On Social Security

[Todd33]

What bugs me about SS when it's brought up. One side says it's bankrupt and needs an overhaul, the other says it works fine.

Rarely is it mentioned that SS has a surplus, a big one. It is used to hide part of the budget deficit every year, which is $100+ Billion larger without SS. Had the politicians had the balls to set SS money aside in investments and not spend it on the general fund, we'd have no projected SS deficit (at least not for many many years). All the scare tactics from Bush this last year were problems not from SS itself, but from the piggies in Congress (on both sides for many years).

http://www.urban.org/Template.cfm?NavMe...ViewPublication.cfm&PublicationID=7240

Check out table 1, I'm not sure how different the numbers are now, but it looks like $2 trillion in surplus in the next 20 years.

I think Gore had it right, we needed a lock box.

 

[imported_tss4]

Originally posted by: Todd33
What bugs me about SS when it's brought up. One side says it's bankrupt and needs an overhaul, the other says it works fine.

Rarely is it mentioned that SS has a surplus, a big one. It is used to hide part of the budget deficit every year, which is $100+ Billion larger without SS. Had the politicians had the balls to set SS money aside in investments and not spend it on the general fund, we'd have no projected SS deficit (at least not for many many years). All the scare tactics from Bush this last year were problems not from SS itself, but from the piggies in Congress (on both sides for many years).

http://www.urban.org/Template.cfm?NavMe...ViewPublication.cfm&PublicationID=7240

Check out table 1, I'm not sure how different the numbers are now, but it looks like $2 trillion in surplus in the next 20 years.

I think Gore had it right, we needed a lock box.

It is ironic. He was mocked so much for being right.

 

[ShadesOfGrey]

I have a huge bank account for my bills. I put $1000 per month into that account to pay all my bills. However since I have this big account full of money, I take on more and more bills. At the rate I am currently adding new bills to my account, my current possitive flow will become negative in a few years and will then start using the huge surplus I had over the years to pay those bills. However, me being a sneaky accountant, I took that surplus money I was saving for my bills and spent it on chips, soda, and cheap hookers. But the money I did spend on chips, soda, and hookers I replaced with an IOU to that big bank account. Remember, I'm a sneaky accountant!

Just don't ask me how I'm going to pay the bills once that $1000 I put in each month doesn't cover them because I really really like the cheap hookers and sodapop right now and don't want to stop!

 

[Genx87]

Many people on here in favor of overhauling it including myself use the point that congress raids and has been raiding the surplus's since its inception to fund other projects or make the deficit look better than it is. The only thing in the trust fund is a giant IOU to the federal govt. Technically the system is broke when you look at it as the only way people will get their benefits once SS starts running a deficit is by raiding the general fund.

The lockbox is the good idea and you are starting to realize why private accounts are the best option in the long term. Short term it is a disaster but we as a nation need to figure this out now while we are still running surplus's instead of 30 years down the road when we are running a trillion dollar deficit per year.

With privatized accounts the congress wont be able to get their greedy hands on the program and every cent a person puts into the program has their name on it and the only person that can touch it is them. Let congress try to figure out how to balance the budget on their own dime, not yours.

 

[Todd33]

Let congress try to figure out how to balance the budget on their own dime, not yours.

I agree. It should have been illegal from the begenning for either side to spend it on the general budget. They broke the program. Maybe they should introduce a bill to enact the lockbox, there are still many years of surplus than can stretch out SS for many years.

 

[zendari]

Yeah, I guess once you hike FICA to ridiculous levels to cover $600 billion of expenditures you're not going to have a defecit.

At least not until the baby boomers want a retirement they didn't pay for.

Something needs to be done about the leeches who retire at 65 and go on living for another 30 years, exhausting more than their fair share of benefits. A 1 time lump sun payment at 65 would be better and fairer than this monthy payment system.

 

[Genx87]

Originally posted by: Todd33

Let congress try to figure out how to balance the budget on their own dime, not yours.

I agree. It should have been illegal from the begenning for either side to spend it on the general budget. They broke the program. Maybe they should introduce a bill to enact the lockbox, there are still many years of surplus than can stretch out SS for many years.

