your wild fury at the government established under our Constitution and at the society which created it. Ours is a democracy; your opinion is shared by a tiny minority so you will have to put up with it or leave. Being snotty in your posts only makes it appear that your frenzy is not supported by understanding. That is too bad.

 

[Fishlore]

Social Security is most definitely NOT a Ponzi Scheme. All Ponzi Schemes are predicated on the sale of securities. Social Security doesn't sell anything. Ponzi Schemes are driven by the investors' desire for profit. Social Security has no investors and does not claim to make profit.

Social Security is a tax program. Ponzi Schemes are not tax programs. The taxation rate is fixed by Congress, as are the eligibility and payment features. It is true that Social Security is inter-generational, that the benefits paid out today were raised by taxes paid previously. Ponzi Schemes never last that long.

The "Ponzi Scheme" nonsense is a tired meme of talk radio. You are, of course, entirely within your rights to hate Social Security and explain why you do so. To use tendentious false analogies as evidence is mere propaganda of the lowest sort. Not that it matters much. The fringe right has about as much chance of toppling Social Security as a mutt pissing on the Washington Monument does of knocking over that noble obelisk..

Ponzi scheme is actually a great definition.

It describes a system where there is a pyramid where the last "investors" get screwed because everybody below them took the money. With a $56 trillion future liability there is a almost certain chance a lot of people are going to get screwed sometime in the future.

The "profit" in this stupid scheme is the money that was raided from the fund that was used by corrupt politicians to fund other projects that had nothing to do with the retirement plan. They paid off unions and special interest groups and got re-elected and maintained power while the people paying the payroll tax got screwed.

When you get corrupt politicians, elected by special interest groups access to a truckload of money they will find a way to spend it, no matter what it was earmarked for. We should never trust government.

The government does not need to be in the business of worrying about your retirement. That is your responsibility. If you are irresponsible then that is your problem. Do better next time.

Why do you believe any of this? Where does the 56 trillion come from? It isn't the Trustees. There is virtually no money in the system for politicians to take. The system has collected about 17 trillion in total revenue. It has paid out 15 trillion or so in benefits. Another 1.5 trillion has been dedicated to financing the interest cost. So where is the money to pay off unions and special interest groups.

Check kiting is much closer. We take money from workers in exchange for the promise of future benefits. We pay those benefits by writing another check to another set of workers. And so forth and so on until boom.

Phony analogies such as Ponzi Scheme and check kiting are neither legal, political nor economic arguments. They are merely fact-free name calling and not worth a response.

The simple-minded Lemonade Stand School of Economics works by (as the name implies) analogy. Real economics does not work by analogy, it works by quantitative data.

The Social Security law has a payroll tax at one end and a schedule of benefits at the other. The laws and policies connecting the two ends of Social Security are, apparently, too difficult for the Lemonade Stand School to grasp.

So-called conservatives have great difficulty understanding ideas with which they do not agree. American conservatives are actually reactionary anarchists. They hate government. They wish there was no government. They don't want to understand government. Instead, they prefer pretend that federal macroeconomic and fiscal policy is a form of consumer household economy writ large. They imagine that Social Security is a passbook savings account. They just don't get it. They don't want to get it. They are too mad at everything to analyze anything. These are the walking wounded from the great battle of Reaganomics. Sad

If the model in your brain of SS is tax at one end and benefits at the other, than you're incapable of defending yourself against all the fraud in the middle. So just crawl right back in the Snug-Eaze and cover your eyes and ears and don't pay any attention to how badly the program has been financed. Won't even know you've been raped.

Social Security has never borrowed a penny. It is prohibited from doing so by law. Social Security has never defaulted on a single cent of its obligations either. This is the program which you pretend to think is "badly financed." That is pathetically ignorant and your snotty personal invective illustrates that you are motivated by uninformed emotional issues. I'm sorry that America has left you behind but you have only yourself to blame. Fortunately for you, Obamacare provides a mental health benefit and SSI provides some financial assistance for people who cannot function successfully in today's America. Good luck to you!

