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

[JoeTheEconomist]

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.

Do you have any data to back-up that claim? And I am not counting spam on the internet.

figure it out for yourself. Take 15% of $40k a year at 6% and invest it for 46 years and tell us how much it comes to.

1969 was a fine year to make $40K a year. That would have been roughly $200K today. Of that 40K, you didn't lose 15%, you paid about 5% of the first $2,500, or $500.

At no point have you ever paid 15% for Social Security. Today is pretty much the max and it is 10.6%. Payroll taxes as a whole are 15.3% - but 4.7% is HI and DI which have nothing to do with retirement.

 

[SwimExpert]

I get paid the same amount, my kids pay the same amount regardless. What does the government owing me have to do with anything? In no scenario do I get more or less money based on the existence of the bogus fund. The existence of this fantasy fund effects who?

You will get paid an amount based upon your contributions to the fund. That's what the government owes you for your SS contributions, and that's EXACTLY how a defined contribution pension plan or annuity works.

Whether or not you will get the amount promised - and I don't think you will - is another story. But the economics of how SS works is no different than any other pooled capital of retirement savings.

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.

You are right on a global basis, but wrong about the individual. There will be individuals who get zero back. In total, SS must pay out less than it collects, but you cannot apply that truism at an individual level. You have no idea which person will retire after the fire break.

Okay, so there may be exceptions where especially long lived people hang on long enough that no matter how much SS tax they paid across their lives, they end up collecting more. But you're talking about an exceptional scenario, not a typical one. The fact still remains that the only way that SS can not implode within a month's time is for it to operate on the basis of providing less in benefits than it's received from you.

 

[SwimExpert]

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.

Do you have any data to back-up that claim? And I am not counting spam on the internet.

figure it out for yourself. Take 15% of $40k a year at 6% and invest it for 46 years and tell us how much it comes to.

1969 was a fine year to make $40K a year. That would have been roughly $200K today. Of that 40K, you didn't lose 15%, you paid about 5% of the first $2,500, or $500.

At no point have you ever paid 15% for Social Security. Today is pretty much the max and it is 10.6%. Payroll taxes as a whole are 15.3% - but 4.7% is HI and DI which have nothing to do with retirement.

Who said anything about 1969, other than you?

 

[kaz]

I get paid the same amount, my kids pay the same amount regardless. What does the government owing me have to do with anything? In no scenario do I get more or less money based on the existence of the bogus fund. The existence of this fantasy fund effects who?

You will get paid an amount based upon your contributions to the fund. That's what the government owes you for your SS contributions, and that's EXACTLY how a defined contribution pension plan or annuity works.

Whether or not you will get the amount promised - and I don't think you will - is another story. But the economics of how SS works is no different than any other pooled capital of retirement savings.

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.

You are right on a global basis, but wrong about the individual. There will be individuals who get zero back. In total, SS must pay out less than it collects, but you cannot apply that truism at an individual level. You have no idea which person will retire after the fire break.

You don't know what ex ante means

 

[kaz]

I get paid the same amount, my kids pay the same amount regardless. What does the government owing me have to do with anything? In no scenario do I get more or less money based on the existence of the bogus fund. The existence of this fantasy fund effects who?

You will get paid an amount based upon your contributions to the fund. That's what the government owes you for your SS contributions, and that's EXACTLY how a defined contribution pension plan or annuity works.

Whether or not you will get the amount promised - and I don't think you will - is another story. But the economics of how SS works is no different than any other pooled capital of retirement savings.

Actually, other "pooled capital of retirement savings" typically involves actual money, not IOUs the pool wrote to itself. And the amount I get paid is irrelevant to the discussion because there is no connection between the amount I will be paid and whether or not those IOUs government wrote to itself are a "trust fund" or not..

What is relevant to the discussion is that the amount we get paid has nothing to do with whether SS has a "trust fund" or not, and there is no connection between what our children will pay and whether SS has a trust fund or not.

There is no cashflow connection to anyone regarding whether the government's IOUs to itself are considered a trust fun or not.

All other financial securities as assets affect cashflow to someone somewhere somehow. Social Security's phantom "trust fund" doesn't.

Seriously, with what you do for a living, and I do believe you even if we banter sometimes, how can you possibly consider something that EX-ANTE has no effect on cashflow, positive or negative, ever, to anyone, an economic asset? How is that possible?