This is what Bush has been trying to do since last winter but meeting resistence from everybody who has their hand in the pot right now.

I still contend the original SS was nothing more than a federal tax guised as a social program for the elderly. They set the eligibilty age at the median age of the population knowing full well 50% would never collect. Then they let the funds flow into the general fund and raped it for all it is worth. FDR is a clever man imo.

 

[Todd33]

Taking money out of the system for private accounts only compounds the problem, causing another trillion dollar shortfall. If Bush had proposed not to spend the surplus then I would have believed his intentions. He was trying to kill SS by bankrupting even faster.

The fact is many people expect that money, as they should after a lifetime of paying into the system. Managing the money well would seem like the minimum the politicians could do, yet they just spent it and then scream about baby boomers.

 

[MonkeyK]

Originally posted by: Genx87
Many people on here in favor of overhauling it including myself use the point that congress raids and has been raiding the surplus's since its inception to fund other projects or make the deficit look better than it is. The only thing in the trust fund is a giant IOU to the federal govt. Technically the system is broke when you look at it as the only way people will get their benefits once SS starts running a deficit is by raiding the general fund.

The lockbox is the good idea and you are starting to realize why private accounts are the best option in the long term. Short term it is a disaster but we as a nation need to figure this out now while we are still running surplus's instead of 30 years down the road when we are running a trillion dollar deficit per year.

With privatized accounts the congress wont be able to get their greedy hands on the program and every cent a person puts into the program has their name on it and the only person that can touch it is them. Let congress try to figure out how to balance the budget on their own dime, not yours.

Are the IOUs really any different than if I had a privatized account invested in US government bonds?
The only difference that I see is that with SS the government has had a captive investor, so rates may be artifically low.

 

[Genx87]

Originally posted by: Todd33
Taking money out of the system for private accounts only compounds the problem, causing another trillion dollar shortfall. If Bush had proposed not to spend the surplus then I would have believed his intentions. He was trying to kill SS by bankrupting even faster.

The fact is many people expect that money, as they should after a lifetime of paying into the system. Managing the money well would seem like the minimum the politicians could do, yet they just spent it and then scream about baby boomers.

Like I said the short term effects will be hard to deal with but once everybody has their own accounts and the congress isnt raiding them. Then the program is self sufficient.

And btw Bush doesnt create a bill, the congress does, and you can expect more raping of the system no matter who is in office.

 

[EatSpam]

Originally posted by: Todd33

Let congress try to figure out how to balance the budget on their own dime, not yours.

I agree. It should have been illegal from the begenning for either side to spend it on the general budget. They broke the program. Maybe they should introduce a bill to enact the lockbox, there are still many years of surplus than can stretch out SS for many years.

Can't do that... it would make the Credit Card president look like even less of a fiscal conservative.

 

[charrison]

Originally posted by: Todd33
Taking money out of the system for private accounts only compounds the problem, causing another trillion dollar shortfall. If Bush had proposed not to spend the surplus then I would have believed his intentions. He was trying to kill SS by bankrupting even faster.

The fact is many people expect that money, as they should after a lifetime of paying into the system. Managing the money well would seem like the minimum the politicians could do, yet they just spent it and then scream about baby boomers.

The question is what do you want this lockbox to look like. We have several options.

1. bury the SS surplus in a coffee can in the whitehouse back yard. This option will of course will lose to inflation.

2.Buy goverment bonds. THis is what we are doing now and there has to be a better option.

3. Buy T-bills and place them in private accounts. This does not radically change the debt picture, however the citizen at least now owns the T-bills and is better protected against the goverment changing payour rules when they retire.

4. Buy stocks/bonds with the surplus. This leads to other interesting problems with goverment now being the largest investor on the block Think of the screams that will occur when funds go into halliburton or other hot button company. Or maybe just good old fashion payback for which ever party is in power.

5. A private account system much like what is offered federal employees. Federal employees have about a 1/2 dozen funds they can choose from and they can only make changes once a year. This is a very low cost system and has shown decent returns since it was implemented. They even have a new fund for this year that automatically balances your fund selection based on years from retirement.