 

[Fishlore]

Social Security is most definitely NOT a Ponzi Scheme. All Ponzi Schemes are predicated on the sale of securities. Social Security doesn't sell anything. Ponzi Schemes are driven by the investors' desire for profit. Social Security has no investors and does not claim to make profit.

Social Security is a tax program. Ponzi Schemes are not tax programs. The taxation rate is fixed by Congress, as are the eligibility and payment features. It is true that Social Security is inter-generational, that the benefits paid out today were raised by taxes paid previously. Ponzi Schemes never last that long.

The "Ponzi Scheme" nonsense is a tired meme of talk radio. You are, of course, entirely within your rights to hate Social Security and explain why you do so. To use tendentious false analogies as evidence is mere propaganda of the lowest sort. Not that it matters much. The fringe right has about as much chance of toppling Social Security as a mutt pissing on the Washington Monument does of knocking over that noble obelisk..

Ponzi scheme is actually a great definition.

It describes a system where there is a pyramid where the last "investors" get screwed because everybody below them took the money. With a $56 trillion future liability there is a almost certain chance a lot of people are going to get screwed sometime in the future.

The "profit" in this stupid scheme is the money that was raided from the fund that was used by corrupt politicians to fund other projects that had nothing to do with the retirement plan. They paid off unions and special interest groups and got re-elected and maintained power while the people paying the payroll tax got screwed.

When you get corrupt politicians, elected by special interest groups access to a truckload of money they will find a way to spend it, no matter what it was earmarked for. We should never trust government.

The government does not need to be in the business of worrying about your retirement. That is your responsibility. If you are irresponsible then that is your problem. Do better next time.

Why do you believe any of this? Where does the 56 trillion come from? It isn't the Trustees. There is virtually no money in the system for politicians to take. The system has collected about 17 trillion in total revenue. It has paid out 15 trillion or so in benefits. Another 1.5 trillion has been dedicated to financing the interest cost. So where is the money to pay off unions and special interest groups.

Check kiting is much closer. We take money from workers in exchange for the promise of future benefits. We pay those benefits by writing another check to another set of workers. And so forth and so on until boom.

Phony analogies such as Ponzi Scheme and check kiting are neither legal, political nor economic arguments. They are merely fact-free name calling and not worth a response.

The simple-minded Lemonade Stand School of Economics works by (as the name implies) analogy. Real economics does not work by analogy, it works by quantitative data.

The Social Security law has a payroll tax at one end and a schedule of benefits at the other. The laws and policies connecting the two ends of Social Security are, apparently, too difficult for the Lemonade Stand School to grasp.

So-called conservatives have great difficulty understanding ideas with which they do not agree. American conservatives are actually reactionary anarchists. They hate government. They wish there was no government. They don't want to understand government. Instead, they prefer pretend that federal macroeconomic and fiscal policy is a form of consumer household economy writ large. They imagine that Social Security is a passbook savings account. They just don't get it. They don't want to get it. They are too mad at everything to analyze anything. These are the walking wounded from the great battle of Reaganomics. Sad

No people like me DON"T hate government but we want STATES to be what they are regional governments that ONLY depend on the Federal government ---
We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America." Transcript of the Constitution of the United States - Official Text

We the People did NOT want or need the Federal Government to spend TAX monies on these totally irrelevant and wasteful projects!
This is what we the People didn't want from our Federal Government!

10. Outhouse in Alaska:$98,670. The Interior Department spent nearly $100,000 to install an outhouse on an Alaskan trail, which includes a single toilet with no internal plumbing.
9. A bus stop with heated pavement for the Washington area: $1 million. A lavish bus stop with heated pavement was built in Arlington, VA, but it has failed to keep commuters warm or dry.
8. Grant for a pole dancing performance: $10,000. Utility poles, that is. The National Endowment for the Arts provided a grant to PowerUP for Austin Energy employees to perform an artsy dance with 20 utility poles, accompanied by a live orchestra.
7. Pizza — from a printer: $124,995. NASA gave a six-figure grant to a company that aspires to make pizza from a 3-D printer.
6. Study to find out if couples are happier when the woman calms down after argument: $335,525. “[M]arriages that were the happiest were the ones in which the wives were able to calm down quickly during marital conflict,” found a study of 81 couples funded by the National Institutes of Health.