The trust fund does not write IOUs to itself. The government writes an IOU to the trust then the trust owes you. You keep repeating that mistake.

The "real cash flows" are your FICA taxes and the SS payments you will receive in later life.

What is the difference between that and you investing in government bonds for your retirement?

Seriously, you don't understand the difference between me loaning money to someone else, and me loaning money to myself. You actually mean that? Seriously?

And as a finance guy, you actually, truly didn't grasp my point that whether or not there is a trust changes zero cash flows ex-ante to anyone, ANYONE, EX-ANTE

you want to look someone in the eye who knows that that means and say you don't get it? I withdraw my statement that I believe you. You are full of shit. And I mean that in the most disrespectful sort of way. In a way that most who say that to you don't. I know what I am talking about. that you don't grasp that your arguement changes zero cashflows is pathetic. If you do what you say, you should be shit canned on the spot.

Cash flows is wall street, Holmes. You don't know that? You aren't Wall Street, you are a janitor, you are a canard:

Toro: There doesn't have to be any money for something to be an asset, WTF are you talking about? Yeah, there does

 

[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.

Do you have any data to back-up that claim? And I am not counting spam on the internet.

figure it out for yourself. Take 15% of $40k a year at 6% and invest it for 46 years and tell us how much it comes to.

1969 was a fine year to make $40K a year. That would have been roughly $200K today. Of that 40K, you didn't lose 15%, you paid about 5% of the first $2,500, or $500.

At no point have you ever paid 15% for Social Security. Today is pretty much the max and it is 10.6%. Payroll taxes as a whole are 15.3% - but 4.7% is HI and DI which have nothing to do with retirement.

ok so if its now 12.5%, figure an average salary compounded for 46 years and tell us what you get

 

[Toro]

In my trust example, the asset is a government Treasury security. That is debt owed to you by the United States government. In my SS example, you have debits in the SS trust. That is debt owed to you by the United States government.

They are both debt owed to you by the United States government. The only difference is the administrator of the trust - in one case the government, the other case the bank. If the government went and bought the bank, then that difference would effectively disappear.

And of course government debt has value. The 2.25% November 15, 2025 Treasury Bond is being quoted at 99-20 on my Bloomberg screen with a bid yield of 2.294%.

According to your argument, that bond is worth $0 because "we owe it to ourselves" and thus has no economic value. You better call the bond market and tell them about your exciting news. I'm sure they'd like to know!

And like I just said. When YOU buy a Treasury Bond -- the Treasury books a debt. The initial SS surplus was SPENT (stolen) with no debt booked to the Treasury. Only an "intragovernmental transfer memo".. You cannot both spend that surplus in the General Fund (unified budget) and use the SAME money to "buy an asset"..

What matters is that the Treasury is dead ass broke --- to the tune of $17TRILL. And it's the taxpayers that are liable for every penny of it. Because the Treasury holds "NO assets" at the end of the each year.

You're confusing surplus with assets and liabilities of the fund. "Surplus" is a flow item

The government almost always spends everything it gets. It doesn't matter if there is a surplus or not. "Surplus" is the difference

Also, the government DOES record all of its liabilities. Go to treasurydirect.gov/NP/debt/current to get the exact amount. Nothing was stolen.

 

[Toro]

I get paid the same amount, my kids pay the same amount regardless. What does the government owing me have to do with anything? In no scenario do I get more or less money based on the existence of the bogus fund. The existence of this fantasy fund effects who?

You will get paid an amount based upon your contributions to the fund. That's what the government owes you for your SS contributions, and that's EXACTLY how a defined contribution pension plan or annuity works.

Whether or not you will get the amount promised - and I don't think you will - is another story. But the economics of how SS works is no different than any other pooled capital of retirement savings.

Actually, other "pooled capital of retirement savings" typically involves actual money, not IOUs the pool wrote to itself. And the amount I get paid is irrelevant to the discussion because there is no connection between the amount I will be paid and whether or not those IOUs government wrote to itself are a "trust fund" or not..

What is relevant to the discussion is that the amount we get paid has nothing to do with whether SS has a "trust fund" or not, and there is no connection between what our children will pay and whether SS has a trust fund or not.

