Sunday, July 31, 2011

Our Biggest Budget Issue: Increased Spending on Payments to Individuals, i.e. "Entitlement Nation"


I'm sure most of us are experiencing "debt ceiling overload" by now and will be happy that a deal was just reached (it's 8:50 p.m.).  Over the last month, we've heard endless debates on federal spending, federal spending as a share of GDP, the $14 trillion ever-increasing federal debt, the the federal debt as a share of GDP, spending cuts as a condition to raise the debt limit, possible revenue/tax increases, a possible balanced budget amendment later, etc.  

But there's an important issue about federal spending that's been pretty much completely overlooked in all of the debates, and it's an issue that was discussed on a CD post back in February.  In that post, I featured an editorial by AOL opinion editor John Merline who pointed out "the biggest thing the federal government does these days is cut checks to individuals."

In 2010, the OMB reports (Table 6.1 Composition of Outlays, 1940-2016) that the federal government spent $3.45 trillion, and made about $2.3 trillion in "payments to individuals," which was about two-thirds (66.13%) of total federal spending last year, the highest ever in history (see top chart above).   And that category was more than three times larger than the share of 2010 federal spending on defense (20.1%) and more than 11 times larger than the share spent on net interest (5.7%).  

Where does all that money go? The bottom chart displays a percentage breakdown of the $2.3 trillion in payments to individuals for 2010, and shows that more than 76% of those payments were for Social Security and Medicare, about 14.4% was for spending on the poor (public assistance, food assistance, and housing assistance), 7% on unemployment insurance payments, and 2.4% on student assistance.

And John pointed out in his AOL editorial that "The biggest of these direct payment programs -- Social Security, Medicare and Medicaid -- are also the fastest growing in the federal budget."

So while it looks like the short-term problem has been temporarily fixed with an increase in the debt limit, the long term problem won't be fixed until we address the nation's most serious problem: we're increasingly becoming an "entitlement nation," with "payments to individuals" increasing both in absolute dollar amounts and as a share of total federal spending, or in the words of John Merline:

"The federal government has over the years essentially turned into a gigantic wealth-transfer machine -- taking money from a shrinking pool of taxpayers and giving it out to a growing list of favored groups. This situation will make getting the federal budget under control increasingly difficult, since it will invariably involve pitting those writing checks against those cashing them."

160 Comments:

At 7/31/2011 9:09 PM, Blogger Broll The American said...

The government doesn't give the money it takes. Taxation and spending aren't connected, unless you're a politician trying to score rhetoric points about the deficit. The money needed to grow the economy needs a point of entry. Money can only enter the economy through Federal spending. They can overpay defense contractors, build bridges to nowhere or cut checks to grandma. It needs to be a wise and balanced approach, but my vote is grandma gets her piece of the pie first.

 
At 7/31/2011 9:17 PM, Blogger Benjamin said...

Okay, we are now talking about the "unified" budget--mashing together federal income tax-funded outlays (largely agency spending, such as Defense, Homeland Security, VA, USDA), with outlays financed by payroll taxes (Social Security and Medicare taxes).

While we need to trim entitlement outlays, remember they are funded by payroll taxes. We can level off or cut payroll taxes if we trim entitlement outlays. I am for that.

If you want to cut or not raise federal income taxes, then you need to cut Defense, Homeland Security, VA, USDA, Interior outlays, as those agencies make up more than 70 percent of federal agency spending. I am for that too.

We will spend more than $10 trillion in the next 10 years on Defense, Homeland Security, and the VA, despite having no military enemies of any calibre,

I can assure you of only one thing: At the end of those $10 trillion in outlays, the Pentagon will tell you what a increasingly dangerous and fragile position America is in; that our equipment is rapidly aging; and that we can difficult retaining our best soldiers.

In short, like the War on Poverty, and the War on Drugs, the ongoing War on Terror will be money almost totally wasted.

 
At 7/31/2011 9:40 PM, OpenID Sprewell said...

Benjie, SS and Medicare and Medicaid are not funded by the payroll taxes that most people pay, as most people who receive the money get back a lot more than they put in, so it's really an income transfer scheme from those who have more money. More than anything, it's just a way for the govt to steal our money, as they force the trust fund surplus every year to be "invested" in treasuries, that offer almost no return, rather than investing it in private securities. Further, they love having that to hold over a bunch of disadvantaged voters' heads, because anytime Obama and the other tinpot despots want to spend a ton more on their mad causes, lining their pockets the whole time, they can threaten retirees that they won't get their SS/Medicare checks, as they just did for months, and get whatever they want because the rest of us don't want to spend our time fighting them.

If you believe people need to be forced to save, why not let them save the way most people do, by putting it in the market? But no, the moment that's floated, the idiot lefties start scare-mongering about "privatizing" social security, when the truth is that govt treasuries return far less. You know it's a scam that they "care" about potentially penniless retirees when they won't let you invest SS money in anything but treasuries, which they get to spend. I agree that defense is a sacred cow for some that also needs cutting, but SS and Medicare are currently a bigger problem. No question we should cut them all concurrently though.

 
At 7/31/2011 10:07 PM, Blogger al fin said...

Public employees' wages, pensions, and benefits are a rapidly growing piece of the pie as well -- sinking some cities and threatening to sink some states. On the federal level, the problem is still in stealth mode, but it's there and being compounded daily.

The public indebtedness quagmire of the US is unprecedented in size, scope, and unwillingness of the leadership to do anything but to dig the hole deeper. Problems this huge and intractable may not be solvable via ordinary political means.

Consider what extra-ordinary solutions may become necessary when one half of a society won't stop taking and the other half can't keep giving.

 
At 8/01/2011 1:30 AM, Blogger PeakTrader said...

"In 2010...the federal government spent $3.45 trillion, and made about $2.3 trillion in "payments to individuals"."

And, in 2010, total federal revenue was less than $2.2 trillion.

 
At 8/01/2011 2:07 AM, Blogger PeakTrader said...

Unless there are major changes, the U.S. is in decline, at least through the 2030s, from slow economic growth, an aging population, and dismal public schools.

 
At 8/01/2011 3:34 AM, Blogger rjs said...

most retirees have been paying into this for 40 years:

http://www.ssa.gov/cgi-bin/investheld.cgi

 
At 8/01/2011 5:16 AM, Blogger Jet Beagle said...

Mark: "more than 76% of those payments were for Social Security and Medicare"

I think this statement is misleading and not exactly correct. It implies that seniors receive benefits from 76% of transfers.

Medicaid is a separate program for the poor, and is nearly as large as Medicare:

Medicare, 2009: $502 billion
Medicaid, 2009: $374 billion

Social security includes not just benefits for retirees, but also benefits for the so-called "disabled" and for survivors who have not yet reached retirement age. I've been unable to find data on the latter, but DI accounts for about $125 billion annually.

Mark: "about 14.4% was for spending on the poor"

This significantly understates federal government benefits provided to the poor. Medicaid is not included in this number. Most of the disability payments funded by OASDI also go to the poor.

 
At 8/01/2011 9:06 AM, Blogger Che is dead said...

"More than anything, it's just a way for the govt to steal our money, as they force the trust fund surplus every year to be "invested" in treasuries, that offer almost no return ..."

It's far worse than that, those "treasury securities" are actually non-transferrable I.O.U.s that pay below market interest rates. The government essentially robs the "trust fund" in order to finance a myriad of programs that are not constitutionally mandated.

 
At 8/01/2011 9:10 AM, Blogger Che is dead said...

"most retirees have been paying into this for 40 years"

Yes, and most of them have voted for politicians that have continually squandered those payments. Actions have consequences, why should younger Americans be subjected to confiscatory tax rates in order to shield these retirees from theirs?

 
At 8/01/2011 9:21 AM, Blogger juandos said...