5. Booze and crystal for the State Department: $5.4 million. The State Department went on a bender the week before the government shutdown, purchasing $5 million of “exquisite” crystal glassware to presumably drink the $400,000 in booze they purchased in 2013.

4. Monitoring depression on Twitter: $82,000. The National Institutes of Health is funding a study “to use Twitter for surveillance on depressed people,” according to the Free Beacon.

3. Seven-figure stack of rocks at the London Embassy: $1 million. The American Embassy in London will be receiving a granite sculpture from an artist “whose work resembles stacked piles of paving stones,” according to the Daily Mail.

2. Artwork for Veterans Affairs offices: $562,000. The Department of Veterans Affairs went on a spending spree during “use it or lose it” season, purchasing over half a million in artwork and millions in furniture in a single week.
1. Government employee trip to luxury hotel in the Caribbean: priceless.Federal employees took a taxpayer-funded trip to the Buccaneer Hotel in St. Croix—the same hotel made famous on TV’s “The Bachelor.” The bill was divided among a number of agencies, making a final tally difficult to come by.
Top 10 Examples of Government Waste in 2013

Who told you that you could speak for "We, the People"? The First Amendment to the Constitution empowers you to make a fool of yourself as an individual citizen. If you need to make a fool of yourself as a spokesman for "We, the People," you are going to have to run successfully for elected office. Good luck, the field is already crowed by similarly deluded extremists.

 

[flacaltenn]

Social Security is most definitely NOT a Ponzi Scheme. All Ponzi Schemes are predicated on the sale of securities. Social Security doesn't sell anything. Ponzi Schemes are driven by the investors' desire for profit. Social Security has no investors and does not claim to make profit.

Social Security is a tax program. Ponzi Schemes are not tax programs. The taxation rate is fixed by Congress, as are the eligibility and payment features. It is true that Social Security is inter-generational, that the benefits paid out today were raised by taxes paid previously. Ponzi Schemes never last that long.

The "Ponzi Scheme" nonsense is a tired meme of talk radio. You are, of course, entirely within your rights to hate Social Security and explain why you do so. To use tendentious false analogies as evidence is mere propaganda of the lowest sort. Not that it matters much. The fringe right has about as much chance of toppling Social Security as a mutt pissing on the Washington Monument does of knocking over that noble obelisk..

Ponzi scheme is actually a great definition.

It describes a system where there is a pyramid where the last "investors" get screwed because everybody below them took the money. With a $56 trillion future liability there is a almost certain chance a lot of people are going to get screwed sometime in the future.

The "profit" in this stupid scheme is the money that was raided from the fund that was used by corrupt politicians to fund other projects that had nothing to do with the retirement plan. They paid off unions and special interest groups and got re-elected and maintained power while the people paying the payroll tax got screwed.

When you get corrupt politicians, elected by special interest groups access to a truckload of money they will find a way to spend it, no matter what it was earmarked for. We should never trust government.

The government does not need to be in the business of worrying about your retirement. That is your responsibility. If you are irresponsible then that is your problem. Do better next time.

Why do you believe any of this? Where does the 56 trillion come from? It isn't the Trustees. There is virtually no money in the system for politicians to take. The system has collected about 17 trillion in total revenue. It has paid out 15 trillion or so in benefits. Another 1.5 trillion has been dedicated to financing the interest cost. So where is the money to pay off unions and special interest groups.

Check kiting is much closer. We take money from workers in exchange for the promise of future benefits. We pay those benefits by writing another check to another set of workers. And so forth and so on until boom.

Phony analogies such as Ponzi Scheme and check kiting are neither legal, political nor economic arguments. They are merely fact-free name calling and not worth a response.

The simple-minded Lemonade Stand School of Economics works by (as the name implies) analogy. Real economics does not work by analogy, it works by quantitative data.

The Social Security law has a payroll tax at one end and a schedule of benefits at the other. The laws and policies connecting the two ends of Social Security are, apparently, too difficult for the Lemonade Stand School to grasp.

