solution to the social security issue

[Anarchist420]

On another forum, someone was saying the following was a better solution than privatizing SS (like myself, the person who thought of the following solution thinks it should just be outright abolished):

- Abolish the category of "payroll tax" and count all income taxes as simply taxes and increase the standard deduction to appropriately account for the true tax burden that is being borne by the public.
- Dissolve the "trust fund" and dispense with all "IOUs" from the Treasury to the SS "trust fund" as satisfied. This is a step to end the illusion that Social Security is a repayment of monies which had been earlier paid into the "trust fund". Social Security is, of course, paid out of monies collected in this fiscal year which is part of what makes it such a sham.
- This converts SS on paper to correspond to what it is in reality ... a year-by-year redistribution of money from taxpayers to tax-feeders and stops the hemorrhaging of the public treasury beyond what can be carried in the national debt (which is a separate problem all unto itself)

What do you think?
I'm not in favor of privatization at all, rather this and cutting benefits.

 

[ElFenix]

it'd be more honest, at least.

 

[actuarial]

There's no way to run social security without a trust. When social security was strong there were 8 workers for every 1 collecting. There will soon be only 3 workers for every 1 collecting. That is a massive inter-generational transfer.

Why not actually contribute money into a REAL trust and not allow access to it, like Canada does with the CPP?

 

[theeedude]

Sounds like an accounting gimmick. Still gotta pay the retirees.

 

[nobodyknows]

I'm for raising income taxes rather then raiding the SS "lockbox" and alsoraising the cap on how much income you have to pay SS tax on. Como on now folks, no raises for SS reciepients for 2 years now?? I was just shopping yesterday and the cheapest steak (chuck steak) they had at Walmart was $5.90/lb.

There are far too many assholes in this country who have it made and just want to piss and moan about others who they see as "costing them money". It's sickening actually.

 

[Mursilis]

What do you think?

What you propose is what we actually have now, in function if not in form. The whole "trust fund" scam was never more than a smoke-and-mirrors accounting gimmick.

 

[dullard]

- Abolish the category of "payroll tax" and count all income taxes as simply taxes and increase the standard deduction to appropriately account for the true tax burden that is being borne by the public.

This is playing with fire. Right now the social security tax is the only way that we are guaranteeing that the poor and lots of the middle class pay taxes. If we don't massively alter the tax laws, then this would be a massive, massive shift of the tax burden from the poor to the wealthy. Let me give you specifics: if nothing else changes, the tax rate must DOUBLE from 35% tops to about 60% to 70% tops, since payroll taxes are half of all government revenue that you just eliminated (and thus income taxes must double).

I don't know what the standard deduction has to do with anything in this thread. Simply increasing that will magnify the tax savings to the poor and lower middle class. That will shift even more of the taxes to the wealthy.

Shifting taxes to the wealthy isn't necessarilly a wrong thing to do, but it has nothing to do with SS reform.

- Dissolve the "trust fund" and dispense with all "IOUs" from the Treasury to the SS "trust fund" as satisfied. This is a step to end the illusion that Social Security is a repayment of monies which had been earlier paid into the "trust fund". Social Security is, of course, paid out of monies collected in this fiscal year which is part of what makes it such a sham.

That is, of course, the biggest lie about SS. It isn't paid out of money collected in this fiscal year. There are surplusses and there are deficits. Either there is a massive increase/decrease in payments to match the increase/decrease in the economy OR we have a trust fund. We choose the trust fund route. There aren't IOUs. The SS fund buys actual physical bonds and it profits from those bonds.

Eliminating that profit like you are proposing does two things. (1) It cuts payments that you and I will get in retirement. (2) It makes it that much harder for our government to operate when there is a massive reduction in bond buyers.

- This converts SS on paper to correspond to what it is in reality ... a year-by-year redistribution of money from taxpayers to tax-feeders and stops the hemorrhaging of the public treasury beyond what can be carried in the national debt (which is a separate problem all unto itself)

Again, it isn't a year-by-year redistribution. It is a redistribution from one generation to another with a buffer fund that buys bonds. If you want a year-by-year redistribution, then why don't you propose that instead of this poorly planned post?

