Why Social Security is still falling apart

[CADsortaGUY]

Why Social Security is still falling apart

Ponzi welfare scheme.
/thread

 

[Brovane]

Yes.

The rich have received massive unfair advantage under policy; this slightly reverses it.

I don't disagree with this. It just that sometimes people don't understand how the two parts interlate. Even though technically this does affect me. Usually about my last 5-6 bi-weekly paychecks each year I will have hit the maximum for SS for the year. Not really sure if I would count myself as rich living in southern CA, the cost of living in is fairly high. However I am willing to make a sacrifice to help get the budget balanced. I am wondering if all wages for example where taxed at 4.2% if this would allow enough money to flow into SS to keep the fund balanced?

 

[BoberFett]

It isn't if you're a particularly stupid party hack like Craig. Normal math doesn't apply to people like him, there's always an infinite amount of other people's money that can be used to pay for stuff.

We could just get McOwen to run the numbers for us. If for every person paying $7/hr into SS, they just paid $10/hr into Ss instead, we'd actually end up with an increase of $6/hr. It'd be like getting $3/hr for free. The money supply would be endless.

 

[Fenixgoon]

Funny, the Republicans said it wouldn't last long at all in the 1930's, too. They were wrong. I'd say the error is in your 'math'.

my math tells me that there were vastly higher birthrates when SS was enacted. my math tells me that our entire economy wasn't shipped to china when SS was enacted (despite there being an economic depression).

and then there was this thing called the "baby boom" that might have a big effect in the next 15 years on SS fund demands.

but what the hell do i know.

http://www.infoplease.com/ipa/A0005067.html

 

[IGBT]

social security is a book entry. There is no fund.

 

[Mursilis]

Of course there is no money/cash in it. It would be terribly stupid if the fed govt stored all the extra SS receipts in huge stacks of cash in some warehouse.

You must invest the SS surplus. You must get a return on that investment or the surplus would be eaten up by inflation. Investing grows the surplus. Do people keep their 401(k) balance in cash? Of course not. They invest in something that dividends, interest or cap gains.

The question then becomes where do you invest it. Do you invest it in the stock market? What happens when we have a crash, as we recently did? This is why privatizing SS is a bad idea.

The safest investment has always been US govt bonds. So, the extra SS money is invested in (special) US govt bonds.

Now, I can see complaints about what has been a rather low interest rate on those (special SS) bonds. But I cannot see a complaint about investing US govt bonds in general.

Fern

To me, the debate over privatization of SS has little do with expanding investment options for the money in the system (although that would be nice). Rather, it had everything to do with legal ownership of SS funds generally. Right now, funds paid into SS are classified as tax revenue, and individuals don't really have individual accounts, or any real legal claim to those funds, unlike a 401(k), by comparison, which belongs to an individual account owner. I'd much rather prefer to "own" my SS contributions, which is why I support privatization.

 

[Craig234]

my math tells me that there were vastly higher birthrates when SS was enacted. my math tells me that our entire economy wasn't shipped to china when SS was enacted (despite there being an economic depression).

and then there was this thing called the "baby boom" that might have a big effect in the next 15 years on SS fund demands.

but what the hell do i know.

http://www.infoplease.com/ipa/A0005067.html

Long term US population still growing, which is what matters. Baby boom is a one-off.

 

[Craig234]

I don't disagree with this. It just that sometimes people don't understand how the two parts interlate. Even though technically this does affect me. Usually about my last 5-6 bi-weekly paychecks each year I will have hit the maximum for SS for the year. Not really sure if I would count myself as rich living in southern CA, the cost of living in is fairly high. However I am willing to make a sacrifice to help get the budget balanced. I am wondering if all wages for example where taxed at 4.2% if this would allow enough money to flow into SS to keep the fund balanced?

It's good to hear your comments, and yes, if the cap were removed it's solve the issue.

By the way, you are not 'the rich' causing problems - you're in the rest of the country.

 

[Patranus]

Frankly I don't understand how anyone under 40 would want Social Security.
(Picked 40 because those people have been paying into it for a long time)

It is a HORRIBLE safety net in terms of return on investment.


If you are going to make people buy shit make them buy treasury bonds. Higher return, they would actually own a asset, have an asset that can be passed to an heir, can be borrowed against, ect. if you want to have a "safe" investment.

But we all know that isn't the real reason people in government stonewall any type of reforms. We know the real reason is that the people in government don't want their trillion dollar slush fund to be taken away.

 

[Brovane]

Frankly I don't understand how anyone under 40 would want Social Security.
(Picked 40 because those people have been paying into it for a long time)

It is a HORRIBLE safety net in terms of return on investment.