Of course several of these ideas were floated by the bush admin, but you only want to accuse them of wanting to bankrupt and bankrupt system.

Pick your poison, your options are limited.

 

[glenn1]

The question is what do you want this lockbox to look like. We have several options.

1. bury the SS surplus in a coffee can in the whitehouse back yard. This option will of course will lose to inflation.

2.Buy goverment bonds. THis is what we are doing now and there has to be a better option.

3. Buy T-bills and place them in private accounts. This does not radically change the debt picture, however the citizen at least now owns the T-bills and is better protected against the goverment changing payour rules when they retire.

4. Buy stocks/bonds with the surplus. This leads to other interesting problems with goverment now being the largest investor on the block Think of the screams that will occur when funds go into halliburton or other hot button company. Or maybe just good old fashion payback for which ever party is in power.

5. A private account system much like what is offered federal employees. Federal employees have about a 1/2 dozen funds they can choose from and they can only make changes once a year. This is a very low cost system and has shown decent returns since it was implemented. They even have a new fund for this year that automatically balances your fund selection based on years from retirement.

Of course several of these ideas were floated by the bush admin, but you only want to accuse them of wanting to bankrupt and bankrupt system.

Pick your poison, your options are limited.

Good summary. You could also add another option to the list,

6. Refund SS surpluses to taxpayers, with the objective that the economic growth this generates continues to keep SS in the black.


I do find it somewhat amusing that some will argue that the SS Trust Fund purchasing Special Issue T-bonds is not the Government writing an IOU to itself. It's not an asset if you're both the issuer and holder of the "asset."

 

[Engineer]

Originally posted by: glenn1
option to the list,

6. Refund SS surpluses to taxpayers, with the objective that the economic growth this generates continues to keep SS in the black.

Do you think, that without spending cuts, that the additional $150 billion (current SS surplus) that the government would now be forced to borrow externally would not "possibly" cause a ripple in the economy more than the $150 billion would cover?

I know that some would be recovered in economic gains, but I don't think it's a one to one relationship (i.e. give $150 billion and a NEW $150 billion is instantly generated)

P.S. I've stated since I was 23 (36 now) that I would sign my SS rights away if I could have my portion to invest. I still feel that way. Will SS collapse in the current configuration? Don't know...maybe...maybe not. I still don't trust DC to fix it either way and personally think that they want to milk it for every last surplus (currently) and then scrap it altogether and remove the trillions of IOU's to itself in one big leap.

Lock boxes work if they are private (truely private, not government controlled) accounts. Why not have 401k style control? Why not let your employer take the money and place it into an account similar to 401k with "no" governement control?

Also, would be nice to not pay taxes on that money, as you currently do on the 6.2% you pay now (you pay federal, state and local taxes ON TOP of that 6.2%). Give it to me with a tax break too!

 

[glenn1]

Do you think, that without spending cuts, that the additional $150 billion (current SS surplus) that the government would now be forced to borrow externally would not "possibly" cause a ripple in the economy more than the $150 billion would cover?

I know that some would be recovered in economic gains, but I don't think it's a one to one relationship (i.e. give $150 billion and a NEW $150 billion is instantly generated)

I simply pointed it out as a possibility, I'll leave it to others to argue the merits of the options.

To answer your questions, I think a ripple is possible (but that the credit markets would be able to handle it, $150 billion in new supply, esp. on the long end could be absorbed fairly easily with probably minimal rate impacts).

As far as economic activity generated, I don't think it would be a 1-1 relationship, if anything you're just shifting the activity from the public sector to the private sector. Sure, you incur some smaller friction costs (no bureaucrats to waste money on), but money is like food, it all goes to the same place eventually

 

[zendari]

Originally posted by: Engineer
Lock boxes work if they are private (truely private, not government controlled) accounts. Why not have 401k style control? Why not let your employer take the money and place it into an account similar to 401k with "no" governement control?

Because people who either

A: Worked the bare minimum number of years
B: Didn't make enough to pay into the system

want expensive golf resort hotel retirements for 30 years, complete with foot massages, but they want someone else to pay for it. Can't do that if we allow freedom and personal control over your own assets.