There is no cashflow connection to anyone regarding whether the government's IOUs to itself are considered a trust fun or not.

All other financial securities as assets affect cashflow to someone somewhere somehow. Social Security's phantom "trust fund" doesn't.

Seriously, with what you do for a living, and I do believe you even if we banter sometimes, how can you possibly consider something that EX-ANTE has no effect on cashflow, positive or negative, ever, to anyone, an economic asset? How is that possible?

The trust fund does not write IOUs to itself. The government writes an IOU to the trust then the trust owes you. You keep repeating that mistake.

The "real cash flows" are your FICA taxes and the SS payments you will receive in later life.

What is the difference between that and you investing in government bonds for your retirement?

Seriously, you don't understand the difference between me loaning money to someone else, and me loaning money to myself. You actually mean that? Seriously?

And as a finance guy, you actually, truly didn't grasp my point that whether or not there is a trust changes zero cash flows ex-ante to anyone, ANYONE, EX-ANTE

you want to look someone in the eye who knows that that means and say you don't get it? I withdraw my statement that I believe you. You are full of shit. And I mean that in the most disrespectful sort of way. In a way that most who say that to you don't. I know what I am talking about. that you don't grasp that your arguement changes zero cashflows is pathetic. If you do what you say, you should be shit canned on the spot.

Cash flows is wall street, Holmes. You don't know that? You aren't Wall Street, you are a janitor, you are a canard:

Toro: There doesn't have to be any money for something to be an asset, WTF are you talking about? Yeah, there does

You're not loaning money to yourself. You keep repeating that mistake.

Tell me the difference between the two are

1. You give the government taxes and you are credited with future SS payments

2. You give the government money for a bond which you are credited for future interest and principle payments.

Tell me what the difference is?

 

[Fishlore]

[


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.

How come you Moon Bats always think that the answer to everything is more taxes?

Yes you can always bring more money into the pockets of the bureaucrats if you raise taxes but not only is that damaging to our economy but it is the immoral thing to do.

These people that would get hit with that increase in taxation are the ones already paying the bulk of the trillion a year in come taxes while 50% of Americans pay none to that tax pool and you want to tax them even more. How come you are so greedy? Shame on you!

Back before retiring I usually met the income cap by late Spring or early summer. Then I had a 7.5% increase in take home pay. I spent that money in the productive economy instead of giving it to the filthy ass government and that was always a good thing.

If you need money then stop spending so much. Ron Paul's 2012 Restore America budget cut a trillion a year out of the Federal budget while maintaining defense and not touching Social Security or Medicare. That was a much better approach than raising taxes to provide even more money to an already bloated government.

Don't you think we need to cut out unnecessary government spending before we go raising taxes on the American people?

The combined Federal, State and Local government collects almost 40% of the GDP in taxes.

When is enough going to be enough for you Moon Bats?

Calling me a "Moon Bat" is a sign of weakness on the issues and a childish impulse to call names rather than analyze issues.

More money is needed for Social Security and Medicare because of demographic shifts in the population and the rising costs of medical care and living expenses. The rise in government spending as a percent of GDP is a world-wide phenomenon and the USA is not the biggest spender by any means.

Back in the day before hip transplants and fresh vegetables year round, the cost of keeping poor people alive was much lower. Do you want to go back?

The money has to come from where the money went, and from the past generation all the increase in GDP has gone to the richest 1%.

As for cutting "unnecessary government spending" who could disagree with that idea? What specific spending do you have in mind?

You don't have to agree with the idea of an adjustable safety net for our society and you can believe that making the rich richer is in the best interests of America, but you don't advance either idea by discourtesy. I don't say this disapprovingly; it is OK by me to exchange humorous insults etc. but the heat extinguishes the light. Do you want to discuss the issue or have a round of grab-ass?

A) You asked: "As for cutting "unnecessary government spending" who could disagree with that idea? What specific spending do you have in mind?"

The primary change needs to be in the concept that the Federal government must control our lives from "womb to tomb".
It is not financially reasonable much less responsible to create a totally dependent society.
These are specific examples of gross injustice of wasting tax dollars in the attempt to control our lives from "womb to tomb".

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

That is a pretty impressive list. Add all those expenditures up and they don't equal the cost of keeping a single combat brigade on the ground in the Middle East for a week. It is enough to feed quite a few hungry kids though.