So-called conservatives have great difficulty understanding ideas with which they do not agree. American conservatives are actually reactionary anarchists. They hate government. They wish there was no government. They don't want to understand government. Instead, they prefer pretend that federal macroeconomic and fiscal policy is a form of consumer household economy writ large. They imagine that Social Security is a passbook savings account. They just don't get it. They don't want to get it. They are too mad at everything to analyze anything. These are the walking wounded from the great battle of Reaganomics. Sad

If the model in your brain of SS is tax at one end and benefits at the other, than you're incapable of defending yourself against all the fraud in the middle. So just crawl right back in the Snug-Eaze and cover your eyes and ears and don't pay any attention to how badly the program has been financed. Won't even know you've been raped.

Social Security has never borrowed a penny. It is prohibited from doing so by law. Social Security has never defaulted on a single cent of its obligations either. This is the program which you pretend to think is "badly financed." That is pathetically ignorant and your snotty personal invective illustrates that you are motivated by uninformed emotional issues. I'm sorry that America has left you behind but you have only yourself to blame. Fortunately for you, Obamacare provides a mental health benefit and SSI provides some financial assistance for people who cannot function successfully in today's America. Good luck to you!

Unfortunately facts are not on your side. Just last year for example, the treasury borrowed 3,900,000,000,000 pennies in order to honor the SS shortfalls.. That's 3.9 Trillion pennies or $39BILL ... Quit listening to Bernie Sanders fairy tales.

 

[Fishlore]

Phony analogies such as Ponzi Scheme and check kiting are neither legal, political nor economic arguments. They are merely fact-free name calling and not worth a response.

The simple-minded Lemonade Stand School of Economics works by (as the name implies) analogy. Real economics does not work by analogy, it works by quantitative data.

The Social Security law has a payroll tax at one end and a schedule of benefits at the other. The laws and policies connecting the two ends of Social Security are, apparently, too difficult for the Lemonade Stand School to grasp.

So-called conservatives have great difficulty understanding ideas with which they do not agree. American conservatives are actually reactionary anarchists. They hate government. They wish there was no government. They don't want to understand government. Instead, they prefer pretend that federal macroeconomic and fiscal policy is a form of consumer household economy writ large. They imagine that Social Security is a passbook savings account. They just don't get it. They don't want to get it. They are too mad at everything to analyze anything. These are the walking wounded from the great battle of Reaganomics. Sad

The response to Ponzi Scheme is ready-baked. You don't have a response for check kiting - so you are reduced to name calling. These aren't analogies.

The structure of Social Security is very similar to check kiting. We write a check to one person in order to cash the last check written. That is a fact about how the system works.

The laws and policies do not connect. That is why there is a nearly $26 trillion shortfall.

When you say that "the structure of Social Security is very similar to check kiting," you are making an analogy. I'll bet you didn't know that, did you? The analogy is a silly one for more reasons than I care to mention. The federal government is not a bank. Without getting into a lot of legal and fiscal details that will only make your head spin, I'll try to make this simple for you: when was the last time the federal government gave you a toaster for paying your taxes?

Given the inter-generational nature of the SS system, the shortfall is inevitable -- in fact, it was foreseen and provided for in 1990 -- but not critical. After all the right wing screaming and stalling is over, the solution to the shortfall is quick and simple: remove the income cap from the FICA tax and apply FICA to capital gains as well as earned income. Voila! Huge surpluses arrive immediately; so huge in fact that it will be possible to cut FICA tax rates substantially.

If that weren't spectacular enough, means testing payments and phasing out benefits to retirees with incomes in excess of 300% of poverty will allow very significant increases in benefits to the truly needy. When these proposals are made as solutions to a reduction in benefits the 10% or so fringe right congresscritters standing on the tracks as the Social Security Express thunders down on them will disappear.

Don't take my word for it. When was the last time that SS benefits were cut? Where are the politicians who ran on phasing out the program? See what I mean?

 

[Toro]

Actually, there is a major "practical difference." The government saved zero, it spent the money as it came in, and like if there was no trust fund, your children will be taxed to pay for it.