Bingo Che: "...why should younger Americans be subjected to confiscatory tax rates in order to shield these retirees from theirs?"...

 
At 8/01/2011 9:21 AM, Blogger Cas said...

The problem with federal, state and local gov't employees was allowing them the "opportunity" (in progresive's eyes) to unionize. The system had already been purged of the "patornage" that was so endemic for our fist 100 yrs, but the real growth of these employees has been for the past 50 yrs.
Elminating these unions would go a long way towards restoring sanity in administering these pension programs, and also provide the means to trim the number of workers...

 
At 8/01/2011 10:00 AM, Blogger Michael Hoff said...

Well, Obamacare should fix some of this. Seniors will be denied more care, so they'll use less and die sooner. Voila! Problem solved.

 
At 8/01/2011 10:03 AM, Blogger Hydra said...

We have a shrinking pool of taxpayers because we have a shrinking pool of people who actually have any money.

 
At 8/01/2011 10:08 AM, Blogger juandos said...

"I can assure you of only one thing: At the end of those $10 trillion in outlays, the Pentagon will tell you what a increasingly dangerous and fragile position America is in; that our equipment is rapidly aging; and that we can difficult retaining our best soldiers"...

Hmmm, Jim Treacher over at the Daily Caller has an apt description for pseudo benny in a tweet: All these lefties are lashing out and calling their opponents "terrorists" because there's no way to fight their real enemy: Math.

 
At 8/01/2011 10:08 AM, Blogger Hydra said...

as most people who receive the money get back a lot more than they put in,

================================

False argument. There are also a lot of people who paid in who never collect anything, because they died prematurely. The system takes this into account and it is epected that those who actually recieve money will gt more than they paid in.

Besides, what is the problem with taking out more than you paid in? Yu would EXPECT to do that with a private pension fund or 401K, wouldn't you? This argument makes that sound like a bad thing.

 
At 8/01/2011 10:17 AM, Blogger Hydra said...

they force the trust fund surplus every year to be "invested" in treasuries, that offer almost no return,

===========================

At present they offer almost no return, historically that is not true. But this is a safety net program, so you would expect to make only the most secure investments. If government was actually buying securities, you would be screaming bloddy murder that government is a)picking winners and losers in the market, and b)it is putting money you entrusted to them at risk.

In fact, one can always go invest their own money in more risky market securities, and feel more comfortable doing so, knowing that they already have that portion of their portfolio that they would have invested in secure issues covered.

The claim that you could make more money investing yur social security money on your own is not completely true, because a prudent and diversified portfolio would probably hold some treasury bonds anyway.

 
At 8/01/2011 10:27 AM, Blogger Hydra said...

If you believe people need to be forced to save, why not let them save the way most people do, by putting it in the market?

===============================

That is a relatively new phenomenon. When I was young and had only a small amount of money there was no prudent and inexpensive way to invest in the market, you pretty much had to deal in round lots or pay exhorbitant trading fees. Round lots meant that you could not diversify. Most mutual funds had minimum pruchase requirements.

The first savings plan I was offered at work offered only one option: guaranteed investment contracts.

But, with the advent of 401Ks, mutual funds, and trading outlets such as Foliotrade meant that you could have fractional shares and basically create your own diverisified fund, trading at will without trading fees.

Nothing about social security prevents anyone from saving or trading in the market. But there is also nothing in the market that guarantees you will have money when it is time to retire, consequently you would probably buy some treasuries anyway.

But, if you claim not and expect all your investment to be in risky high paying ventures and penny stocks, well, that is exactly the kind of behavior that leads to the idea you must force people to save prudently.

 
At 8/01/2011 10:31 AM, Blogger Hydra said...

The government essentially robs the "trust fund" in order to finance a myriad of programs that are not constitutionally mandated.

==============================

The government borrows from money wich will evenetually be needed to pay retirement benefits. It uses the money to pay bills the government has contracted for. Whether the bills were caused by things that are not constitutionally mandated or not, they are expenditures approed by the congress and not overturned by the courts.

They are legally binding costs that must be paid.

 
At 8/01/2011 10:57 AM, Blogger Walt G. said...

"Actions have consequences, why should younger Americans be subjected to confiscatory tax rates in order to shield these retirees from theirs?"

Because retirees vote at a higher rate than younger Americans. Non-actions have consequences, too.

 
At 8/01/2011 11:54 AM, Blogger krs said...

I found this summary useful:

http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/tables.pdf

A few observations:

1. 2021 estimate of interest outlays: $928B

2. 2021 estimate of receipts: $4820B

3. Interest as a percent of receipts (calculated): 19% (currently 10%).

4. 2021 estimate of gross debt outstanding: $26,341B (currently $13,529).

5. 2021 interest rate assumption for gross debt outstanding (calculated): 3.5%.

Good luck with entitlement payments when nearly 20% of the receipts are going to pay interest....

Interest rates may remain low if the ISM continues to print at 50 or lower, but does anyone think our rates will be at 3.5% in 10 years?! Either Japan redux, or look to short T-Bonds in the near future....

 
At 8/01/2011 12:01 PM, Blogger morganovich said...

michael-

"Well, Obamacare should fix some of this. Seniors will be denied more care, so they'll use less and die sooner. Voila! Problem solved."

it sure didn't reduce costs in massachusetts.

perhaps it can get you to die earlier, but not for any less money.

 
At 8/01/2011 12:05 PM, Blogger Benjamin said...

Interesting stat: The OECD nations spend one-half what we do on health care, and live longer.

 
At 8/01/2011 12:08 PM, Blogger Benjamin said...

OT: The bond market says deflation.


"For instance, this morning the yield on 5 year T-notes fell to 1.28%, the lowest rate I’ve ever seen on 5 year bonds. This is the market forecast of future rates, and an implied prediction that rates will be at zero for much longer than Fed officials believe. Here are recent monthly averages from the St Louis Fred:

2011-07: 1.28%
2011-06: 1.58%
2011-05: 1.84%
2011-04: 2.17%
2011-03: 2.11%
2011-02: 2.26%

Lenders mending for five year at 1.28 percent essentially are expecting deflation. Or we have a capital glut.

There are no other explanations.

 
At 8/01/2011 12:10 PM, Blogger morganovich said...

"Because retirees vote at a higher rate than younger Americans. Non-actions have consequences, too."

as ever, walt espouses out the "might makes right" viewpoint.

that has nothing to do with justice.

if we are in a liferaft, and i drink all my water and you still have some, it's ok for me to beat you up and force you to give me yours? how about if there are 3 of us and we vote 2 to 1 that you have to give it to me? is there any difference at all from what you are arguing? does that seem fair, just, or likely to promote responsible behavior?

that's pretty much what you are saying.

the generation retiring voted to spend this money. the young who are being asked to pay were often not even of voting age when that happened.

blaming them for not heading it off now is like my blaming you for not being tough enough to protect your water or popular enough that when 2 of us vote against your one that you have to give it up that that is just.

where is the justice and equity in that?

they played, now they want us to pay? and it's OUR fault?

you have some very strange notions of justice walt.

you are blaming the victim.

51% of americans pay no net federal income tax. that's a permanent majority that makes a constant majority in favor of all spending because they know they are not going to pay for it.

free beer every day!

that's why democracy untempered by rights is just particularly nasty tyranny and collapses under fiscal mismanagement.

 
At 8/01/2011 12:10 PM, Blogger Che is dead said...

This comment has been removed by the author.

 
At 8/01/2011 12:13 PM, Blogger morganovich said...

"There are no other explanations."

as ever, you demonstrate your total lack of even a basic understanding of financial markets.

there are TONS of other explanations.

flight to safety from the EU.

massive fed buying that ended at a time when the treasury could not issue debt.

increased bank capital requirements leading to increased holdings of US debt

heavy chinese buying to keep their currency low.

the effects of huge money supply growth.

you really ought not comment in financial issues bunny, you keep making yourself look ridiculous.

it's clear you have no idea what you are talking about.

