Let's talk about Social Security

[TheYellowDog]

Let's talk about Social Security, folks. If I remember correctly, annual payroll-tax revenues will not fully cover benefits beyond the year 2018, and if no new revenues are put into the system, benefit receivers could see cuts of one-third by the year 2039. Now, if we use payroll tax increases to solve the problem, you are going to be screwing working families. The current 12.4% tax would probably have to rise around 20%, which is just ridiculous.

When FDR created Social Security, we had a 3% tax. Of course back then, many people never lived till retirement age. But with all of the advances in medicine, people are living longer and longer, and Social Security is being torn apart. I also don't want to hear an idea of eliminating the 85,000 cap, because that cap is important. Someone making a million dollars a year has to pay 62,000 into Social Security a year, from their 6.2% tax portion of the total 12.4%. That person would never be able to get all of that money back from Social Security after he/she retired. In fact, they wouldn't even get back more than a small portion of it. Some may regard that as fair, but it's not. I've heard people on here say that Social Security was never intended for everyone, only the poor. That's not true, it was intended for every retired senior, so don't distort the truth like this.

By the year 2040, unless something is done, Social Security and Medicare will crowd out many important domestic programs. There just won't be money, and taxes will have to be raised dramatically. Somewhere around 57% of seniors' income and benefits today is funded by current taxes, paid by younger workers.

Bush right now is even working on a plan with Mexico, I believe, to let their workers who work here receive credit for time worked in Mexico, with our Social Security system. They would be eligible to get OUR Social Security, that's not right.

I've heard complaints from people that partial, or even full privatization of Social Security, would eliminate the safety net concept. Well, how can we say that Social Security has a safety net now when it's greatly endangered? I don't ever expect to collect Social Security, and most younger people don't either. They have no faith in the system, and why should they? Both parties have routinely dipped into Social Security funds over the years to pay for other programs. If people do not want Social Security privatization, then they must agree to a complete lockbox, guaranteeing that all surpluses, if any, will be deposited back into social security. It's completely immoral to take money out of it and throw it into other programs.

[TheYellowDog]

1. kick

:kick:

[uptohere]

2. its always been reprehensible to steal the so-called surplusses

n/t

[TheYellowDog]

3. I know

And everyone in Washington does it, pretty much.

[TheYellowDog]

4. the seniors need the money

n/t.

[Bandit]

5. What's stopping you from investing on your own?

Why do you need the government to invest for you? You are correct at the rate Bush* is absconding with the Social Security trust fund you may very well not see a dime.

[TheYellowDog]

6. Let's see,

maybe because I want the 12.4% that is being paid in??

[tinnyguy1777]

8. Its suppose to remain solvent-----

Its such a permanent part of American life, that there would be wholesale riots if Congress tried to get rid of it. I view it as a "sacred cow" if you will.
:-)

[Yupster]

7. Two things to start ...

I think there are two fairly painless things to do that would relieve much of the stress on the system. Interestingly, each is a sacred cow of one party, so I believe a good old fashioned compromise is in order.

1. Take off the upper limit cap (now around $ 80,000). Now I would suggest also taking off the cap on upper benefits, but since the FICA payout formula is so progressive, the upper earners would get very little for their extra contributions, but at least you could tell them they were earning some extra benefit with the extra contributions.

2. Require the priviledged groups who are allowed to not be in social security (teachers and state workers mostly) to come back into the system.

These two relatively minor changes would add much to the financial health of the system. I think they should be done together, so that each party would have to stand up to their special interest group.

The upper income earners would scream and the teachers' unions would scream, but they are both fair changes (IMO) that are long overdue.

[TheYellowDog]

10. NO they aren't fair changes

It's not fair for someone to only get back a tiny fraction of the social security that they put in. That would fix the problem, I agree, but it is completely wrong.

[TahitiNut]

13. Dammit. It has almost NOTHING to do with "what you put in"!

No more than supporting your retired parents has anything to do with how YOUR children support you.

It's a "pay as you go" system -- something to replace the "third world" retirement "system" of having enough children who survive and are able to care for you.

Under this system, we're one big (happy) family. All of us are taking care of our parents and, when we retire, all of our children will take care of all of us.

It's not a freaking savings account except insofar as we "invest" in the next generation!! They ARE our "savings," just like our parents invested in US!