 

[Jhhnn]

The SS trust isn't the problem. Despite all the waving and pointing from the rightwing, the real problem is all the other debt, which is growing explosively under our rightwing leadership. The trust only comprises ~25% of federal debt, and would be easily maintainable and repayable as required, if it were the only debt.

When push comes to shove, who gets paid- a bunch of grannies, or international bankers?

It's a no-brainer- the bankers win every time. Seniors will have their benefits slashed to nothing and be starving in the streets before the US defaults on one cent of publically held non-SS debt. That's the reality of Capitalism.

So if we really want to address the issue constructively, we have to quit creating liabilities that are more important than SS, something the current leadership has no intention of doing.

They're sponsoring the looting spree, and fully intend to destroy the fiscal integrity of the govt while making as much money as possible in the meanwhile...

It's really very simple.

 

[charrison]

Originally posted by: Jhhnn
The SS trust isn't the problem. Despite all the waving and pointing from the rightwing, the real problem is all the other debt, which is growing explosively under our rightwing leadership. The trust only comprises ~25% of federal debt, and would be easily maintainable and repayable as required, if it were the only debt.

When push comes to shove, who gets paid- a bunch of grannies, or international bankers?

It's a no-brainer- the bankers win every time. Seniors will have their benefits slashed to nothing and be starving in the streets before the US defaults on one cent of publically held non-SS debt. That's the reality of Capitalism.

So if we really want to address the issue constructively, we have to quit creating liabilities that are more important than SS, something the current leadership has no intention of doing.

They're sponsoring the looting spree, and fully intend to destroy the fiscal integrity of the govt while making as much money as possible in the meanwhile...

It's really very simple.

So answer me this. What type of lockbox do you suggest for SS?

 

[Jhhnn]

I don't suggest a lockbox, at all, because that won't solve the problem. There's already too much of the SS trust that's unprotected by such a maneuver, and any way of truly locking it up will either cause the value to diminish over time or be exposed to market risk.

There's only one answer, and that's to return to the tax and spending model in place prior to the takeover by the current leadership. Or any other balanced model acceptable to the American people. Which means throwing the Looters out of the Whitehouse and making them a minority in at least one house of the Congress. If that can't be done, then we're screwed. Simple enough?

 

[charrison]

Originally posted by: Jhhnn
I don't suggest a lockbox, at all, because that won't solve the problem. There's already too much of the SS trust that's unprotected by such a maneuver, and any way of truly locking it up will either cause the value to diminish over time or be exposed to market risk.

There's only one answer, and that's to return to the tax and spending model in place prior to the takeover by the current leadership. Or any other balanced model acceptable to the American people. Which means throwing the Looters out of the Whitehouse and making them a minority in at least one house of the Congress. If that can't be done, then we're screwed. Simple enough?

So you are content with the current congressional looting that has occured since LBJ put SS off budget?

So it appears you want the status quo and not reform of SS.

 

[shira]

Originally posted by: zendari
Yeah, I guess once you hike FICA to ridiculous levels to cover $600 billion of expenditures you're not going to have a defecit.

At least not until the baby boomers want a retirement they didn't pay for.

Something needs to be done about the leeches who retire at 65 and go on living for another 30 years, exhausting more than their fair share of benefits. A 1 time lump sun payment at 65 would be better and fairer than this monthy payment system.

Interesting that you characterize those who were forced to pay into this system for 45 years - and who can expect to receive back a VERY modest rate of return - as "leeches."

Please explain how it is "exhausting more than their fair share of benefits" when those paying into the system are getting a rate of return that is much LESS than what they could have earned had they invested that money on their own.