Whether there is a "trust fund" or not, there is no economic difference. The government has no assets other than those which are cancelled out by debt. When you add a number to it's negative, you get zero every time, and that's the net value of the the "trust fund." Read your post, you demonstrate exactly my point that you're lost in syntax and the actual meaning of assets and securities has been lost to you. A security based on an asset with an underlying value of zero isn't a real asset, it's a scam when it's treated as being an asset, and that's what social security is, a scam

The government's savings does not go up. The government's liabilities go up. Your savings go up. The government operates the trusts in the name of the recipients. It doesn't operate it in the name of itself.

When you pay FICA taxes, the accounting looks like this. Let's say you pay $100 in taxes. At that moment, the balance sheets look like this

You
Dr. $100 SS claim
Cr. $100 in cash

The SS Trust
Dr. $100 in government non-marketable liabilities
Cr. $100 owed to you

The Treasury
Dr. $100 in cash
Cr. $100 in government non-marketable liabilities owed to the Trust.

The Trust is the conduit through which your SS contributions pass. Eliminating the trust, the net effect is

Dr. $100 you are owed by the government
Cr. $100 the government owes to you.

That's the economic effect of SS. The government's debt is $100 it owes to you.

What I think you are getting confused on is what is in the Trust. In the Trust, there is a $100 asset, which is the debt owed to it by the government. I think this is where you are saying "you can't call a debt a liability." But that is netted out by the $100 the Trust owes to you. So if you count the debt owed to the Trust ($100) as an asset, you also have to count the amount owed by the government to the Trust and the liability owed to you ($100+$100=$200). The gross balance changes when running the cash flows through the Trust, but the net balance does not.

 

[JoeTheEconomist]

Phony analogies such as Ponzi Scheme and check kiting are neither legal, political nor economic arguments. They are merely fact-free name calling and not worth a response.

The simple-minded Lemonade Stand School of Economics works by (as the name implies) analogy. Real economics does not work by analogy, it works by quantitative data.

The Social Security law has a payroll tax at one end and a schedule of benefits at the other. The laws and policies connecting the two ends of Social Security are, apparently, too difficult for the Lemonade Stand School to grasp.

So-called conservatives have great difficulty understanding ideas with which they do not agree. American conservatives are actually reactionary anarchists. They hate government. They wish there was no government. They don't want to understand government. Instead, they prefer pretend that federal macroeconomic and fiscal policy is a form of consumer household economy writ large. They imagine that Social Security is a passbook savings account. They just don't get it. They don't want to get it. They are too mad at everything to analyze anything. These are the walking wounded from the great battle of Reaganomics. Sad

The response to Ponzi Scheme is ready-baked. You don't have a response for check kiting - so you are reduced to name calling. These aren't analogies.

The structure of Social Security is very similar to check kiting. We write a check to one person in order to cash the last check written. That is a fact about how the system works.

The laws and policies do not connect. That is why there is a nearly $26 trillion shortfall.

When you say that "the structure of Social Security is very similar to check kiting," you are making an analogy. I'll bet you didn't know that, did you? The analogy is a silly one for more reasons than I care to mention. The federal government is not a bank. Without getting into a lot of legal and fiscal details that will only make your head spin, I'll try to make this simple for you: when was the last time the federal government gave you a toaster for paying your taxes?

Given the inter-generational nature of the SS system, the shortfall is inevitable -- in fact, it was foreseen and provided for in 1990 -- but not critical. After all the right wing screaming and stalling is over, the solution to the shortfall is quick and simple: remove the income cap from the FICA tax and apply FICA to capital gains as well as earned income. Voila! Huge surpluses arrive immediately; so huge in fact that it will be possible to cut FICA tax rates substantially.

If that weren't spectacular enough, means testing payments and phasing out benefits to retirees with incomes in excess of 300% of poverty will allow very significant increases in benefits to the truly needy. When these proposals are made as solutions to a reduction in benefits the 10% or so fringe right congresscritters standing on the tracks as the Social Security Express thunders down on them will disappear.