That's probably why so many are infected with the Repugnant meme: Fuck the next generation! :puke:


The eligibility and progressive max-out of benefits are mere equity considerations to inhibit gaming of the system. (A little like not caring for the retirement of a runaway parent.)

[quilp]

9. Misusing SS funds is not the fault of the system.

The system has been perverted by the contributions being used as taxes. Taxes, which according to Bush, low payed workers don't pay.

There are two solutions:

Take the current cap of $86,000.00 off. This would cause the rich and powerful to actually take an interest in how it is used. It would be their money as well as ours, and there would be less tolerance of the Bushniks abusing it.

Make it a pay-as-you-go system and end the deception that a "surplus" is being put in a "trust fund". This would expose the true size of the Bush deficit and sober even the Republicans up.

"Lock Boxes" can be raided. And neither of the above solutions will happen. But don't accept the Republican propaganda that there will not be SS checks for the young in the future. They must be there because the era Corporate pensions are over. The Government cannot provide only for its own employees. There is no choice but maintain and improve the system.

[ThomWV]

11. Back Up A Bit

Look, there are two aspects of the Social Security System that you seem to be overlooking and they are important. The first is the notion that raising the upper end of earnings on which you pay in is bad becasue the payer would never realize payments back to themselves that equaled the pay in. Well, it was never intended to work that way and in fact it does not work that way. What you pay in is not somehow invested for you to draw from later and so the level at which you pay in today does not build in an account from which you will later draw. What you pay in today is being used to pay for the benefits of those who are currently drawing on the system. When today's payer retires and starts receiving the payments they are entitled to it will not come out of a fund into which they have been paying, the money will come directly from the pay checks from future workers. You already knew that of course but sometimes its good to be reminded. Anyway when you understand that aspect of the SSS then you should be easily able to understand the problem with privitization of the SSS. You see, if it is current payments to the system that fund the checks that go out the first of ever month then you can not divert the incomming stream towards private Social Security accounts. If you do the money to make the payments today drys up. That is the fatal flaw with Social Security Privitization, it leaves no money to pay the people who are already retired. Point that one out to your hell-bound-for-privateization Republican friends and see what they have to say.

Thom

[TahitiNut]

12. Thoughts ...

First, I'll note that I'm a bleeding edge baby-boomer whose father and two grandfathers died too soon to collect retirement benefits. My mother and one grandmother worked for their own benefits eligibility. I've paid the maximum in payroll taxes almost all of my working life.

On the 'lockbox' paradigm ... One may as well call that the "mayonaisse jar" for all the sense it makes. Look, back in 1983-84 the cowardly Congress decided to preemptively raise the payroll tax to the point workers are now taxed 35% more than is needed to pay current retirees. This has created an accumulated 'surplus' in the Social Security Trust Funds (OASI Trust Fund and DI Trust Fund). Just what the f*ck do people do with saved money?? Well, it's loaned out! While you might quibble with what the least risk loan might be, any 'trust account' is money that's loaned. I personally disagreed vehemently with the violation of the basic theme of "pay as you go" where current workers pay the benefits of current retirees. Raise the age, reduce the benefit, and/or raise the tax ... but pumping money into a Honey Pot for greedy corporatist politicians to use for things like airline bailouts is nuts. Currently, that means the Trust Fund has 'loaned' over $1.48 trillion to the Federal government, most in 'special issue bonds' at interest rates ranging from 3.5% to 6.5%. The average interest rate, weighted by the amount invested at each rate, is 5.73% at the end of July 2003. Similarly, the average number of years to maturity, weighted by the amounts maturing, is 7.9 years. The average interest rate (payable to the OASI & DI TFs) has declined almost steadily (monotonically) since 1984 when it was over 12.4%. Just in the last 12 months, it 'loaned' about $160 billion, equal to about 1/3rd of what it paid in benefits.

On the 'privatization' furor ... You can bet your sweet ass that if there weren't over $1,474,000,000,000(!) in the Trust Fund, the greedy corporatists wouldn't be salivating (and having wet dreams) over it. It'll grow to over $3 trillion!! OASDI/HI is the least overhead social program that exists, and is far, far, far more economically efficient than any 'private' scheme.

On the foreseeable 'crunch' ... The following graph depicts the latest projected "Long-Range OASI and DI Trust Fund Ratios" as reported in the "2003 OASDI Trustees Report". Read it at your leisure. It's the most informative source you'll find, IMHO.



