McCain On Social Security

[heyheybooboo]

Originally posted by: Fern

Originally posted by: Harvey
-snip-
Furthermore, it is also completely relevant that the worst financial drain on the entire governement is your Traitor In Chief's war in Iraq. That's trillions that otherwise would not have otherwise been squandered.

War Resisters League Report on Iraq/Afganistan War spending

According to their site, only about 7.4% of the annual budget (excluding SS which would make it look even lower) is spent on Iraq & Afganistan combined.

Their numbers and the math:

Military Spending 54% and $1,450 Billion for 2009.

Afganistan and Iraq $200 Billion for 2009 (amount included in the $1,450 total for military spending)

200/1,450 = .1379 x 54% = .0744 or 7.44%

Originally posted by: Harvey
-snip-
-- Social Security would be solvent if Congress hadn't stolen... err... "borrowed" trillions from surplus that was in the SS trust fund.

Social Security would be solvent with a surplus if Congress hadn't "borrowed" the money already mandated by law to squander elsewhere.

Social Security runs a surplus.

What to do with the extra funds?

Storing them in a vault (similar to stuffing it in a mattress) would be a poor choice. The funds should be invested.

What to invest in?

I don't think the stock market would be many's first choice given the risk of loss (much the same with arguing over which stocks, and then there's the opportunity for shenanigans etc).

What's considered the safest investment?

US bonds and notes. No risk of loss on principal (other than errosion due to high inflation).

So the excess funds are invested in US Treasuries securites; and SS does have a surplus. Actually it's a special type of Treasury that IMO pays too low a rate of interest IMO. It's that low rate that is unfair to the SS fund. By paying an artifically low rate, they are subsidizing the general budget and making the deficit look lower than it should be because the payment on debt (one of our biggest expenditure) looks lower than it should.

How the federal government utilized those funds they received from SS investment in US Treasury securities is irrelevant to SS. No different than when I invest in a CD from a bank, as long as they pay me my interest and principal it's irrelevant to me.

What the federal governemt did with those funds is a general budget (irresponsible) spending matter/problem.

Al Gore and his stupid "lockbox" analogy has been a great cause of confusion regarding SS funds. It's an incredibly poor and inapt explaination, for if the SS funds are not invested in US Treasuries then what, pray tell, are they invested in?

Fern

I've always enjoyed the 'lockbox' analogy. In political speak it's the perfect one-word slogan to combat the 'irresponsibility' of Congress.

I've always felt that a significant portion of today's SS funds over and above what is paid out each year in benefits should be 'loaned' to state and local gov'ts to be used strictly for infrastructure improvements.

Call 'em Freedom Bonds. Make it simple for John and Jane Doe to purchase their own state or local Freedom Bonds and guarantee that the interest they receive from the bonds is both state and federal tax free.

 

[Mursilis]

Originally posted by: Engineer

Originally posted by: charrison


This is probably the best option for reforming SS. They even added a new plan to the TSP that automatically sets your risk level based on your age. So even those that think they are too dumb to invest will have a good option.

It does sound like a good plan. With that said, I would recommend a phase in for people who are 25 or more years away from retirement as we all can see what a short term (10 years of fewer) market can be like. Maybe 100% for those 25 years or further, 75% for those 20-25 years, 50% for those 15-20 years, 25% for those 10-15 years and leave it as it is for those less than 10 years.

Or you could simply give an option to opt out of SS and receive a lump sum invested into an account and take your chances with the market even on a short term basis.

For the risk-adverse, the TSP does offer the G-fund, which is a gov't security fund with no loss of principal. The F-fund, which tracks bonds, is also relatively safe, with only one year of loss in the past 10, and an average 6% rate of return. Not all the funds are stock funds.

 

[Engineer]

Originally posted by: Mursilis

Originally posted by: Engineer

Originally posted by: charrison


This is probably the best option for reforming SS. They even added a new plan to the TSP that automatically sets your risk level based on your age. So even those that think they are too dumb to invest will have a good option.