If you are going to make people buy shit make them buy treasury bonds. Higher return, they would actually own a asset, have an asset that can be passed to an heir, can be borrowed against, ect. if you want to have a "safe" investment.

But we all know that isn't the real reason people in government stonewall any type of reforms. We know the real reason is that the people in government don't want their trillion dollar slush fund to be taken away.

Well maybe because it is more than just a retirement fund. There is children benefits (if I would die and my children are under 18), Disability benefits. It is basically a insurance and it doesn't take long to acrue the benefits like disablity etc. Yes would I make out better if I had that money to invest and over a 40-year period until my retirement. However for example say I worked for 10-years and was married. I had two minor children and a spouse and I passed away. My children and spouse would have benefits beyond what I paid in. Also if I had only worked for a short period of time and then became disabled. There is benefits and negatives about SS. However I believe as a "pay as you go system" it isn't bad and it is a nice baseline to build a retirement plan on.

 

[Fern]

It's a serious issue that the government will have to come up with trillions of tax dollars to pay the Social Security fund the money it's borrowed and spent.

That's a reason why more Americans voted for the guy who favored a lockbox for the money instead of spending where the other guy did on borrowed 'tax cuts'.

But since not enough Americans voted for the lockbox guy to prevent the election being stolen, we got the rich given even more money adding to our debt.

And one thing they've done with that money is to buy our elections to ensure that the people don't 'fix' the issue, and instead it'll be 'fixed' by cutting SS, etc.

We could 'fix' SS tomorrow by undoing some of that by removing the cap.

Now, name me the politicians who call for doing that or a similar policy based on the rich paying a fairer share - the list is almost empty, far from passing.

What the hell is a "lock box"?

The "lock box" thing was a dumb talking point that means exactly nothing.

If you think it's real, then explain it in some detail.

Fern

 

[Fern]

Are there any baby boomers here who actually believed they'd ever see money from Social Security? There's nothing new about any of this.

Life expectancy has gone from 59.7 in 1930 to 68.9 the year I was born to 77.9 for someone born in 2007. according to this chart http://www.infoplease.com/ipa/A0005148.html

The age of retirement should have been bumped up accordingly over the years. Then we all would have been putting in more money total, retirees would have been taking out less money total, and Social Security might have been still showing a surplus.

It makes no sense to keep extending the age to get benefits.

What the hell is SS for? It's for retirement. Most people cannot work past 65. Heck, in a lot of fields people cannot work that long. Most manual laborers cannot work at their jobs at that age. Can see a guy being a roofer at 65 yrs old? CPA's are usually forced out at about 55 yrs old because the mind just ain't as sharp and screwing up can cause enormous liability.

Trying to keep people in the workforce past 65 yrs old means less jobs for younger people to.

What are we going to do with people who retire at 65 and don't have a lot of money? Maybe they didn't save, or maybe they did but lost much of it in a market downturn. Or maybe they were self-employed and could save a whole lot because they were paying 15 damned percent to SS.

What are these people going to do? Our society isn't going to tolerate homeless starving elderly. They'll just be on some other govt program so what's the difference?

The answer is means testing for benefits.

Fern

 

[Fern]

To me, the debate over privatization of SS has little do with expanding investment options for the money in the system (although that would be nice). Rather, it had everything to do with legal ownership of SS funds generally. Right now, funds paid into SS are classified as tax revenue, and individuals don't really have individual accounts, or any real legal claim to those funds, unlike a 401(k), by comparison, which belongs to an individual account owner. I'd much rather prefer to "own" my SS contributions, which is why I support privatization.

The idea of segregating accounts and recognizing ownership is problematic. For one thing, we'd have one helluva problem administering it.

Realize that SS benefit calcs are not linear. Lower income types get better return on their contributions, although a smaller overall benefit amount, than high income earners. How do you do that with individual accounts? It sounds like poor people would end with much benefits than rich types, which is the exact opposite of what SS is about. It is the poor who are unable to save adequately for retirement, not the rich.

Then we've got a lot of actuarial problems too. With individual accounts if someone were to die before retirement presumably their heirs get their balance. As it is now that remains in the general fund and helps pay benefits for others. I.e., the cost would skyrocket or the benefit amount would plummet.

My main objection though has to do with allowing people control over investment. We all know what the frack is gonna happen. As the saying goes: "Profits will be privatized and loses subsidized". Inevitably, some are gonna choose poor investments. Since this country won't tolerate homeless starving old people we're going to end up subsidizing those whose investments sucked. I.e., it's just going to cost us a helluva lot more when all is said and done.

SS is a safety net, not an investment plan.

Fern