 
At 8/01/2011 12:17 PM, Blogger Che is dead said...

"Because retirees vote at a higher rate than younger Americans. Non-actions have consequences, too."

I was about to say that this was a good point, except that most of the money being taken from them (younger Americans) is taken before they've even reached an age where they have the right to vote. Baby boomers are simply writing IOUs on their future earnings committing them to a life of forced bondage. But, hey, it keeps Democrats in office.

 
At 8/01/2011 12:19 PM, Blogger morganovich said...

oh, also, and quite probably most important, the bond curve is set by the fed.

they set the price at which banks can borrow money from each other's excess deposits or fromt he fed itself.

this sets up arbitrage.

borrow at 25bp, buy 6 month at 13bp, and lever 6:1.

so long as money is this cheap, bonds will be well bid for this reason.

stick to barstools bunny.

 
At 8/01/2011 12:22 PM, Blogger Che is dead said...

"The government borrows from money wich will evenetually be needed to pay retirement benefits."

Gee, thanks, I would have never figured that out without your help.

So, essentially what your saying is that our kind and benevolent government is giving all of us the opportunity to pay for our retirement twice. Once in the form of payroll taxes and the other in the form of income taxes. You liberals are sooo generous.

 
At 8/01/2011 12:33 PM, Blogger Che is dead said...

"False argument. There are also a lot of people who paid in who never collect anything, because they died prematurely ... what is the problem with taking out more than you paid in? Yu would EXPECT to do that with a private pension fund or 401K, wouldn't you? This argument makes that sound like a bad thing."

I would have expected my 401K or pension fund to be invested in productive assets and would expect to receive more based on the viability of those investments. You see, when my 401K is invested in ExxonMobile I am profiting because they are contributing, in a profitable way, to the economy. Hell, they are even contributing to the tax base. The government "invests" in creatons like this and when it has blown all of the money intended for my retirement it asks me to make it up in higher income taxes. Only a socialist ideologue could find such a program acceptable.

As for "dying prematurely", if I do, the assets in my 401K go to my heirs, not to the federal government.

 
At 8/01/2011 12:43 PM, Blogger Che is dead said...

My question is this: If all you leftists care so much about grandma and grandpa, why did you take money from them their entire working lives and throw it into a government run Ponzi scheme? And when it's pointed out to you time and time again that this has what has been done, you fight to keep them in it. What kind of person does that?

 
At 8/01/2011 12:47 PM, Blogger Benjamin said...

Che-

Your invented word of "creatons" is properly spelled as "cretins."

If you do not wish to be regarded as a cretin, you should employ proper spelling--otherwise, you'll get lumped in with Morganovich and the Utah UFO Society.

 
At 8/01/2011 1:04 PM, Blogger arbitrage789 said...

I'm sure we can count on the corporate jet owners to provide us all with a life of decadence.

 
At 8/01/2011 1:07 PM, Blogger Che is dead said...

This comment has been removed by the author.

 
At 8/01/2011 1:12 PM, Blogger Che is dead said...

"Benji", Just for you: "Creaton" In fact, it kind of describes you.

 
At 8/01/2011 1:13 PM, Blogger Walt G. said...

"how about if there are 3 of us and we vote 2 to 1 that you have to give it to me?"

How about if two were under 40 and one was over 40 and the one over 40 won, should the other two complain?


"as ever, walt espouses out the "might makes right" viewpoint."

Just stating a fact that those under 40 are underrepresented due to their voting pattern. People over 40's voting pattern over represents their population.

I don't see where you think I took a right or wrong position from what I wrote, morganovich. Most of what I do is solve problems by recognizing them and then applying the most likely solution. If the younger generation wants power, the first thing they have to do is vote. If that does not work, then, they can try something else.

It might be a cruel world, but part of it is at least understandable which removes some of the uncertainty. Maybe removing some of the uncertainty would make it a less cruel world.

 
At 8/01/2011 1:14 PM, Blogger Benjamin said...

Morgan-
As often you can't see the forest for the all the UFOs blocking your sight.

Interest rates, broadly, could not fall unless the investing public believed lower inflation, or deflation was coming, or there is a capital glut.

All the niggardly little events you mention cannot offset the huge trends.

If investors as a group think inflation is going to soar, or if there is a capital shortage, then rates will rise.

But rates have been falling.

Go back to UFOs.

 
At 8/01/2011 1:26 PM, Blogger Walt G. said...

"51% of americans pay no net federal income tax. that's a permanent majority that makes a constant majority in favor of all spending because they know they are not going to pay for it."

Are you assuming those who pay no net income tax are voting at the same rate as those who are paying taxes, morganovich? I think you will find that those who are older and more affluent vote at a much higher rate than those who are not. This higher rate would negate the majority's votes. Politicians count on it.

 
At 8/01/2011 1:34 PM, Blogger Hydra said...

"51% of americans pay no net federal income tax.


================================

How many of these have no income?

 
At 8/01/2011 1:38 PM, Blogger arbitrage789 said...

Hydra,

Of course, some of them have no income. But at the same time, there are plenty of people whose Federal tax burden is only 3%.

Of course, these people want higher taxes on EVERYONE ELSE.


I wouldn't be so opposed to higher taxes if we moved much more in the direction of a flat tax.

 
At 8/01/2011 1:47 PM, Blogger Ron H. said...

"The government borrows from money wich will evenetually be needed to pay retirement benefits. It uses the money to pay bills the government has contracted for. "

The word borrow implies a plan or at least an intent to pay the money back. Rob is probably a better word to use in this case, as there is absolutely no plan, nor is there any foreseeable future ability to pay it back.

In addition, as the SS benefits paid out now exceed the money paid in, and will do so for the foreseeable future, the need to begin using those funds is now. So, saying 'eventually', doesn't quite describe the reality either.

Just so it's clear, the IOUs in the SS trust fund are not marketable, and can only be redeemed by Treasury.

Currently government borrows nearly as much each year as it takes in in tax revenue, and there's no indication this will change anytime soon.

It's a bleak picture, and using words like 'borrow' or 'eventually', don't describe how serious the problems really are.

 
At 8/01/2011 2:14 PM, Blogger Ron H. said...

"Your invented word of "creatons" is properly spelled as "cretins."

If you do not wish to be regarded as a cretin, you should employ proper spelling--otherwise, you'll get lumped in with Morganovich and the Utah UFO Society.
"

Bunny,

This is one of the lamest responses I've ever seen from you, and that's really saying a lot.

It's obvious that you have nothing meaningful to contribute, and absolutely zero with which to counter Ches argument.

 
At 8/01/2011 2:31 PM, Blogger Ron H. said...

"That is a relatively new phenomenon. When I was young and had only a small amount of money there was no prudent and inexpensive way to invest in the market..."

This isn't exactly a new phenomenon, it's just a positive indication that ordinary working people have become wealthy enough to actually consider investing in equities.

There have always been other ways to invest small amounts, including savings accounts, which are an indirect method of investing.

"Nothing about social security prevents anyone from saving or trading in the market."

...Except the fact that the first 12.4% of their gross earnings is forced into OASDI.

Sure, if someone wants to invest additional amounts, they are free to do so.

 
At 8/01/2011 2:53 PM, Blogger Hydra said...

"Well, Obamacare should fix some of this. Seniors will be denied more care, so they'll use less and die sooner. Voila! Problem solved."

=================================

Right. The stop smoking campaign raised health care costs substantially, because the people who quit or never started live longer, and therefore use more health care services.

Same probleme with Social Security: people live longer and collect longer, so we will need to make some actuarial changes.

 
At 8/01/2011 2:56 PM, Blogger Hydra said...

"Interesting stat: The OECD nations spend one-half what we do on health care, and live longer."