It does sound like a good plan. With that said, I would recommend a phase in for people who are 25 or more years away from retirement as we all can see what a short term (10 years of fewer) market can be like. Maybe 100% for those 25 years or further, 75% for those 20-25 years, 50% for those 15-20 years, 25% for those 10-15 years and leave it as it is for those less than 10 years.

Or you could simply give an option to opt out of SS and receive a lump sum invested into an account and take your chances with the market even on a short term basis.

For the risk-adverse, the TSP does offer the G-fund, which is a gov't security fund with no loss of principal. The F-fund, which tracks bonds, is also relatively safe, with only one year of loss in the past 10, and an average 6% rate of return. Not all the funds are stock funds.

That sounds like our current system....invested in government securities!

 

[BansheeX]

Wow, 6 pages of "uh-huh" and denial without any informational links. Educate yourselves on how Social Security works, the complexity of the scheme itself, and the inherent nature of it's failure (like giving a kid a squirt gun and telling him never to fire it).

http://www.letxa.com/articles/15

http://youtube.com/watch?v=oh-NqdmEDq4

One thing I will cover myself that I'm not sure either of these articles gets into is the propaganda dished out for the two-part system. SS is "divided" into two parts, one paid by the employer and one paid by the employee. The SS system will say you only pay that 6.2% yourself while your employer pays 6.2%. In reality, the worker pays both. Because the cost of an employee to an employer is a combined cost, tax and wage. It makes no difference to the employer if the cost of the employee is $1000 a week, of which $100 is tax and $900 wage, or if he costs $1000 a week, all of which is taxed. Makes no difference. So without that 6.2% by the employer, the employee's wage portion would automatically be higher by that amount.

Tricky, huh? Not terribly complex, but very effective on the average person to make him believe that not only is he paying in single digits, but that his employer is paying just as much, lessening his resistance to the system.

 

[piasabird]

There is only a SS trust fund on paper. They take all the money from the SS trust fund and put it in the general budget. Wise up.

 

[ElFenix]

Originally posted by: BansheeX

One thing I will cover myself that I'm not sure either of these articles gets into is the propaganda dished out for the two-part system. SS is "divided" into two parts, one paid by the employer and one paid by the employee. The SS system will say you only pay that 6.2% yourself while your employer pays 6.2%. In reality, the worker pays both. Because the cost of an employee to an employer is a combined cost, tax and wage. It makes no difference to the employer if the cost of the employee is $1000 a week, of which $100 is tax and $900 wage, or if he costs $1000 a week, all of which is taxed. Makes no difference. So without that 6.2% by the employer, the employee's wage portion would automatically be higher by that amount.

Tricky, huh? Not terribly complex, but very effective on the average person to make him believe that not only is he paying in single digits, but that his employer is paying just as much, lessening his resistance to the system.

well, that's not quite right either. your employer would obviously be willing to pay you at any point up to what it is costing them. but on the other hand you would be willing to work for them at any rate going down to your after SS tax pay (for this purpose we'll pretend there are only SS taxes), plus some discounted value factor of what the SS contribution will be worth in the future (which is very small, because a) it's really far in the future for more of us and b) americans show that they have a rather large discount rate what with the low savings rate AND SS pays a really low interest rate).

so there is a range in which you would both consider yourselves better off. say your pay after SS tax is $10.03/hr, and cost to employer is $12/hr, with your 'legal' pay being $11 an hour with each contributing $1/hr in SS tax as the legal burden. if you wanted the job more than your employer wanted you in particular (typical low-skilled job), the negotiated rate would be somewhere nearer the $10.03/hr mark than $11/hr. if you had unique skills, experience, whatever, it'd be closer to $12/hr than $11/hr.

it's hard to imagine an arm's length transaction where the employee walked away with all $12/hr.

Originally posted by: Engineer

I haven't had a chance to read up on it. What is it invested into and at what rate of "average" interest does it return? Is it privately invested (I assume it is)?

it looks like it's privately 'managed' but since the privately 'managed' funds are all index funds there isn't really any management at all. i guess privately 'administered' is a better terminology, but i don't know who sends out the statements.

anyway, TSP is about what i would like SS to be. a government mandated savings account with a handful of investment choices that allow one to easily diversify and easily see what one's money is doing.

your rate of return would obviously be determined by what ratios you've invested in the various funds.

about all i'd change is allow it to be inheritable, though i think that'd be the last thing to get phased in (after all, we'd have to pay off all the seniors who've been screwed by the current SS implementation all their lives). TSP might be inheritable already.