I have never felt the government controlling my life, with the exception of the time I spent in the USMC and I volunteered for that. I'm a long way from the womb and not far from the tomb. What do you want to do that the government won't let you do? What is it that the government is making you do that is so awful?

 

[Fishlore]

[Q


Calling me a "Moon Bat" is a sign of weakness on the issues and a childish impulse to call names rather than analyze issues.

More money is needed for Social Security and Medicare because of demographic shifts in the population and the rising costs of medical care and living expenses. The rise in government spending as a percent of GDP is a world-wide phenomenon and the USA is not the biggest spender by any means.

Back in the day before hip transplants and fresh vegetables year round, the cost of keeping poor people alive was much lower. Do you want to go back?

The money has to come from where the money went, and from the past generation all the increase in GDP has gone to the richest 1%.

As for cutting "unnecessary government spending" who could disagree with that idea? What specific spending do you have in mind?

You don't have to agree with the idea of an adjustable safety net for our society and you can believe that making the rich richer is in the best interests of America, but you don't advance either idea by discourtesy. I don't say this disapprovingly; it is OK by me to exchange humorous insults etc. but the heat extinguishes the light. Do you want to discuss the issue or have a round of grab-ass?

I call you Moon Bat because it is appropriate.

The friggin Federal government is spending almost four trillion a year of which more than a half trillion is borrowed. A couple or three years ago it was over a trillion a year borrowed.

The combined cost of Federal, State and Local government is almost 40% of the GDP so when you Moon Bats claim we need more money then I call bullshit. The cost of government is the highest expenditure of almost every family in American, regardless of income so we are taxed plenty right now. So when you come up with your ideas of taxing more then excuse me if I ridicule you for it. You deserve the ridicule for your greed and irresponsibility.

We never should have implemented the stupid Social Security program to start with. It has grown to be a monster and the only sane thing to do is call it quits. Like I said earlier we need to find a way to pay back those that paid into the system by cutting welfare and government transfer spending elsewhere and then we need to curtail the program for the future. It ain't rocket science.

Simply put the government should not be in the business of providing our retirement. That is our responsibility. We all get screwed when we give the money to politicians elected by special interest groups to save for us and maybe pay us back later. That never works out very well, does it?

High taxation not only hurts the rich but it also hurts the poor by taking money out of job creating investments and it stifles creativity not to mention punishes success. All negative things. That is a concept that eludes most Moon Bats.

We don't need to be living in a nanny state where the oppressive government takes the money that we earn and transfers it to the special interest groups that voted in the government leaders. That is a recipe for disaster as we see all over the world and is happening here in the US.

Moon Bat (liberal) economics always fails at some point. It does OK until the wealth that was created by more conservative and responsible economic programs runs out then everybody is screwed.

I am always amazed at the ignorance of most people when it comes to Economics. There ain't no such thing as a free lunch is an economic reality that very few people understand.

Calling me a Moon Bat and calling bullshit are childish feel-good exercises that make you look silly. It's OK, I forgive you. I know it sucks to be you and I am sorry for you.

Your problem isn't with the Moon Bats, or even the much-feared liberals, it is with the Constitution of the United States which has established a government of the people, by the people and for the people. You have the misfortune to live in an age in which the people want Social Security, they want Medicare, they want the better things in life which, they believe, would be theirs if the richest 1% didn't have both trotters in the trough.

They may, of course, be wrong, they may be misguided, they may be crazy. If only they would listen to the handful of people who believe as you do and who wish to return to some notional golden past where all a fellow needed was a sharp axe and his trusty musket with which to make his own utopia.

When the Indians were running this country, there was no government, no taxes and the women did all the work. The white man thought he could improve that situation. No wonder you are so pissed off. You have been betrayed by your own white brothers. Sorry about that.

 

[Fishlore]

I get paid the same amount, my kids pay the same amount regardless. What does the government owing me have to do with anything? In no scenario do I get more or less money based on the existence of the bogus fund. The existence of this fantasy fund effects who?

You will get paid an amount based upon your contributions to the fund. That's what the government owes you for your SS contributions, and that's EXACTLY how a defined contribution pension plan or annuity works.

Whether or not you will get the amount promised - and I don't think you will - is another story. But the economics of how SS works is no different than any other pooled capital of retirement savings.