=======================

Unfortunately they spend most of that extra time waiting for health care services.


Same with exercise. Exercise will extend your life span, but the amount it extends lie spand is just about equal to th time spent exercising.

 
At 8/01/2011 3:00 PM, Blogger Hydra said...

When I was young and had only a small amount of money there was no prudent and inexpensive way to invest in the market..."

This isn't exactly a new phenomenon, it's just a positive indication that ordinary working people have become wealthy enough to actually consider investing in equities.

================================

I disagree, when I was young there was no prudent and inexpensive way to invest, unless you had substantial amounts to invest.

Today, there are many more ways to get started with much lower amounts. These are new tools and services that simply were not available to the casual investor previously.

 
At 8/01/2011 3:10 PM, Blogger arbitrage789 said...

Hydra,

"Exercise will extend your life span, but the amount it extends lie spand is just about equal to thE time spent exercising"

^^^^^^^^^^^^^^^^^^^^^
I've never heard anyone say this, but I suppose it's possible.

Even if it is, there's also the question of quality of life.

For example, I hope I don't have a stroke.

Rather just get it over with.

 
At 8/01/2011 3:10 PM, Blogger Hydra said...

Sure, if someone wants to invest additional amounts, they are free to do so.

=====================

Yes, but I would go further and say that not only are they free to do so, they are empowered to do so with the knowlege that the low risk portion of their plan is already covered.

True, there were always savings accounts, as you say an indirect method of investing, but here I think youare chaqnging the argument. The argument was that people would be better off investing in the market, now youa are including non market methods.

But given the savings and loan collapse, and current bank failures, I think you would be hard pressed to argue that those "investments" are as safe as social security.

Except, of course for the fact of government intgrusion in the form of FDIC insurance. Even if one went the savings account route, I think they would have to consider that the low risk portion of their plan, and only after the savings account reached a certain amount, could you divert some of it to actual market investments.

In that case it is little diffferent and no better than having the first part of your savings directed to social security.

 
At 8/01/2011 3:16 PM, Blogger Hydra said...

the generation retiring voted to spend this money. the young who are being asked to pay were often not even of voting age when that happened.


===============================

Yes, but one could equally argue that much of the money that was spent, was spent to benefit the younger generation, as well as our own. To whatever extent that is true, it is easonable to expect them to pay their share in turn.

 
At 8/01/2011 3:21 PM, Blogger Hydra said...

I've never heard anyone say this, but I suppose it's possible.

==========================

We had a close family friend who was an epidemologist. He and my father (and others) spent decades studying the results of exercise routines on health and longevity.

He became a passionate runner, late in life, and this was the way he explained it to me.

"We now have pretty good evidence linking the effect and amount of exercise to longevity. Unfortunately, those two numbers are about the same, but the QUALITY of your life is also greatly improved."

 
At 8/01/2011 3:30 PM, Blogger Hydra said...

Of course, some of them have no income. But at the same time, there are plenty of people whose Federal tax burden is only 3%.

==============================

I only meant to point out one way that the statement that 51% pay no income tax is misleading. If the premise is mesleading or faulty, the rest of the argument has no value.

Sure, there are plenty of people whose federal ax burden is only 3%. But, as I recall the entire bottom 20% of earners only earn something like 4% of the total gross arnings.

Why should their liability be substantially greater than their piece of the pie?

Even supposing you could get 30% out of them, If you got 30% of the bottom 4% of total income you would still have 1.33% of revenue.

If you believe we cannot balance the budget on the back of the rich, then surely we cannot do it on the backs of the poor.

 
At 8/01/2011 3:30 PM, Blogger Hydra said...

This comment has been removed by the author.

 
At 8/01/2011 3:34 PM, Blogger Benjamin said...

Che-

Sorry, if it ain't in Webster's, or the New Oxford Dictionary, it ain't a word.

And it ain't.

PS Read Martin Feldstein's op-ed in today's WSJ. It is great.

 
At 8/01/2011 3:45 PM, Blogger juandos said...

"Whether the bills were caused by things that are not constitutionally mandated or not, they are expenditures approed by the congress and not overturned by the courts"...

Best description yet hydra of the herd mentallity that goes into the breaking of their oaths...

 
At 8/01/2011 3:56 PM, Blogger Hydra said...

Best description yet hydra of the herd mentallity that goes into the breaking of their oaths...


================================

Don't see your point.

Are you suggesting that if the govt issues a contract for M4 rifles is it OK to breach that contract, simply because they changed their mind on how much total money the govt allows themselves to borrow?

 
At 8/01/2011 4:21 PM, OpenID Sprewell said...

Che and Ron, hmm, I didn't know that the treasuries in the trust funds aren't even normal, marketable treasuries, which the ssa itself admits on its website. Funny how they try to address the IOU criticism with bluster about how the govt is backing it up, so it must be okay. ;)

Hydra, if you think it's dead people's social security payments paying more for others, you are nuts. As has been linked from this blog before, it's just income redistribution from those with more money to those with less. I've got no problem with people getting out more than they put in, as long as that money actually comes from investment returns and not from simply taking it from someone else. Given the abysmal return from the govt treasuries that the trust fund surplus is forced to "invest" in, not to mention the ponzi scheme of paying current retirees with current tax returns, that extra return is coming from somebody else.

 
At 8/01/2011 4:25 PM, OpenID Sprewell said...

Treasuries have always offered below-market returns, it's just much worse now. There are many more secure investments than treasuries, you only show your ignorance by claiming that treasuries are the only "secure" option. Of course I don't want the govt buying private securities, but they are already forcing us to buy govt securities with the 20% surplus on their ponzi scheme, a much worse situation. Nobody wants to entrust anything to them: they could simply require that you put your SS money away in a 401k, where you choose the securities. The only reason this isn't done is because then they wouldn't be able to rob it, like they do with the SS trust fund. Thank you for pointing out the obvious that once the govt steals their SS cut, you are free to invest the rest of your money in any way you like.

A diversified portfolio doesn't have to hold any treasury bonds. You keep talking as though the govt treasuries will always be secure, when the fact is that their debt rating is about to fall because that claim is not credible anymore. You must have been pretty ignorant if you thought there was no way to invest in the market when you were young. People were investing in bucket shops in the '20s, the retail investor has been around for a century. Perhaps your workplace was pretty backwards if they only offered you one savings option. So if we have many more options now, that means people should be able to invest their SS money any way they like now, right?

 
At 8/01/2011 4:26 PM, OpenID Sprewell said...

There is nothing about social security that guarantees that you will have that money when you retire either, and given out of control debt and entitlements, it almost guarantees that SS will drastically change by the time you retire. You clearly don't understand risk if you think every security other than treasuries is somehow more risky.

Hydra and Walt, if you think that current SS and Medicare promises are "legally binding" and will continue to be paid, you're not thinking straight. There will be multiple elections between now and when that money has to be paid out and I'm part of the Gen-X/Y crowd that is being made to pay for your mistakes. If you think we're just handing that money over, you're nuts. It is much more likely that those programs will be drastically cut or dissolved than anything else.

 
At 8/01/2011 5:09 PM, Blogger arbitrage789 said...

Hydra,

"If you believe we cannot balance the budget on the back of the rich, then surely we cannot do it on the backs of the poor"

^^^^^^^^^^^^^^^^^^^^^^^

Depends what you mean by "poor".

More importantly, the issue I'm raising is less about the tax revenue that can be generated from the bottom three quintiles (of the income scale), and more about their ever-increasing demands for government spending.


If the people in the bottom three quintiles had to pay a lot more for the government services they get, they might not demand so much.

 
At 8/01/2011 5:58 PM, Blogger Che is dead said...

"Sorry, if it ain't in Webster's, or the New Oxford Dictionary, it ain't a word. And it ain't." -- "Benji"

I invent words, you invent worlds.