 

[BansheeX]

Originally posted by: ElFenix

Originally posted by: BansheeX

One thing I will cover myself that I'm not sure either of these articles gets into is the propaganda dished out for the two-part system. SS is "divided" into two parts, one paid by the employer and one paid by the employee. The SS system will say you only pay that 6.2% yourself while your employer pays 6.2%. In reality, the worker pays both. Because the cost of an employee to an employer is a combined cost, tax and wage. It makes no difference to the employer if the cost of the employee is $1000 a week, of which $100 is tax and $900 wage, or if he costs $1000 a week, all of which is taxed. Makes no difference. So without that 6.2% by the employer, the employee's wage portion would automatically be higher by that amount.

Tricky, huh? Not terribly complex, but very effective on the average person to make him believe that not only is he paying in single digits, but that his employer is paying just as much, lessening his resistance to the system.

well, that's not quite right either. your employer would obviously be willing to pay you at any point up to what it is costing them. but on the other hand you would be willing to work for them at any rate going down to your after SS tax pay (for this purpose we'll pretend there are only SS taxes), plus some discounted value factor of what the SS contribution will be worth in the future (which is very small, because a) it's really far in the future for more of us and b) americans show that they have a rather large discount rate what with the low savings rate AND SS pays a really low interest rate).

so there is a range in which you would both consider yourselves better off. say your pay after SS tax is $10.03/hr, and cost to employer is $12/hr, with your 'legal' pay being $11 an hour with each contributing $1/hr in SS tax as the legal burden. if you wanted the job more than your employer wanted you in particular (typical low-skilled job), the negotiated rate would be somewhere nearer the $10.03/hr mark than $11/hr. if you had unique skills, experience, whatever, it'd be closer to $12/hr than $11/hr.

it's hard to imagine an arm's length transaction where the employee walked away with all $12/hr.

This is the wrong way to look at it. It's not purely a matter of what the employee is "willing" to work for, it's a matter of employers competing for labor in demand and trying to outbid each other for that labor in a way that preserves their ability to turn a profit. So naturally, wages get bid up to a certain level in a free market, even for low skill jobs (my local fast-food restaurant starts well above the imposed minimum by government, for example). If that tax was not imposed, that would free up costs to each employer that would no doubt be utilized in the mass bidding contest, resulting in a higher average wage. Thus the consequences are solely on the worker's end, he is effectively paying the "employer's part" by receiving a lower wage than he otherwise would have.

 

[Vic]

McCain is not going to do anything to change Social Security anyway, so this entire circle jerk is moot.

 

[BansheeX]

Originally posted by: Vic
McCain is not going to do anything to change Social Security anyway, so this entire circle jerk is moot.

I agree, neither party will. It will have to collapse. There are too many people dependent on the system now for it to become anything but political suicide to even suggest abolishing it by allowing people to keep and invest their own money. I just have libertarian delusions sometimes about convincing people otherwise before it does more damage than it already has. I know I'm not going to get any of what I've paid into, so that's a forgone conclusion, but it doesn't have to destroy our country or future generations in the process. I can't imagine what SS and medicare tax will be in twenty years if they move to keep it solvent. 20% of earnings per paycheck in addition to inflation and other taxation? We must be insane.

 

[Oceandevi]

Originally posted by: CADsortaGUY

Originally posted by: Harvey

Originally posted by: SlingXShot

Memo to Senator McCain: That's how the system works. It's how it's always worked.

Further memo so McShame -- Social Security would be solvent if Congress hadn't stolen... err... "borrowed" trillions from surplus that was in the SS trust fund.

It'd also be "solvent" if it wasn't a scam. The whole idea of paying old people for being old is flawed anyway so it's no wonder it isn't solvent.

Thats a twisted way of looking at it.