Actually, other "pooled capital of retirement savings" typically involves actual money, not IOUs the pool wrote to itself. And the amount I get paid is irrelevant to the discussion because there is no connection between the amount I will be paid and whether or not those IOUs government wrote to itself are a "trust fund" or not..

What is relevant to the discussion is that the amount we get paid has nothing to do with whether SS has a "trust fund" or not, and there is no connection between what our children will pay and whether SS has a trust fund or not.

There is no cashflow connection to anyone regarding whether the government's IOUs to itself are considered a trust fun or not.

All other financial securities as assets affect cashflow to someone somewhere somehow. Social Security's phantom "trust fund" doesn't.

Seriously, with what you do for a living, and I do believe you even if we banter sometimes, how can you possibly consider something that EX-ANTE has no effect on cashflow, positive or negative, ever, to anyone, an economic asset? How is that possible?

The trust fund does not write IOUs to itself. The government writes an IOU to the trust then the trust owes you. You keep repeating that mistake.

The "real cash flows" are your FICA taxes and the SS payments you will receive in later life.

What is the difference between that and you investing in government bonds for your retirement?

Seriously, you don't understand the difference between me loaning money to someone else, and me loaning money to myself. You actually mean that? Seriously?

And as a finance guy, you actually, truly didn't grasp my point that whether or not there is a trust changes zero cash flows ex-ante to anyone, ANYONE, EX-ANTE

you want to look someone in the eye who knows that that means and say you don't get it? I withdraw my statement that I believe you. You are full of shit. And I mean that in the most disrespectful sort of way. In a way that most who say that to you don't. I know what I am talking about. that you don't grasp that your arguement changes zero cashflows is pathetic. If you do what you say, you should be shit canned on the spot.

Cash flows is wall street, Holmes. You don't know that? You aren't Wall Street, you are a janitor, you are a canard:

Toro: There doesn't have to be any money for something to be an asset, WTF are you talking about? Yeah, there does

You're not loaning money to yourself. You keep repeating that mistake.

Tell me the difference between the two are

1. You give the government taxes and you are credited with future SS payments

2. You give the government money for a bond which you are credited for future interest and principle payments.

Tell me what the difference is?

You buy a bond at market price and you can sell it to someone else if you choose. You don't buy the FICA tax, you pay it, and, unlike the bond which has the same price no matter who buys it, the amount of FICA you pay depends on your earned income. You can't sell or transfer you Social Security account like a bond and unlike a bond, the amount in it represents the minimum to which you are entitled. Congress can raise your entitlement and or your FICA tax independently of each other. There really is nothing in Social Security that is in any way the same as the purchase of bonds or stocks. The comparison is a tendentious fallacy invented by talk radio demagogues to arouse the faux indignation of uninformed folks indignant over their marginalization. Sad, really

 

[Fishlore]

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.

There IS a negative income tax. It's called EITC. And I don't want you as builder or a carpenter.

Your are correct about EITC. It is not the negative income tax proposal of Richard Nixon. It is less sweeping and tied to tax liability not income; still, it is much better than nothing.

I take your response about a carpenter for floors and ceilings to imply that you are satisfied with the current pattern of income distribution. Is that correct?

No.. It was silly statement. Raising the floors to lower the ceiling? I like my ceilings as the designer saw them in the first place. Don't even understand it,. EVERYONE should be involved as a TAXPAYER. Having damn near half of workers now EXCUSED from income tax (or on EITC) is prescription for disaster. And that's not gonna raise the floor or lower the ceiling.

For the purposes of THIS discussion ---- the SS solutions that I've heard sound good but are actually cruel and sadistic. Raising the age of retirement means you're in favor of making that rickety roofer climb ladders in the hot sun for another 4 or 6 years. It means that 2 working spouses probably need to keep working to avoid draining their private retirement funds.. And raising the exemption levels on payroll tax -- means that some folks will be paying 4 to 10 times more than others for the same benefit. SS is supposed to be a UNIVERSAL insurance program and FDR would be screaming bloody murder about these proposals.

So -- if that's done. And SS is OFFICIALLY changed from UNIVERSAL retirement to a grinchy WELFARE retirement program --- What do you think the chances are the public would EVER trust you leftists/socialists with UNIVERSAL healthcare or UNIVERSAL anything in the future??