 
At 8/01/2011 6:08 PM, Blogger Che is dead said...

"Yes, but one could equally argue that much of the money that was spent, was spent to benefit the younger generation, as well as our own. To whatever extent that is true, it is easonable to expect them to pay their share in turn."

Since most of that money has been spent on entitlement programs and not infrastructure, and since "investments" in education have failed to improve educational quality, I fail to see the benefit to the younger generation. So, yes, one could argue that, but then they would be a moron.

 
At 8/01/2011 6:14 PM, Blogger Walt G. said...

Sprewell,

Will that be the Republicans or Democrats who decide to try to get elected without the 40-and-over group's vote in the next 30 years?

Changes? Sure. Bet on it. But SS will still be a substantial source of income for many for years to come. My future income mix is 50% savings, 25% SS, and 25% pension with some work thrown in on top until my 60s if I am able. A loss of one source will cause a lifestyle change, and a loss of two sources will cause hardship.

Che is dead, I think the younger generation is getting a much better world than I started out with in the 50s. In a lot of cases, the poor live better now than the rich did then.

 
At 8/01/2011 6:37 PM, OpenID Sprewell said...

Walt, likely neither, I expect the Tea Party and other new groups to have much more influence in the coming years, with their own party candidates and much more power. I suspect the change will be so substantial that SS will not exist for long. A lot more people will be able to work a lot longer, because information work will be predominant and can be done from your home, sitting in front of a computer. People have better lives now, but imagine how much better it'd be if the govt hadn't wasted so much of our money along the way. And since retirees can buy much more with their SS income today than they could have back then, there's no reason not to cut it, particularly when they never paid for it in the first place.

 
At 8/01/2011 6:51 PM, Blogger Ron H. said...

"Today, there are many more ways to get started with much lower amounts. These are new tools and services that simply were not available to the casual investor previously."

While it's true that technology has made investing in equities by individual small investors much easier and cheaper than in the past, your statement that there were no prudent or inexpensive ways to invest, is untrue, unless you wish to restrict your definition of investing to buying and selling equities, and nothing else.

I mentioned savings accounts, which provide money for others to invest, and there have been mutual funds available for hundreds of years, Real Estate Investment Trusts, Limited Partnerships, and friendly societies' that provided investment opportunities to individuals all of which predate Social Security. I think your perception that no such opportunities existed when you were young, is due to your not being aware of them.

"But, if you claim not and expect all your investment to be in risky high paying ventures and penny stocks..."

I haven't claimed that. Nice strawman.

"...well, that is exactly the kind of behavior that leads to the idea you must force people to save prudently."

What hubris. Here again, your elitist, socialist attitudes shine through.

There is no legitimate reason for you or others who believe themselves capable of deciding how others should manage their lives, to decide how much, if anything, or in what manner, other people should save or invest.

"True, there were always savings accounts, as you say an indirect method of investing, but here I think youare chaqnging the argument. The argument was that people would be better off investing in the market, now youa are including non market methods."

That was never my argument. My argument is that people are better off choosing for themselves how, or even if, they wish to save and invest for their future, rather than having people like you deciding it for them.


My disagreement with you, is your contention that individuals of modest means had few opportunities or even inclination to save before the blessing of SS, and tha advent of modern investment strategies.

"In that case it is little diffferent and no better than having the first part of your savings directed to social security."

You couldn't be more wrong. There is a world of difference between being free to choose, and having money ripped out of your wallet to be invested on your behalf. The fact that you don't see this is to your discredit.

 
At 8/01/2011 7:20 PM, Blogger Che is dead said...

"I think the younger generation is getting a much better world than I started out with in the 50s. In a lot of cases, the poor live better now than the rich did then." -- Walt

And I credit government for very little of that progress.

 
At 8/01/2011 7:24 PM, Blogger Walt G. said...

Sprewell, I can't find any support for your position. This is what I read about the Tea Party. Do you have anything different?

"As a result of the widespread use of Social Security, 81% of the American public is opposed to cuts of any kind to Social Security, according to a recent poll. Even 59% of self-identified Tea Party supporters feel favorable towards politicians that support Social Security according to the same poll; thus, when GOP star Daniel Webster made comments denouncing Social Security, he immediately had to denounce cuts to Social Security because not even the Tea Party supports a position as radical as cutting Social Security." (Source: Huffington Post, Dec 2010)

 
At 8/01/2011 7:28 PM, Blogger Walt G. said...

Che is dead, like it or not, we are the government.

 
At 8/01/2011 7:53 PM, OpenID Sprewell said...

Walt, you are right that even the Tea Party isn't as for as deep cuts right now as are likely to eventually pass, but your numbers still show that many more of the Tea party are for cuts. The people you highlight simply stick their heads in the sand, because they don't want to acknowledge that the money won't be there anyway, until they're forced to address it in the coming years. We see the same thing in medicine, where people want to fantasize that the govt will handle all the tough issues for them, only they get much worse care and rampant medicare fraud as a result. You are right that those who vote are the govt, but there are lot of people who don't even vote now and are likely to finally start giving a shit soon, now that 40 cents of every dollar goes to some govt.

 
At 8/01/2011 8:07 PM, Blogger Larry G said...

The numbers are important.

Medicare Part A - IS funded from FICA

Medicare Part B (and C,D) are NOT funded by FICA but are partially funded by premiums and 75% from from income tax revenues.

MedicAID is 100% funded by tax revenues.

The MILITARY and the two wars and HomeLand Security are 100% funded by income taxes.

We take in about 1.2 trillion in income taxes. Almost a trillion comes from FICA that basically gets spent on SS/Medicare Part A..

The military, two wars, Homeland Security and Medicare Part D - TOTALLY consume the 1.2 trillion we take in - in income taxes.

We are spending 1.5 trillion MORE than the 1.2 trillion we take in - in income taxes.

Ignore FICA for the moment and ask what we have to do to deal with the NON-FICA part of the budget.

You could totally wipe out Medicare Part B and MedicAid and STILL have about a trillion in deficit.

What else would you cut to get that trillion?

cutting FICA won't help you with the non-FICA budget problem.

by focusing on FICA rather than the non-FICA budget, are we really accomplishing anything other than letting off ideological steam?

the numbers are important.

we cannot begin to make serious propositions about what to do - if we do not know the numbers and that's a big problem now days.

Most folks simply don't know the numbers.

When Mark Perry puts up a chart showing 2.1 trillion in revenues and then lists out the outlays - it really confuses the average person who does not really understand that almost half of that 2.1 trillion if FICA taxes and totally dedicated to SS, DI and Medicare Part A and if you wiped out SS, DI, and Medicare Part A - you'd have a trillion more dollars in hand but no one in their right mind is going to propose that.

Paul Ryan found that out pretty quick.

 
At 8/01/2011 8:18 PM, Blogger kleht said...

"taking money from a shrinking pool of taxpayers and giving it out to a growing list of favored groups."

"taking money from a shrinking pool of workers in relation to giving it out to an expanding group of receivers" is a more appropriate comment, I think. Regardless, it's still a very majoy problem.

"giving it out to a growing list of favored groups". "Favored" goups? The largest two groups encomposes practically everyone (with exceptions, of course) in the U.S. - who have qualified by paying into the system.

It's true that some don't pay their share - especially the rich, who are not required to pay their fair share at 6.2% of their total earned income.

And, unless I'm wrong, Medicare also covers those who don't pay into the system.

 
At 8/01/2011 8:30 PM, OpenID Sprewell said...

Larry, it is true that FICA has only started to have mild deficits now, but a large chunk of the coming budget problems are based on overpromised FICA spending that has not been paid for. If we keep the benefits the same, we will have to raise taxes somewhere, either through higher FICA rates or higher income taxes. Hence, even FICA is in for big reform.

 
At 8/01/2011 8:47 PM, Blogger Larry G said...