To see just how absurd your notion is that SS retirees are gouging future generations, how about a paragraph from one of your favorite institutions, the Heritage Foundation:

Social Security's inflation-adjusted rate of return is only 1.23 percent for an average household of two 30-year-old earners with children in which each parent made just under $26,000 in 1996.1 Such couples will pay a total of about $320,000 in Social Security taxes over their lifetime (including employer payments) and can expect to receive benefits of about $450,000 (in 1997 dollars, before applicable taxes) after retiring at age 67, the retirement age when they are eligible for full Social Security Old-Age benefits.2 Had they placed that same amount of lifetime employee and employer tax contributions into conservative tax-deferred IRA-type investments-such as a mutual fund composed of 50 percent U.S. government Treasury bills and 50 percent equities-they could expect a real rate of return of over 5 percent per year prior to the payment of taxes after retirement. In this latter case, the total amount of income accumulated by retirement would equal approximately $975,000 (in 1997 dollars, before applicable taxes).

So, again, how is a 1.23% return "more than their fair share"? Seems to me the SS retirees are getting much LESS than their fair share.

Note: I'm not arguing for private investment of SS contributions. Not at all. I'm disputing your nonsensical idea that receiving SS payments is taking advantage of future generations.

By the way, where does this "lving for another 30 years" come from? Do you really believe that typical SS retirees live to age 95? FYI, The average life expectancy in the U.S. upon reaching age 65 is approximately 16 years for men and 20 years for women. Get your facts straight.

 

[Jhhnn]

Your disingenuity is transparent, charrison, and insulting. I've already made my point- SS isn't the problem, the problem is other mounting debt, and the looming inability to meet all obligations.

Repubs, so-called conservatives, have hated SS since it's inception, and have absolutely no intention of ever "saving" it, at all. They've hit on the one sure way to destroy it, and to get fatter at the same time- cut taxes at the top, radically increase spending, create explosive debt of higher priority than SS. They're intentionally creating a financial crisis in our not so distant future.

When and if SS collapses, it won't be an accident, it'll be the result of concerted effort to bankrupt the govt, and to forever change the balance between wealth and egalitarian democracy.

 

[zendari]

Originally posted by: shira
So, again, how is a 1.23% return "more than their fair share"? Seems to me the SS retirees are getting much LESS than their fair share.

Note: I'm not arguing for private investment of SS contributions. Not at all. I'm disputing your nonsensical idea that receiving SS payments is taking advantage of future generations.

By the way, where does this "lving for another 30 years" come from? Do you really believe that typical SS retirees live to age 95? FYI, The average life expectancy in the U.S. upon reaching age 65 is approximately 16 years for men and 20 years for women. Get your facts straight.

Compare the return of a retiree who lives to 95 to one who lives to 85. Why does the former get a higher ROR than the latter?

Yet another problem with the lack of personal private control of your finances. You claim the elderly are getting less than their fair share, yet by not supporting privatization are delegating me to a -3.x% return, last time I checked on the same calculator. And that's before the 2042 ending of the fake surplus.

 

[zendari]

Originally posted by: Jhhnn
The SS trust isn't the problem. Despite all the waving and pointing from the rightwing, the real problem is all the other debt, which is growing explosively under our rightwing leadership. The trust only comprises ~25% of federal debt, and would be easily maintainable and repayable as required, if it were the only debt.

Interesting, because the liability for SS in perpetuity is $11.1 trillion, far higher than the national debt accrued not only by Bush, but the first 43 presidents combined.

 

[charrison]

Originally posted by: Jhhnn
Your disingenuity is transparent, charrison, and insulting. I've already made my point- SS isn't the problem, the problem is other mounting debt, and the looming inability to meet all obligations.

Repubs, so-called conservatives, have hated SS since it's inception, and have absolutely no intention of ever "saving" it, at all. They've hit on the one sure way to destroy it, and to get fatter at the same time- cut taxes at the top, radically increase spending, create explosive debt of higher priority than SS. They're intentionally creating a financial crisis in our not so distant future.

When and if SS collapses, it won't be an accident, it'll be the result of concerted effort to bankrupt the govt, and to forever change the balance between wealth and egalitarian democracy.

Yet you complain about it being raided by congress since the days of LBJ. Since he moved it off the books all the surpluses are spent and replaced with special t-bills. You complain about this method and yet you dont want to do anything about it. You are the one that is being transareltly disingenious and insulting.

congress raiding SS is either a problem or it is not. You seem to think that is not the problem, unless you think it is a problem.