 

[dullard]

Personally, I'm in favor of putting SS back to where it originally was when it was invented: for payments to people who outlived the average lifespan and clearly couldn't work any more. Now that means, SS payments would kick in around the age of 80.

Problem solved.

 

[3chordcharlie]

CPP in Canada is indeed a segregated fund; a lot of changes were made in the late '90s when the writing on the wall (retiring baby boomers) started seeming large and well-focused.

It's expensive (~5% each from employee and employer up to ~$50k), but it is now stable.

I'd sure rather have the $2300/yr to invest myself, but at least with a stable funding structure the eventual benefits are fairly secure.

 

[Exterous]

There are far too many assholes in this country who have it made and just want to piss and moan about others who they see as "costing them money". It's sickening actually.

It's not about having 'it made'. It's about fixing a flawed system that is destined to fail. All we hear is how people have paid into the system so they deserve to get payed out at full promised benefits. Yet I am expected to pay into the system and be ok with not getting the full benefits. They demand 'fairness' without extending 'fairness' to the following generations.

Personally, I'm in favor of putting SS back to where it originally was when it was invented: for payments to people who outlived the average lifespan and clearly couldn't work any more. Now that means, SS payments would kick in around the age of 80.

Problem solved.

This would be a great step

 

[ConstipatedVigilante]

Personally, I'm in favor of putting SS back to where it originally was when it was invented: for payments to people who outlived the average lifespan and clearly couldn't work any more. Now that means, SS payments would kick in around the age of 80.

Problem solved.

That makes sense to me. I don't understand why people get SS payments now when they're still fit enough to work.

 

[Anarchist420]

This is playing with fire. Right now the social security tax is the only way that we are guaranteeing that the poor and lots of the middle class pay taxes. If we don't massively alter the tax laws, then this would be a massive, massive shift of the tax burden from the poor to the wealthy. Let me give you specifics: if nothing else changes, the tax rate must DOUBLE from 35% tops to about 60% to 70% tops, since payroll taxes are half of all government revenue that you just eliminated (and thus income taxes must double).

I don't think that going to a top marginal rate of 60-70% would be necessary and that would likely reduce revenue anyway. I think if we went to the Coolidge marginal rates and brackets (for CG and earned income) not adjusted for inflation, and for each individual tax payer (i.e., no married filing jointly, but a higher deduction for dependents, plus the current standard deduction staying the same), then that would increase revenues enough to get rid of the payroll tax as long as SS benefits were reduced, via means testing and cost of living increase based upon prices rather than wages. Then reducing the corporate tax to a flat marginal rate of 12.5% with say, a 400k standard deduction would bring in plenty of revenue.
We could even have deductions for donations and medical expenses while getting rid of mortgage interest deductions.

 

[HendrixFan]

It's not about having 'it made'. It's about fixing a flawed system that is destined to fail. All we hear is how people have paid into the system so they deserve to get payed out at full promised benefits. Yet I am expected to pay into the system and be ok with not getting the full benefits. They demand 'fairness' without extending 'fairness' to the following generations.

It wasn't destined to fail, it was pushed to failure by those who figured they could pilfer from it. SS has existed for over 70 years and during that time it ran a net profit year to year. Last year was the first year it did not. If both parties hadn't spent the better part of the last 40 years pulling money out of SS to use for other government functions their would be no concern over SS solvency.

 

[nobodyknows]

It's not about having 'it made'. It's about fixing a flawed system that is destined to fail. All we hear is how people have paid into the system so they deserve to get payed out at full promised benefits. Yet I am expected to pay into the system and be ok with not getting the full benefits. They demand 'fairness' without extending 'fairness' to the following generations.

The coin has two sides, but you only see one, the one that is most advantagous to you. It's obvious to me you don't give a crap about "fairness".

 

[piasabird]

Social Security was never meant to be a retirement system. People should be making their own retirement money. Then when they do they should not be eligible to receive social security. Also Social Security pays out too high. Social Security is suppose to be the least likely retirement source and provide barely enough money to get by.

If teachers who do not pay social security, then they can only receive about 1/3 of social security if they receive a pension plan.