@sprewell... true enough but priorities should dictate dealing with the wolf in our fact - right now as we plan for dealing with FICA ...RATHER than making FICA - THE ISSUE - why we cannot/will not deal with the current existing deficit and debt.

It makes no sense to approach it that way.

The FICA Tax (and SS benefits) have been ROUTINELY adjusted/changed a half-dozen or more times over it's 60 year history to keep it solvent.

The changes necessary to do that now are know and acceptable to many. Both Deficit Commissions address it satisfactorily.

The entitlements that we SHOULD be dealing with right now are Medicare Part B and MedicAid which are about 1/3 of our budget - and growing fast.

Both are taxpayer-subsidized and need major reforms.

Unlike FICA-financed Medicare Part A which is mandatory, Medicare Part B is not and you must sign up for it.

But virtually no senior turns it down because it costs (for most) about $100 a month and it pays 80% - no matter your income and no matter the cost of most procedures.

So you can own 2 homes and 3 cars and get a 25K hip replacement for 5K.... this is going on all across the country.

MedicAID is being used to pay for nursing homes for seniors who want to give their assets to their kids rather than spend it on the nursing home.

Both of these programs are the ones that people should be worrying about right now - not the FICA/SS which is a gnat on a dogs butt comparatively.

 
At 8/01/2011 9:04 PM, OpenID Sprewell said...

Larry, I want to cut everything, because I think the private sector will do a better job across the board. So FICA or not makes no difference to me, it all has to go. One of the reasons our medical system is so expensive is because so much of it is paid by third parties, whether medicare or private insurance. All the third parties need to go, in favor of medical savings accounts and only catastrophic coverage for medical insurance. The vast benefits that will drop out of this change will far outweigh any bellyaching about lost govt "benefits."

 
At 8/01/2011 9:21 PM, Blogger Larry G said...

Sprewell.. In a perfect world, I'd agree and I'll even admit that what we have now really truly sucks but I know of no such health care system approach - in the world - that works the way you say it would.

there are about 200 (give or take) countries in the world and about 40 of them have some level of govt involvement in it and ALL of them have collectively better health care outcomes that the other 160.

so... are you saying that

1. - the govt should not be involved in it - no matter what - that's it's not the govt job to start with...

or 2. that wherever govt does health care it does it badly ?

Singapore, often cited as an example of "free market" health care has a mandatory 33% payroll tax to fund their individual HSAs, national subsidized catastrophic insurance and price controls on medical providers.

Could you cite an existing system that best represents what you advocate?

 
At 8/01/2011 9:32 PM, OpenID Sprewell said...

Larry, perhaps the reason why medical care sucks everywhere is because the govt is so involved most everywhere? The 40 that you claim have more govt involvement don't have better care because of the govt involvement, you have to separate them according to whether the better care came first and what the actual result of govt involvement was. I am saying both, medicine is none of the govt's business and they do it badly. Singapore may not be completely free, but they are much more free than most and get much better results on many metrics too. One doesn't have to compare a completely govt-free system to a completely govt-run system to figure out the govt tends to fuck it up: all you need to look at is that the ones with less govt involvement, with other factors about equal, do much better. As for what current system does the best, no doubt the US system, because private insurance is still paying for half of the expenditure, and yet our system is so bad in so many ways, imagine how much worse all the others are.

 
At 8/01/2011 9:44 PM, Blogger Larry G said...

Okay... so I ask the question...

name the top 5 non-govt influenced health care countries in the world.

bonus question:

Is the Singapore Health Care system a correct model for the US to adopt?

Is there a better one?

 
At 8/01/2011 9:58 PM, OpenID Sprewell said...

Larry, that's a pointless question because even in the US, the govt pays for 45% of all medical expenditures. However, we clearly see better results from more private systems like the US. Obviously we should adopt parts of the Singapore system, like health savings accounts, but not their regulations, like when they disallow public hospitals from buying new, higher-tech, and more expensive equipment. You are looking at it the wrong way, there is no one good system today that everybody else needs to copy. Rather, we need to get more market forces into medicine and let them work their magic, just as we have seen the medical benefit from the market forces in the US as opposed to the UK, not to mention all the other sectors where market forces have made life so much better.

 
At 8/01/2011 9:59 PM, Blogger Ron H. said...

"It's true that some don't pay their share - especially the rich, who are not required to pay their fair share at 6.2% of their total earned income."

First of all, the correct number is 12.4% if you are self employed, including as a contract employee. If you are employed by someone else, your employer will deposit 6.2% of your pay directly with the IRS, and deduct the other 6.2% from your gross earnings.

Second, it's not clear why you think a "fair share" for "the rich" should be more than the "fair share" paid by a lower income earner if both pay 12.4% on a maximum of $106,800, and both get the same maximum benefit.

Why should someone pay more for the same amount of benefit just because their income is higher?

Should they pay more for a haircut or a steak dinner?

 
At 8/01/2011 10:04 PM, Blogger Ron H. said...

"I think you will find that those who are older and more affluent vote at a much higher rate than those who are not. This higher rate would negate the majority's votes. Politicians count on it."

Did you mean to say that " This higher rate would negate the majority's non-votes?"

 
At 8/01/2011 10:10 PM, Blogger Larry G said...

@sprewell... but you have no model. You're advocating a different, new one with no existing analog - and you're sure it will work "better".

Surely out of the entire world, there is at least ONE country that has a model that you think the best and worthy of using here.

Singapore "works" better precisely because of the 33% payroll tax AND the regulations... not the other way.

There are many other countries that don't do the regulations that Singapore does that fare much worse.

I'm all in favor of a "better" system but not just unsupported ideas with no real world examples.

You're looking at an ideological concept and little more with no evidence and no analogs..

That's never going to gain acceptance from anyone.....much less get a majority of people in favor of it.

In order for us to get something "better" - there has to be some practical approach to getting there.

It's easy to be opposed to something.. even something that deserves opposition.

It's much harder to propose something that is "better" and have it accepted by enough people to have it go forward.

it just seems unrealistic to adopt a view that has no chance of becoming a reality....

 
At 8/01/2011 11:08 PM, OpenID Sprewell said...

Larry, if we all waited for somebody else to copy before we did anything, nothing new would ever be tried. But I'm not advocating that we shift en masse to a completely free market system, because I know that there are too many dummies who would oppose such a radical change. Rather, I'd be fine with moving the current system in a more free market direction. That means repealing Obamacare, then removing the tax deduction on employer-provided insurance, then making sure HSAs are not disadvantaged over insurance, and so on. I know it will work better because I have seen the effects of market competition everywhere else. It is you who has no model for why those market effects are magically invalidated in medicine. Singapore works better because it has HSAs, which provide some cost control, and a largely privately paid system: the payroll tax pays less than a third of their medical expenditures.

Obviously, there are many countervailing factors at work here, so one can ignorantly claim, like you do, that the real reason Singapore is so cheap is because of completely nonsensical factors like the payroll tax (or perhaps even their slanty eyes), if you don't actually examine the matter. There is nothing unsupported here: that would be like saying that a single-payer system in the US has "no real world examples" simply because nobody else has exactly the same system we would have. I cannot help it if you are ignorant of the vast evidence of market processes producing better medical outcomes. The countries with the most govt involvement in medicine, like the UK and Cuba, are a mess; there is little dispute among non-idiots- that leaves out Michael Moore- about the reason. A majority of the people are for repealing Obamacare, so it is the opposite view that doesn't have much acceptance. I have made it clear what I'm proposing and clearly there are a lot of people who already want to move in that direction. And I agree with you on your last point, it is sad that Obama and the lefties have adopted an unrealistic view and plan "that has no chance of becoming a reality." :)

 
At 8/02/2011 12:36 AM, Blogger Ron H. said...