Don't take my word for it. When was the last time that SS benefits were cut? Where are the politicians who ran on phasing out the program? See what I mean?

I see what you mean. You want to end Social Security, and replace it with a welfare program. You realize that FDR specifically warned against what you are proposing. Genius. Here is a better end. End Social Security, and transfer the assets to a welfare program of your choice. My guess is that you don't know what check kiting is.

 

[JoeTheEconomist]

Actually, there is a major "practical difference." The government saved zero, it spent the money as it came in, and like if there was no trust fund, your children will be taxed to pay for it.

Whether there is a "trust fund" or not, there is no economic difference. The government has no assets other than those which are cancelled out by debt. When you add a number to it's negative, you get zero every time, and that's the net value of the the "trust fund." Read your post, you demonstrate exactly my point that you're lost in syntax and the actual meaning of assets and securities has been lost to you. A security based on an asset with an underlying value of zero isn't a real asset, it's a scam when it's treated as being an asset, and that's what social security is, a scam

The government's savings does not go up. The government's liabilities go up. Your savings go up. The government operates the trusts in the name of the recipients. It doesn't operate it in the name of itself.

When you pay FICA taxes, the accounting looks like this. Let's say you pay $100 in taxes. At that moment, the balance sheets look like this

You
Dr. $100 SS claim
Cr. $100 in cash

The SS Trust
Dr. $100 in government non-marketable liabilities
Cr. $100 owed to you

The Treasury
Dr. $100 in cash
Cr. $100 in government non-marketable liabilities owed to the Trust.

The Trust is the conduit through which your SS contributions pass. Eliminating the trust, the net effect is

Dr. $100 you are owed by the government
Cr. $100 the government owes to you.

That's the economic effect of SS. The government's debt is $100 it owes to you.

What I think you are getting confused on is what is in the Trust. In the Trust, there is a $100 asset, which is the debt owed to it by the government. I think this is where you are saying "you can't call a debt a liability." But that is netted out by the $100 the Trust owes to you. So if you count the debt owed to the Trust ($100) as an asset, you also have to count the amount owed by the government to the Trust and the liability owed to you ($100+$100=$200). The gross balance changes when running the cash flows through the Trust, but the net balance does not.[/QUOTE]

This isn't how the government keeps its books. The $100 SS payment is processed by the Treasury. It uses the cash to pay for existing benefits. If there is anything left over, it is put into the SS Trust Fund. The $100 is use entirely either between benefits or the purchase of bonds. The cost of future benefits is held off-balance sheet. Yes, payroll taxes are revenue today. The projected cost of future benefits associated to collecting the revenue is not a cost until it is recognized as actual benefits.

The existing Trust Fund is held against nearly $30 trillion of future claims for which the system does not expect to generate cash.

 

[EdwardBaiamonte]

Allowing individuals to retain their SS taxes would allow them to instead invest those funds into retirement plans that would yield better returns,

very true, an average American could retire with an estate of $1.4 million rather than the dog food money they get from SS, assuming they live long enough to collect any of it.

 

[SwimExpert]

Do you have a source for this statement?

You really can't figure it out yourself? By necessity, SS must pay out less than it collects. The operational costs of managing the program alone demand this. If it weren't true then the whole thing would have gone belly up before most of us were even born.

 

[Toro]

This isn't how the government keeps its books.

I'm aware of that. I'm demonstrating the economic effect of how the SS trusts work.

The economics of SS work the same as a pool of government Treasury securities. There are some differences, but to keep it simple

SS
1. You pay FICA taxes.
2. You receive a credit in the SS Trust. The government owes you money.
3. The government spends your money

Treasury security
1. You buy a Treasury security through your broker
2. The government electronically credits your brokerage account. The government owes you money.
3. The government spends your money

The accounting, actuarial assumptions and discount rates used to establish the liabilities of the Trusts may all differ, but above are the cash flows from you to the government. It is the same.

 

[EdwardBaiamonte]

You really can't figure it out yourself? .

sure you can. if an average person put 14% of his life time income in a private savings account he would be a millionaire.