 

[Hayabusa Rider]

Social Security was never meant to be a retirement system. People should be making their own retirement money. Then when they do they should not be eligible to receive social security. Also Social Security pays out too high. Social Security is suppose to be the least likely retirement source and provide barely enough money to get by.

If teachers who do not pay social security, then they can only receive about 1/3 of social security if they receive a pension plan.

The current generation of retirees had a retirement plan and often contributed to. Ron Regan decided that companiesand individuals raiding pension funds then having them go belly up to make a quick profit was more important than the people who had it stolen from them. He vetoed legislation that would have prevented it. That left a huge number of people who must use SS as retirement simply because they had it stolen from them with the government's blessing. How do I know this? My father contributed to his pension fund for 35 years and lost it all to someone who used the funds assets to buy out the company and drove it into bankruptcy 6 months later. He made out really really well. My father was just one of many.

 

[CPA]

Privatize it or eliminate it.

 

[Hayabusa Rider]

Privatize it or eliminate it.

People who are already dependent on it can finish it out. Give everyone else their money back. How's that?

 

[3chordcharlie]

People who are already dependent on it can finish it out. Give everyone else their money back. How's that?

Are people who are now 63 already dependent? (Hint: the answer is yes);

What about people who are 55?

And there's no money to give back... it's gone.

 

[Hayabusa Rider]

Are people who are now 63 already dependent? (Hint: the answer is yes);

What about people who are 55?

And there's no money to give back... it's gone.

Who's fault is that? Maybe we shouldn't be talking about how to stiff the citizens but how to extract funds from ALL the politicians hides. Oh while we're at it, let's give them control of health care. They've done such a great job with SS.

 

[3chordcharlie]

Who's fault is that? Maybe we shouldn't be talking about how to stiff the citizens but how to extract funds from ALL the politicians hides. Oh while we're at it, let's give them control of health care. They've done such a great job with SS.

If 'the citizens' are supposed to accept that SS is broken, and must be ended, then at least tell the whole truth!

There is nowhere in the US that the missing SS money could be extracted for repayment. It can't be done.

 

[Exterous]

It wasn't destined to fail,

I meant it is destined to fail as it stands now, not as it stood at inception

The coin has two sides, but you only see one, the one that is most advantagous to you. It's obvious to me you don't give a crap about "fairness".

Yes - I know there are two sides. I explicitly pointed that out in my post

What would be a fair system to you? Keep on the current path? That doesn't seem to be working too well. In fact it would appear to be progressively less fair to future generations. We ask our children to bear more national debt, medicare, retirement payouts than ever before. How is that fair?

This is not to say we drop people off SS cold turkey. We need a gradual increase in retirement age and, eventually, peg SS payout dates to the average life expectancy.

 

[Steeplerot]

Except that SS is not failing, why do people keep lying about this? Is it that important to make an extra short-term buck to gut what little stability is left?

 

[Exterous]

Except that SS is not failing, why do people keep lying about this? Is it that important to make an extra short-term buck to gut what little stability is left?

Yes - damn those lying Social Security Trustees. What do they know?!

In addition, OASDI continues to fail the long-range test of close actuarial balance. Projected OASDI tax income will be sufficient to finance about 75 percent of scheduled annual benefits in 2037

But while it is projected that the Medicare HI Trust Fund is adequately financed until 2029, and the Social Security OASI and DI Trust Funds are adequately financed until 2040 and 2018, respectively, the significant longer term financial imbalances of the programs still need to be addressed. The sooner action is taken to address the long-run financial imbalances, the more reform options will be available, and the more time there will be to phase in changes so that those affected will have adequate time to prepare.

http://www.ssa.gov/oact/trsum/index.html

 

[Darwin333]

There's no way to run social security without a trust. When social security was strong there were 8 workers for every 1 collecting. There will soon be only 3 workers for every 1 collecting. That is a massive inter-generational transfer.

Why not actually contribute money into a REAL trust and not allow access to it, like Canada does with the CPP?

As your post indicates, it is too late. The trust is full of non-transferable iou's which must be converted to actual debt in order for them to be "repaid" and we currently aren't even running a surplus with social security. Even if the economy improves a ton we won't be running much of a surplus from here on out.