Sprewell,

"Obviously, there are many countervailing factors at work here, so one can ignorantly claim, like you do, that the real reason Singapore is so cheap is because of completely nonsensical factors like the payroll tax..."

I suspect you may be getting a sense of what you're dealing with in your interchange with Larry.

If you want to see some really spectacular logic failures, ask him some questions about unfunded liabilities. It's an amazing experience, and well worth your time.

 
At 8/02/2011 1:09 AM, Blogger Ron H. said...

Sprewell: "Che and Ron, hmm, I didn't know that the treasuries in the trust funds aren't even normal, marketable treasuries, which the ssa itself admits on its website. Funny how they try to address the IOU criticism with bluster about how the govt is backing it up, so it must be okay. ;)"

Exactly. The clever spinmasters are able to simultaneously claim that there's over $2 Trillion in the Trust Fund, and admit that it's broke. I wish I had 10% of that skill.

 
At 8/02/2011 6:26 AM, Blogger juandos said...

"I wouldn't be so opposed to higher taxes if we moved much more in the direction of a flat tax"...

I wouldn't opposed to seeing higher taxes either if the 'parasites' paid for the government services they seem to think they need...

 
At 8/02/2011 7:45 AM, Blogger morganovich said...

"How about if two were under 40 and one was over 40 and the one over 40 won, should the other two complain? "

what difference does that make?

that seems meaningless.

 
At 8/02/2011 7:50 AM, Blogger morganovich said...

"Interest rates, broadly, could not fall unless the investing public believed lower inflation, or deflation was coming, or there is a capital glut."

bunny-

that may be the stupidest thing i've seen you say yet, and that's really saying somehting.

if the feds rates are low, bonds will follow. it's called arbitrage and leverage. you should look them up and learn how they work before you start trying to speak of matters you clearly do not understand.

your whole argument is laughably, provably false.

the one year is yielding around 25bp.

are you telling me that the market believes that inflation is zero?

what possible evidence do you have for that proposition?

even the BLS says it's 3.6% (and rising).

bonds reflect lots of things besides inflation expectations.

 
At 8/02/2011 7:54 AM, Blogger morganovich said...

"How many of these have no income?"

probably almost none.

they get paid by the government, which is to say, by me and everyone else paying taxes and shouldering the extra debt burden.

the real question is: "would most of the go get jobs and stop being wards of the state if the terms were less generous".

i'd favor a plan like that of estonia: you can go on government aid, but so long as you receive it and for 6 months thereafter, you are not allowed to vote.

letting people on aid vote themselves more aid from my pocket is a dangerously slippery slope.

 
At 8/02/2011 7:58 AM, Blogger morganovich said...

"I disagree, when I was young there was no prudent and inexpensive way to invest, unless you had substantial amounts to invest."

this is a ridiculous statement.

there have ALWAYS been ways to do this, perhaps you just didn't know what they were.

your bank would buy you bonds, CD's etc. there have always been brokerage accounts.

i had such investments even as a child and with amounts that were denominated in 100's.

i honestly cannot imagine where you got such a bizarre idea.

 
At 8/02/2011 8:00 AM, Blogger morganovich said...

"Che is dead, like it or not, we are the government."

and our framers had to foresight to realize what a disaster that would be if left unchecked and therefore enumerated inalienable rights in our constitution.

it is our failure to adhere to such principles that is causing most of these problems.

 
At 8/02/2011 8:03 AM, Blogger morganovich said...

""If you believe we cannot balance the budget on the back of the rich, then surely we cannot do it on the backs of the poor"

since 2000 the % of people paying no federal taxes has jumped from 23% to 51%.

are you telling me you don't think that has had major budget consequences?

it's not like 2000 was a time of terrible abuses of the poor and abject poverty.

you are being ridiculous.

 
At 8/02/2011 8:42 AM, Blogger juandos said...

"bunny-

that may be the stupidest thing i've seen you say yet, and that's really saying somehting
"...

I'm sure we've NOT plumbed the depths of pseudo bennyisms that make no sense at all...:-)

 
At 8/02/2011 9:25 AM, Blogger Larry G said...

@sprewell... then you are proposing something that has no existing analog and has never been done before and you have no existing "near" models that exist.

That's fine. That's innovation but you also have no real plan, no political support and effectively nothing more than an idea that is going nowhere.

That's fine.

There are lots of people like that also.

But if you truly want a better system you need more than opposition to the current ones including ALL the existing ones in the world.

I'm not making "ignorant claims" here. I'm pointing out the total lack of concept other than an idea with no practical strategy for implementing it other than apparently a revolution and fiat from a dictator.

I call that whimsical dreaming. Totally worthless and impractical on a number of levels but most of all on the political level where you have to convince a majority of people to vote against the current system and to vote for your ill-defined system.

Now.. I did not ask you for AN EXACT analog.

I asked you to provide a small rank list of the ones that are MOST LIKE what you support and you did not do that but responded that I was asking for "exact".

that's evading the question.

Obama's plan FWIW, has elements of the Singapore approach. An individual mandate. Universal Coverage. Subsidized catastrophic. Insurance "exchanges" that will compete in a more open market, etc.

You won't agree, of course but as I've pointed out - you and the politicians that support your view are AWOL on "replacing ObamaCare".

You're function as opposition and have virtually no political support for what you do support.

I love your comment about the most govt involvement because Singapore with it's govt-imposed 33% MANDATORY FICA tax is among the MOST govt-controlled in the world - to the point where you yourself would not agree to a system LIKE THAT in this country.

You want the BENEFITS of that system but you don't want the govt influence and as I have pointed out to you -there are no such systems in the world and so I asked you for your top 5 - which you don't seem to have.

so you're basically opposed to EVERY health care system in existence if govt-influenced because I see NO LIST of ANY thaat are acceptable to you as starting model....

That's not a practical philosophy guy.

That's standing on the hillside chucking rocks... and little more.


I'll not insult you because you have not insulted me but others in this group do and they are truly idiots both in the content of what they argue and in the manner they argue.

 
At 8/02/2011 9:53 AM, Blogger Larry G said...

re: the 51%. You folks may or may not have noticed that the last two years, there has been a temporary $400 credit on your income tax - if earn wages.

That $400 credit essentially wipes out tax liabilities for many of the working poor.... and that, in turn, effects the percent of who actually pays.

Another is the child tax credit which started out in 1997 as a $400 credit per kid and now is at about $1000.

These are credits by the way -not deductions. So even if they owe no taxes, they still get the money.

Many are the same folks (33%) that utilize MedicAid to HAVE their kids.

Now...I'd like someone to tell me the names of the specific politicians who have openly advocated getting rid of these credits and changing MedicAid so it won't pay for childbirth or tax credits for kids.

No one that I know of... and the SCOTUS thinks they're legal so there goes the "unconstitutional" argument, eh?

When the $400 tax cut is removed, a LOT of people will then have to pay SOME tax but it will not be a major amount.. a couple hundred dollars... for many - and while it will help the budget - I've NEVER seen the argument made as to how much it will help and the argument itself just functions as a proxy for the rich vs poor war.

Let's see some real numbers from those who say that if the people not paying - actually did pay - how it would effect the 1.5 trillion deficit and 14.6 trillion debt.

I'm betting - not much.... 10 or 20% tops but that argument becomes the excuse for not dealing with the whole deficit and debt - which is money we've already spent and owe to creditors and refuse to pay because we want to argue about who owes it instead of allocating it out on a progressive basis to everyone.

Instead, we argue about who was responsible for the debt, and who is not paying taxes, etc rather than a fair but equitable sharing of it - that you and I OWE - no matter what happens to SS, Medicare or other programs in the future. We owe the money now.

 
At 8/02/2011 10:28 AM, Blogger Walt G. said...

"How about if two were under 40 and one was over 40 and the one over 40 won, should the other two complain? "

what difference does that make?

that seems meaningless."