Because you seem to think that reading the mind of FDR is a useful guide to understanding contemporary government policies, you might enjoy looking up the original federal income tax law to see the threshold income level at which tax liability began to be incurred. Compare that income amount to the prevailing median family income at the time and see just which sections of the population were subject to income tax.

If that assignment is too difficult for you, let me know and I'll give you the answers. Good luck.

 

[flacaltenn]

I get paid the same amount, my kids pay the same amount regardless. What does the government owing me have to do with anything? In no scenario do I get more or less money based on the existence of the bogus fund. The existence of this fantasy fund effects who?

You will get paid an amount based upon your contributions to the fund. That's what the government owes you for your SS contributions, and that's EXACTLY how a defined contribution pension plan or annuity works.

Whether or not you will get the amount promised - and I don't think you will - is another story. But the economics of how SS works is no different than any other pooled capital of retirement savings.

Actually, other "pooled capital of retirement savings" typically involves actual money, not IOUs the pool wrote to itself. And the amount I get paid is irrelevant to the discussion because there is no connection between the amount I will be paid and whether or not those IOUs government wrote to itself are a "trust fund" or not..

What is relevant to the discussion is that the amount we get paid has nothing to do with whether SS has a "trust fund" or not, and there is no connection between what our children will pay and whether SS has a trust fund or not.

There is no cashflow connection to anyone regarding whether the government's IOUs to itself are considered a trust fun or not.

All other financial securities as assets affect cashflow to someone somewhere somehow. Social Security's phantom "trust fund" doesn't.

Seriously, with what you do for a living, and I do believe you even if we banter sometimes, how can you possibly consider something that EX-ANTE has no effect on cashflow, positive or negative, ever, to anyone, an economic asset? How is that possible?

The trust fund does not write IOUs to itself. The government writes an IOU to the trust then the trust owes you. You keep repeating that mistake.

The "real cash flows" are your FICA taxes and the SS payments you will receive in later life.

What is the difference between that and you investing in government bonds for your retirement?

No silly -- the Treasury wrote an IOU not BACKED by any debit on its books. That money was spent in the General Fund. Geebuz -- If you can't tell how many times the same dollar is committed -- you have no PRAYER of understanding the "embezzlement and fraud" that Harry Reid referred to..

The diff is that if I buy a bond -- the Government books it as a debt in that years' accounting. Since SS was hidden OFF-BOOK -- that debt was never registered. Which is why now ---- the Treasury has to issue NEW DEBT to raise cash to pay the program deficits. $2 plus interest for every SS surplus $ stolen is what's been taken from the taxpayers. ..

This has never been an issue of balancing the phony T.F. It's always been an issue of how all that is finally resolved in the Government overall book keeping..

 

[flacaltenn]

Some folks just see the Fed Govt as a Ginormous Cash Cow with no limit to producing milk and no reason to consider what the debt is or how it got there..

 

[Toro]

You will get paid an amount based upon your contributions to the fund. That's what the government owes you for your SS contributions, and that's EXACTLY how a defined contribution pension plan or annuity works.

Whether or not you will get the amount promised - and I don't think you will - is another story. But the economics of how SS works is no different than any other pooled capital of retirement savings.

Actually, other "pooled capital of retirement savings" typically involves actual money, not IOUs the pool wrote to itself. And the amount I get paid is irrelevant to the discussion because there is no connection between the amount I will be paid and whether or not those IOUs government wrote to itself are a "trust fund" or not..

What is relevant to the discussion is that the amount we get paid has nothing to do with whether SS has a "trust fund" or not, and there is no connection between what our children will pay and whether SS has a trust fund or not.

There is no cashflow connection to anyone regarding whether the government's IOUs to itself are considered a trust fun or not.

All other financial securities as assets affect cashflow to someone somewhere somehow. Social Security's phantom "trust fund" doesn't.

Seriously, with what you do for a living, and I do believe you even if we banter sometimes, how can you possibly consider something that EX-ANTE has no effect on cashflow, positive or negative, ever, to anyone, an economic asset? How is that possible?

The trust fund does not write IOUs to itself. The government writes an IOU to the trust then the trust owes you. You keep repeating that mistake.

The "real cash flows" are your FICA taxes and the SS payments you will receive in later life.