 

[charrison]

Originally posted by: Engineer

Originally posted by: Mursilis

Originally posted by: Engineer

Originally posted by: charrison


This is probably the best option for reforming SS. They even added a new plan to the TSP that automatically sets your risk level based on your age. So even those that think they are too dumb to invest will have a good option.

It does sound like a good plan. With that said, I would recommend a phase in for people who are 25 or more years away from retirement as we all can see what a short term (10 years of fewer) market can be like. Maybe 100% for those 25 years or further, 75% for those 20-25 years, 50% for those 15-20 years, 25% for those 10-15 years and leave it as it is for those less than 10 years.

Or you could simply give an option to opt out of SS and receive a lump sum invested into an account and take your chances with the market even on a short term basis.

For the risk-adverse, the TSP does offer the G-fund, which is a gov't security fund with no loss of principal. The F-fund, which tracks bonds, is also relatively safe, with only one year of loss in the past 10, and an average 6% rate of return. Not all the funds are stock funds.

That sounds like our current system....invested in government securities!

As far as money involved, it would not be much different. However, you would own those government bonds, rather than the government owing those bonds to itself. This is a very important difference.

 

[Engineer]

McCain gets it....he really does get it.

I thought that SS was reduced by a certain amount if you made above a certain income and was phased out if you made too much. Is that not the case anymore?

McCain gets Social Security but criticizes system By DAVID A. LIEB, Associated Press Writer
Thu Jul 17, 3:21 PM ET



KANSAS CITY, Mo. - Although Republican presidential candidate John McCain has called Social Security "a disgrace," he still cashes his own retirement check every month.

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"I'm receiving the benefits, the system is broken and, unfortunately, my children and grandchildren, according to the trustees of the Social Security system, will not have the same benefits the present retirees have," McCain told reporters Thursday on his campaign bus.

McCain's 2007 tax return shows Social Security benefits of $23,157 for the year, an average of $1,929.75 a month. He said he started receiving the payments "whenever I was eligible."

Asked last week by a young woman at a town-hall meeting in Portsmouth, Ohio, if she is likely to receive Social Security benefits one day, McCain said it is unlikely without fixing the system.

"Americans have got to understand that we are paying present-day retirees with the taxes paid by young workers in America today," he said. "And that's a disgrace. It's an absolute disgrace, and it's got to be fixed."

Social Security benefits are projected to exceed the system's tax revenues in about nine years. The program's trustees have said the Social Security trust fund will be depleted by 2041 unless the system is changed.

McCain, who will turn 72 next month, was eligible to receive full-retirement benefits when he turned 65. In 2008, the maximum benefit for a person retiring at full retirement age was $2,185.

McCain reported a total income of $405,409 in 2007. As a senator, he is paid $169,300 a year. Last year, he donated $105,467 to charity, his return shows.

McCain's wife, Cindy, reported a total income of more than $6 million in 2006, according to the campaign. She files her tax return separately from her husband and has received an extension for 2007. Heiress to a large Arizona beer distributorship, she is reportedly worth more than $100 million.

People are not required to take Social Security payments, according to B.J. Jarrett, a spokesman with the Social Security Administration.

"An individual does have the right to refuse his/her Social Security retirement benefit. However, Social Security is an entitlement program and an individual would essentially be forfeiting a benefit based upon contributions during his/her working lifetime," Jarrett said.

___

Associated Press writer Devlin Barrett contributed to this report.

 

[Mursilis]

Originally posted by: ElFenix

Originally posted by: Engineer

I haven't had a chance to read up on it. What is it invested into and at what rate of "average" interest does it return? Is it privately invested (I assume it is)?

it looks like it's privately 'managed' but since the privately 'managed' funds are all index funds there isn't really any management at all. i guess privately 'administered' is a better terminology, but i don't know who sends out the statements.

anyway, TSP is about what i would like SS to be. a government mandated savings account with a handful of investment choices that allow one to easily diversify and easily see what one's money is doing.

your rate of return would obviously be determined by what ratios you've invested in the various funds.

about all i'd change is allow it to be inheritable, though i think that'd be the last thing to get phased in (after all, we'd have to pay off all the seniors who've been screwed by the current SS implementation all their lives). TSP might be inheritable already.