 

[Toro]

Your claiming that the government has liabilities but that is not true. The government can do anything it wants including stopping the Social Security checks. If the right circumstances presented itself the government would cut off the checks or change the rules to be a means test to see who gets it or whatever.

Yes and no.

The government does have liabilities to the Trust, i.e. it owes money to those who are SS recipients. However, you are correct in that the government can arbitrarily change the benefits.

That is also true of the Treasury securities market also. The government can alter the terms of payment for them as well.

However, the effects would be dramatically different. If the government defaulted on its Treasury securities, the financial markets might collapse. If they changed the terms of SS, i.e. if they "defaulted" on their SS promises, financial markets would probably rally.

 

[Flash]

[Q

My dear Watson,
There are two trust funds operated by Social Security. The name "trust fund' creates the false impression in the minds of the uninformed that these funds are supposed to function like the family trust funds set up by wealth people in their wills. This is not the case, as you will learn if you examine the law. To cite just one, critical difference: the SS funds are required to hold only interest bearing non-negotiable Treasury securities backed by the full faith and credit of the federal government. Your family trust fund couldn't buy one of those securities if it wanted to and SS cannot buy anything else.

I can sense your wild fury at the government established under our Constitution and at the society which created it. Ours is a democracy; your opinion is shared by a tiny minority so you will have to put up with it or leave. Being snotty in your posts only makes it appear that your frenzy is not supported by understanding. That is too bad.

My "wild fury" is for the corruption and lack of courage and greed that drives our Republic.

Democracy can be just as oppressive and corrupt as any other kind of government. There is nothing good about the majority (which is usually only a plurality) using the government to steal on their behalf.

Our Founding Fathers understood that and that is why we have the Second Amendment by the way.

Social Security was a terrible idea and as is common with almost every government program it evolved into a monster that has the ability to bankrupt the country.

Only someone naive and a little bit stupid side would think it was good to give the government their money while they were working in the anticipation they would get a pension one day. It was likely that somewhere along the line corrupt politicians would decide to use the money that American citizens were sending in each week for their own pet projects to get the support of the special interest groups that elected them.

 

[Flash]

[Q

Yes and no.

The government does have liabilities to the Trust, i.e. it owes money to those who are SS recipients. However, you are correct in that the government can arbitrarily change the benefits.

That is also true of the Treasury securities market also. The government can alter the terms of payment for them as well.

However, the effects would be dramatically different. If the government defaulted on its Treasury securities, the financial markets might collapse. If they changed the terms of SS, i.e. if they "defaulted" on their SS promises, financial markets would probably rally.

If President Bernie Sanders and a despicable Democrat Congress decides that nobody making more than say $50K a year should get SS benefits then all it would take would be a midnight session of Congress like the filthy one that passed Obamacare and millions of Americans would be screwed out of the money that they and their employer paid in over the years and nothing would be done about it.

 

[Fishlore]

Phony analogies such as Ponzi Scheme and check kiting are neither legal, political nor economic arguments. They are merely fact-free name calling and not worth a response.

The simple-minded Lemonade Stand School of Economics works by (as the name implies) analogy. Real economics does not work by analogy, it works by quantitative data.

The Social Security law has a payroll tax at one end and a schedule of benefits at the other. The laws and policies connecting the two ends of Social Security are, apparently, too difficult for the Lemonade Stand School to grasp.

So-called conservatives have great difficulty understanding ideas with which they do not agree. American conservatives are actually reactionary anarchists. They hate government. They wish there was no government. They don't want to understand government. Instead, they prefer pretend that federal macroeconomic and fiscal policy is a form of consumer household economy writ large. They imagine that Social Security is a passbook savings account. They just don't get it. They don't want to get it. They are too mad at everything to analyze anything. These are the walking wounded from the great battle of Reaganomics. Sad

The response to Ponzi Scheme is ready-baked. You don't have a response for check kiting - so you are reduced to name calling. These aren't analogies.

The structure of Social Security is very similar to check kiting. We write a check to one person in order to cash the last check written. That is a fact about how the system works.

The laws and policies do not connect. That is why there is a nearly $26 trillion shortfall.