What is the difference between that and you investing in government bonds for your retirement?

Seriously, you don't understand the difference between me loaning money to someone else, and me loaning money to myself. You actually mean that? Seriously?

And as a finance guy, you actually, truly didn't grasp my point that whether or not there is a trust changes zero cash flows ex-ante to anyone, ANYONE, EX-ANTE

you want to look someone in the eye who knows that that means and say you don't get it? I withdraw my statement that I believe you. You are full of shit. And I mean that in the most disrespectful sort of way. In a way that most who say that to you don't. I know what I am talking about. that you don't grasp that your arguement changes zero cashflows is pathetic. If you do what you say, you should be shit canned on the spot.

Cash flows is wall street, Holmes. You don't know that? You aren't Wall Street, you are a janitor, you are a canard:

Toro: There doesn't have to be any money for something to be an asset, WTF are you talking about? Yeah, there does

You're not loaning money to yourself. You keep repeating that mistake.

Tell me the difference between the two are

1. You give the government taxes and you are credited with future SS payments

2. You give the government money for a bond which you are credited for future interest and principle payments.

Tell me what the difference is?

You buy a bond at market price and you can sell it to someone else if you choose. You don't buy the FICA tax, you pay it, and, unlike the bond which has the same price no matter who buys it, the amount of FICA you pay depends on your earned income. You can't sell or transfer you Social Security account like a bond and unlike a bond, the amount in it represents the minimum to which you are entitled. Congress can raise your entitlement and or your FICA tax independently of each other. There really is nothing in Social Security that is in any way the same as the purchase of bonds or stocks. The comparison is a tendentious fallacy invented by talk radio demagogues to arouse the faux indignation of uninformed folks indignant over their marginalization. Sad, really

That's all correct.

My point though is that SS is designed as if it were a pool of government bonds. It looks like a defined contribution pension plan that invests solely in government securities. The economics are no different though, as you rightly point out, there are differences, along with others.

 

[flacaltenn]

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.

There IS a negative income tax. It's called EITC. And I don't want you as builder or a carpenter.

Your are correct about EITC. It is not the negative income tax proposal of Richard Nixon. It is less sweeping and tied to tax liability not income; still, it is much better than nothing.

I take your response about a carpenter for floors and ceilings to imply that you are satisfied with the current pattern of income distribution. Is that correct?

No.. It was silly statement. Raising the floors to lower the ceiling? I like my ceilings as the designer saw them in the first place. Don't even understand it,. EVERYONE should be involved as a TAXPAYER. Having damn near half of workers now EXCUSED from income tax (or on EITC) is prescription for disaster. And that's not gonna raise the floor or lower the ceiling.

For the purposes of THIS discussion ---- the SS solutions that I've heard sound good but are actually cruel and sadistic. Raising the age of retirement means you're in favor of making that rickety roofer climb ladders in the hot sun for another 4 or 6 years. It means that 2 working spouses probably need to keep working to avoid draining their private retirement funds.. And raising the exemption levels on payroll tax -- means that some folks will be paying 4 to 10 times more than others for the same benefit. SS is supposed to be a UNIVERSAL insurance program and FDR would be screaming bloody murder about these proposals.

So -- if that's done. And SS is OFFICIALLY changed from UNIVERSAL retirement to a grinchy WELFARE retirement program --- What do you think the chances are the public would EVER trust you leftists/socialists with UNIVERSAL healthcare or UNIVERSAL anything in the future??

Because you seem to think that reading the mind of FDR is a useful guide to understanding contemporary government policies, you might enjoy looking up the original federal income tax law to see the threshold income level at which tax liability began to be incurred. Compare that income amount to the prevailing median family income at the time and see just which sections of the population were subject to income tax.

If that assignment is too difficult for you, let me know and I'll give you the answers. Good luck.

I'll do that ----- just as soon as you look up the original participation schedule for SS and see where the caps and the contributions were when THAT program was started.

And I doubt that we have EVER EXEMPTED over 45% of working Americans from paying ANY income tax. Especially not during the War years.

 

[Toddsterpatriot]

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.

Do you have any data to back-up that claim? And I am not counting spam on the internet.

figure it out for yourself. Take 15% of $40k a year at 6% and invest it for 46 years and tell us how much it comes to.