TSP, like 401(K)s, is currently inheritable. That's because YOU, and not the gov't, OWN it. It's YOUR money the day it goes into your account, unlike SS. Sure, you can't take it out without a tax penalty before you hit a certain age, but legally it's still yours, and if you die, it's your heirs' property. It's the system SS should be if the Dems didn't insist on ignoring and/or demagoguing the whole issue.

 

[Jhhnn]

It never ceases to amaze me that SS discussions inevitably ignore, rather desperately, the real reasons for problems down the road. Apparently, that's because anti-SS forces have been entirely too successful w/ their propaganda efforts. By now, I'm sure, some readers are entirely turned off to whatever I might say, simply because they're victims of (and staunch believers in) simulated rationality, something explained in this article-

http://web.archive.org/web/200...t.php3?article_id=3159\

For those of you with short attention spans and a disinterest in contrary opinion, I'll quote the pertinent passage-

Challenges to Public Reason: Simulated Rationality

Public reason faces a long series of challenges, which taken together are formidable. One major challenge is the professionally cultivated practice of simulated rationality: if you're a powerholder, or more likely a loose network or segmentary coalition of powerholders, and you want to take certain actions, and if norms of public reason are in effect, then you will naturally search for rational-sounding arguments for your plans. This procedure -- decision first, then arguments -- is utterly routinized throughout the public and private bureaucracies of the world, and a whole industry of public relations (and other communications professions that operate on the same conceptual basis as public relations) exists to support it.

The core concept of public relations is the "perception": what matters in practical terms is not whether one's arguments are rational, but whether they are perceived as rational. One must adopt the surface forms of rational argument -- arranging words in logical-seeming ways, using scientific vocabulary, adducing (carefully selected) facts, providing impressive-sounding statistics, citing the opinions of authorities (that is, people who will be perceived as authorities), and so forth. When norms of public reason have been institutionalized, producing this reason-effect is half the battle, and one can purchase reason-effects by the yard.

The short version is that one has to examine their underlying assumptions to arrive at the truth, a very difficult proposition given the effects of 30 years of rightwing thinktank framing and perception management.

Let's start with the idea that SS is a self contained problem.

It's not, and the SS trust proves that to be true. The govt owes the trust ~$3T, by design.

Why is that a problem?

By itself, it's not a problem, but in the context of the other, larger, higher priority debt of the govt, it *is* part of the problem. Over the course of the Bush Admin, we've borrowed more in 7+ years from other sources than we've borrowed from SS in 25 years, and pay higher interest on that additional debt. Borrowing over the course of the RR-GHWB years follows a similar pattern.

Let's review- Total federal debt is the real problem. It requires annual interest maintenance fees far in excess of what will be required to augment SS when SS disbursements begin to exceed SS income, sometime around 2017.

That same federal debt has required maintenance in proportion to its total for as long as the debt has existed. Think about that just a little bit. That's approaching $250B/yr for publically held debt, at an average ~4-5% interest rate... currently almost 10% of the federal budget. Those fees have grown tremendously under a succession of repub admins. Compare that absolutely iimperative outlay to any other in the federal budget. It's at least 10X the total of all earmarks, for example, the earmarks the right has has been raving about so vociferously... twice the annual cost of the WOI... Get the picture?

Who benefits from that? Those who hold the debt, obviously, and those whose taxes were cut to help create it. Also those who received increased federal funding in the process- largely defense industry contractors. Offshoring benefits, too, because dollar value is held artificially high when balance of payments deficits return home to buy US govt securities...

The only way to deal with SS problems is to deal with the larger problem- to economize in the federal budget where possible, and to raise taxes now, particularly on those groups who've benefitted the most over the last 30 years of deception. It's important to do it now, while boomers are still working. We don't just need to balance the budget- we need to create a meaningful surplus, pay off some debt so that we'll be in a better position to borrow when we really need it...

Yeh, I know- it doesn't fit in a 10 second soundbite slogan, and that I'm trying to convince people who have the attention span of gnats, who've had their opinions basically spoon fed to them via talk radio, the AEI, the Heritage foundation, Independence institute, on and on...

Don't say nobody ever tried to tell you, or get you to actually think..