Notes: The pairs of lines labeled with roman numerals I, II, and III portray optimistic, middle-of-the-road, and pessimistic sets of economic assumptions respectively. The 'ratio' expressed as a percentage reflects the size of the funds compared to the rate at which benefits are paid. (Under the optimistic assumptions, both OASI and DI are solvent far beyond 2080!!)

What we can see for this graph is that (unless changes are made) the trust funds will begin to decline in the 2015-2020 timeframe. When the trust funds start getting smaller, the federal government will have to either retire part of the national debt or sell bonds to the public -- at a higher interest rate. (Remember, the Trust Fund is ALL national debt!) That's when the (slow-motion) CRUNCH begins. Long before the trust funds hit bottom. Think about what happens: <1> either both interest rates go up and more of what we are taxed goes to pay interest (to the wealthy, of course), and/or <2> taxes go up to pay off the national debt (too little, too late).

HTH

[Yupster]

14. But doesn't the health of the system

depend on the government paying off that $ 1.5 trillion in debt that it owes to social security. -- well the government ain't got the money. It spent it already.

[TahitiNut]

15. The 'health' of what system?

The Trust Funds hold bonds. Bonds can be sold or redeemed. If they're not redeemed when due, the issuer is in default. Do you expect the Federal Government to default on its bonds? :eyes: (What they'll do to at least some extent is issue more bonds to get the money to retire the older bonds held by the Trust Funds.)

It's the Federal Government ("we the people") that's between a rock and a hard spot. Clinton/Gore were easing that crunch by paying down the debt. Commander Codpiece and his Cabal of Insane Thieves, in less than 3 years, have created a far more monstrous crunch. That's why they reduced taxes on the rich. It's future federal taxes which will have to retire the national debt and pay the interest on it until it's retired. Guess who collects that (tax-free) interest when the Trust Funds aren't? Who buys our federal bonds? (Look at Junior's financial statement to get a clue.)

[Yupster]

16. No, I don't expect the federal government to default

But they don't have the money to pay either.

Therefore, I expect the congress to change the rules when the time comes and find a way not to pay them because they can't. It's not like the government can reach into its pocket and produce $ 1.5 trillion. It's not there. Gone. Spent. Fluttered off in the evening breeze.

I would guess when the time comes that the system needs the bonds, the congress will vote to decrease benefits for at least some people and / or raise the retirement age enough so the system can pay its now reduced obligations without the bonds.

[TahitiNut]

18. The $1.5 trillion ...

... will eventually become more than $3 trillion.

It won't all come due at one time. It depends on how steep the downward slope of the blue line is in the graph above. Under the optimistic assumptions, it won't decline fast at all ... going well beyond 2080 before the Funds hit zero.

[Yupster]

17. Federal bonds

only avoid state income tax. Their dividends are subject to federal income tax.

[TahitiNut]

19. Except when deferred ...

... like in a self-managed IRA or other tax sheltering arrangement.

[Yupster]

20. Of course

anything in an IRA is tax-deferred.

[SaveABug]

21. I'm waiting for the euthanasia program

Of course it will be voluntary. Your children will get the benefits you paid in if you kick the bucket on purpose.

It's only a matter of time in this alternate, upside down, non-compassionate world we reside in.

[bleedingheart]

22. People have been worried about Social Security going

kaputt for more than 40 years...and yet it is still working.

What I think everyone should be aware of is that corporate america thinks it will be there because my future pension (about 31 years away) is directly affected by what I will receive from Social Security

so....if I get $3000 a month from my pension ...but my Social Security payment would be $2000... My corporate pension will be reduced by half of my social security payment..

$3000 - $1000 = $2000 Corporate pension...

then add $2000.... I will get $4000 a month instead of $5000 a month... which in 30 years might not be that much...but who knows... plus this takes into consideration that I will be working at my current company for the next 30 + years...

The funny but sad part of this is that there is no guarantee that my pension fund won't be robbed blind by the corporate pigs... so in the end...I may end up with only $2000 a month if the Bushies don't completely screw it up...then I will be working until I die instead of enjoying retirement....


Note: the figures used are not real...they were from the example the pension folks gave us...

[Yupster]

23. For the last 40 years, everytime

the system got in trouble, the government raised the payroll tax.

It's now over 12 % and another 3 % for medicare. Obviously this solution can't keep going for much longer.

[TheYellowDog]

24. Yeah

Eventually it will have to be 20%. I don't think working families will like that.