1969 was a fine year to make $40K a year. That would have been roughly $200K today. Of that 40K, you didn't lose 15%, you paid about 5% of the first $2,500, or $500.

At no point have you ever paid 15% for Social Security. Today is pretty much the max and it is 10.6%. Payroll taxes as a whole are 15.3% - but 4.7% is HI and DI which have nothing to do with retirement.

Of that 40K, you didn't lose 15%, you paid about 5% of the first $2,500, or $500.

5% of $2500 is $125.
The maximum taxable income in 1969 was $7800.
The OASDI tax rate in 1969 was 8.4%.
$655.20 max cost per employee.

Today is pretty much the max and it is 10.6%.

12.4%.

 

[Fishlore]

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.

There IS a negative income tax. It's called EITC. And I don't want you as builder or a carpenter.

Your are correct about EITC. It is not the negative income tax proposal of Richard Nixon. It is less sweeping and tied to tax liability not income; still, it is much better than nothing.

I take your response about a carpenter for floors and ceilings to imply that you are satisfied with the current pattern of income distribution. Is that correct?

No.. It was silly statement. Raising the floors to lower the ceiling? I like my ceilings as the designer saw them in the first place. Don't even understand it,. EVERYONE should be involved as a TAXPAYER. Having damn near half of workers now EXCUSED from income tax (or on EITC) is prescription for disaster. And that's not gonna raise the floor or lower the ceiling.

For the purposes of THIS discussion ---- the SS solutions that I've heard sound good but are actually cruel and sadistic. Raising the age of retirement means you're in favor of making that rickety roofer climb ladders in the hot sun for another 4 or 6 years. It means that 2 working spouses probably need to keep working to avoid draining their private retirement funds.. And raising the exemption levels on payroll tax -- means that some folks will be paying 4 to 10 times more than others for the same benefit. SS is supposed to be a UNIVERSAL insurance program and FDR would be screaming bloody murder about these proposals.

So -- if that's done. And SS is OFFICIALLY changed from UNIVERSAL retirement to a grinchy WELFARE retirement program --- What do you think the chances are the public would EVER trust you leftists/socialists with UNIVERSAL healthcare or UNIVERSAL anything in the future??

Because you seem to think that reading the mind of FDR is a useful guide to understanding contemporary government policies, you might enjoy looking up the original federal income tax law to see the threshold income level at which tax liability began to be incurred. Compare that income amount to the prevailing median family income at the time and see just which sections of the population were subject to income tax.

If that assignment is too difficult for you, let me know and I'll give you the answers. Good luck.

I'll do that ----- just as soon as you look up the original participation schedule for SS and see where the caps and the contributions were when THAT program was started.

And I doubt that we have EVER EXEMPTED over 45% of working Americans from paying ANY income tax. Especially not during the War years.

I see you have dodged the issue. Not surprised. You are on the right track about the war years, that is when the income tax was extended downward to the middle class.

Nobody likes paying taxes Those who leap from dislike to foaming rage have deficient understanding of the nature of the American community. It's so Ron Paul.

 

[flacaltenn]

In fact Toro -- not only wasn't the surplus SS booked as a debt on the unified budget -- but it is the ONLY REASON that BillyJeffClinton and Gringrich could claim that they "balanced the budget" back around 1995 or so.

So they TOOK CREDIT for spending the SS surplus and not showing it as a debt.

 

[flacaltenn]

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.

Do you have any data to back-up that claim? And I am not counting spam on the internet.

figure it out for yourself. Take 15% of $40k a year at 6% and invest it for 46 years and tell us how much it comes to.

1969 was a fine year to make $40K a year. That would have been roughly $200K today. Of that 40K, you didn't lose 15%, you paid about 5% of the first $2,500, or $500.

At no point have you ever paid 15% for Social Security. Today is pretty much the max and it is 10.6%. Payroll taxes as a whole are 15.3% - but 4.7% is HI and DI which have nothing to do with retirement.

Of that 40K, you didn't lose 15%, you paid about 5% of the first $2,500, or $500.

5% of $2500 is $125.
The maximum taxable income in 1969 was $7800.
The OASDI tax rate in 1969 was 8.4%.
$655.20 max cost per employee.

Today is pretty much the max and it is 10.6%.

12.4%.

And folks like me and my partners pay the ENTIRE %12.4 ourselves.