When you say that "the structure of Social Security is very similar to check kiting," you are making an analogy. I'll bet you didn't know that, did you? The analogy is a silly one for more reasons than I care to mention. The federal government is not a bank. Without getting into a lot of legal and fiscal details that will only make your head spin, I'll try to make this simple for you: when was the last time the federal government gave you a toaster for paying your taxes?

Given the inter-generational nature of the SS system, the shortfall is inevitable -- in fact, it was foreseen and provided for in 1990 -- but not critical. After all the right wing screaming and stalling is over, the solution to the shortfall is quick and simple: remove the income cap from the FICA tax and apply FICA to capital gains as well as earned income. Voila! Huge surpluses arrive immediately; so huge in fact that it will be possible to cut FICA tax rates substantially.

If that weren't spectacular enough, means testing payments and phasing out benefits to retirees with incomes in excess of 300% of poverty will allow very significant increases in benefits to the truly needy. When these proposals are made as solutions to a reduction in benefits the 10% or so fringe right congresscritters standing on the tracks as the Social Security Express thunders down on them will disappear.

Don't take my word for it. When was the last time that SS benefits were cut? Where are the politicians who ran on phasing out the program? See what I mean?

I see what you mean. You want to end Social Security, and replace it with a welfare program. You realize that FDR specifically warned against what you are proposing. Genius. Here is a better end. End Social Security, and transfer the assets to a welfare program of your choice. My guess is that you don't know what check kiting is.

I have never said anything that would lead anyone to think I want to end Social Security. I do think we need something like the negative income tax plan proposed by Richard Nixon. Lowering the ceiling in order to raise the floor is just good carpentry.

 

[flacaltenn]

Actually, there is a major "practical difference." The government saved zero, it spent the money as it came in, and like if there was no trust fund, your children will be taxed to pay for it.

Whether there is a "trust fund" or not, there is no economic difference. The government has no assets other than those which are cancelled out by debt. When you add a number to it's negative, you get zero every time, and that's the net value of the the "trust fund." Read your post, you demonstrate exactly my point that you're lost in syntax and the actual meaning of assets and securities has been lost to you. A security based on an asset with an underlying value of zero isn't a real asset, it's a scam when it's treated as being an asset, and that's what social security is, a scam

The government's savings does not go up. The government's liabilities go up. Your savings go up. The government operates the trusts in the name of the recipients. It doesn't operate it in the name of itself.

When you pay FICA taxes, the accounting looks like this. Let's say you pay $100 in taxes. At that moment, the balance sheets look like this

You
Dr. $100 SS claim
Cr. $100 in cash

The SS Trust
Dr. $100 in government non-marketable liabilities
Cr. $100 owed to you

The Treasury
Dr. $100 in cash
Cr. $100 in government non-marketable liabilities owed to the Trust.

The Trust is the conduit through which your SS contributions pass. Eliminating the trust, the net effect is

Dr. $100 you are owed by the government
Cr. $100 the government owes to you.

That's the economic effect of SS. The government's debt is $100 it owes to you.

What I think you are getting confused on is what is in the Trust. In the Trust, there is a $100 asset, which is the debt owed to it by the government. I think this is where you are saying "you can't call a debt a liability." But that is netted out by the $100 the Trust owes to you. So if you count the debt owed to the Trust ($100) as an asset, you also have to count the amount owed by the government to the Trust and the liability owed to you ($100+$100=$200). The gross balance changes when running the cash flows through the Trust, but the net balance does not.

You left out the 3rd party guaranteeing the debt.. And that's the same taxpayers who paid the $100. And of course you know this is not a correct analogy -- because you focus on the benefits paid. And it's an insurance program with an actuarial table, not an investment. So folks get different effective returns and yields.

The ONLY part of the payout that even INVOLVES the Treasury is the annual income shortfall. The REST is paid thru direct transfer from SS income..

You also got the Treasury side of the deal wrong because what goes BACK to SS isn't just the book keeping note that subtracts from the IOUs. It also includes cold cash to pay the benefits with. And that cash is freed ONLY by issuing new debt instruments with the taxpayers guaranteeing future payments.