Morganovich, why is a strictly dominated strategy where you win the payoff regardless of what others do meaningless? If you are not participating in the outcome, shouldn’t that mean you are indifferent to the outcome?

 
At 8/02/2011 11:38 AM, Blogger Hydra said...

My disagreement with you, is your contention that individuals of modest means had few opportunities or even inclination to save ....

==========================

I never made any such contention. What I said was that when I started saving there were very few vehicles for me to do so.

Even when my company made a savings plan avaialable, it had one option.

I believe there were only a handful of companies that offered DRIPs.

But there was certainly nothing that offered the inexpensive options or advantages of my current internet brokerage account.


As for whether people have the inclination to save, a lot of people SAY they would do better on their own, and no doubt some would, but the entire reason we sarted social security was that we discovered the hard way that many people either will not or can not save for later needs.


But my main point is that a prudent plan, for those who are able to save will include some secure investments. For many people that means treasuries.

So, I your social security acount is invested in secure bonds, then it is only doing automatically something that you would have most likely done anyway.

 
At 8/02/2011 11:42 AM, Blogger Hydra said...

Hydra, if you think it's dead people's social security payments paying more for others, you are nuts.

===============================

I had a friednd who died suddenly of brain cancer in his early fifties. He paid in to SS most of his life and got nothing out.

Where did the money go?

 
At 8/02/2011 11:46 AM, Blogger Hydra said...

there have been mutual funds available for hundreds of years, Real Estate Investment Trusts, Limited Partnerships,

================================

Most of these had sizeable minimum investements and were not suitable for someone with small amounts to invest.

I still submit there were few good ways to start small and diversify.

 
At 8/02/2011 11:50 AM, Blogger Hydra said...

A lot more people will be able to work a lot longer, because information work will be predominant and can be done from your home, sitting in front of a computer.


===================================

And we should make them work just because they will be ABLE to?

Are you nuts?
The main reason many people wrok is so they can earn enought to stop working someday.

There are, of course, people who enjoy working and they work ever day, aaccumulating more and more and more until the day the take it all with them.....

 
At 8/02/2011 11:55 AM, Blogger Hydra said...

If the people in the bottom three quintiles had to pay a lot more for the government services they get, they might not demand so much.

======================


If they had a lot more to pay for the government services with they might not demand so much service either.


Do you not see that their ever increasing demands for services are linked to their ever decreasing slice of the pie?



The argument still holds that if you beleive you cannot balance the budget on the backs of the rich, then you cannot balance it on the backs of the poor.

 
At 8/02/2011 12:00 PM, Blogger Hydra said...

if both pay 12.4% on a maximum of $106,800, and both get the same maximum benefit.

Why should someone pay more for the same amount of benefit just because their income is higher?


=============================
Huh?


How is one paying more? They both p the same percentage on the same maximum, and get the same benefit.


But the higher earner gets and additional benefit, because he no longer pays in and can invest his remaning money any way he sees fit, a benefit lower income earners do not get.

 
At 8/02/2011 12:04 PM, Blogger Ron H. said...

"I never made any such contention. What I said was that when I started saving there were very few vehicles for me to do so."

Well, there you go. You are correct, of course. that's what you DID say.

The fact that there were many investments available to individuals with modest means didn't change the fact that they weren't available to you, because you didn't know about them.

I can't argue with a claim that you were too ignorant to find investment vehicles until the advent of the internet.

Did you read morganovich's responses to your "I didn't know any better" claim?

Your additional excuse that you had no opportunities because your employer didn't offer you any, is pretty telling. I can see why you prefer a system in which you are told what to do by those who know better: You are unable to do it for yourself.

 
At 8/02/2011 12:04 PM, Blogger Hydra said...

A diversified portfolio doesn't have to hold any treasury bonds. You keep talking as though the govt treasuries will always be secure,

========================
You are right, does not have to be treasury bonds, but some portion will be or should be in some less risky holdings.

Does not change the basis or result of my arguments.

As for the ready availibility of suitable investments for everyone, that is just revisionist.

 
At 8/02/2011 12:07 PM, Blogger Hydra said...

since 2000 the % of people paying no federal taxes has jumped from 23% to 51%.

=====================

I do not believe it.

You have a source?


No, it need not have major consequences even if true, because the wealthy are earning much more of the pie.

 
At 8/02/2011 1:25 PM, Blogger Ron H. said...

"As for whether people have the inclination to save, a lot of people SAY they would do better on their own, and no doubt some would, but the entire reason we sarted social security was that we discovered the hard way that many people either will not or can not save for later needs.

And you see this as a perfectly good reason to steal money from my paycheck to support them? And you wonder why people call you a leftist?

Don't give me that lame "we must do it or they will starve" argument. Ask yourself what happened before SS. And no, people weren't starving.

If people wish to stop working someday in their old age they must defer consumption along the way to provide for it. It's not my responsibility to do it for them.

"But my main point is that a prudent plan, for those who are able to save will include some secure investments. For many people that means treasuries."

While this may be true as it relates to people's individual investment strategies, it has little to do with SS. The OASDI trust fund consists entirely of special issue bonds, IOUs, redeemable only by the treasury. They are not marketable, and individual investors can't buy them.

If you look at SS income, you will notice an entry for 'interest on investments' in the amount of $118
billion that is paid on these IOUs.

"So, I your social security acount is invested in secure bonds, then it is only doing automatically something that you would have most likely done anyway."

No, they aren't the same secure bonds I might invest in, and you are ignoring the glaring difference between free choice and coercion.

But, then I'm forgetting that you welcome coercion, as you don't consider yourself capable of making decisions for yourself.

 
At 8/02/2011 1:36 PM, Blogger Ron H. said...

"And we should make them work just because they will be ABLE to?"

No, "we" shouldn't do anything, Mr. Socialist. They should work if they want to enjoy all the benefits of trading their labor for other things in the form of money, including saving for retirement.

"Are you nuts?
The main reason many people wrok is so they can earn enought to stop working someday.
"

Exactly. That's an important reason to "wrok", even if not the main one.

 
At 8/02/2011 1:51 PM, Blogger Ron H. said...

"If they had a lot more to pay for the government services with they might not demand so much service either.


Do you not see that their ever increasing demands for services are linked to their ever decreasing slice of the pie?
"

So, in your opinion, people are entitled to some certain standard of living, and some particular amount of income relative to what others make, and if they are unable or unwilling to provide it for themselves, it's perfectly understandable that they demand the rest of us be forced to provide it for them?

Wow.

 
At 8/02/2011 1:54 PM, Blogger Hydra said...

And you see this as a perfectly good reason to steal money from my paycheck to support them?

===>================


It is not to support them, it is to support you.

Yes, I think there is reason enough. You say that if you kept your money you would support yourself, but I don't trust you to do so, and the reason I don't is the historical precedent that caused the need for social security.

To a large extent we individuals and we corporations get the regulation that we earn through our own bad behavior.

Picking on the use of "we" as if you are somehow different, and lame adhominem name calling do not advance your argument.

In particular the argument that I don't want my money to go to " them" is a common and singularly lame argument.

 
At 8/02/2011 1:58 PM, Blogger morganovich said...

hydra-

""But right now, the fact (is) that according to the Committee on Joint Taxation, 51 percent -- that is, a majority of American households -- paid no income tax in 2009. Zero. Zip. Nada. … Actually, to show how out of whack things have gotten, 30 percent of American households actually made money from the tax system by way of refundable tax credits -- the Earned Income Tax Credit, among others. So 51 percent of American households paid no income tax in 2009, but 30 percent actually made money under the current system."

In a sign that this is becoming a Republican talking point, Cornyn’s comments echoed those made on the floor the same day by Sen. Orrin Hatch, R-Utah.

So, is it true that a majority of Americans aren’t paying any federal income tax? The answer is that Cornyn is correct. And the backstory is interesting.

As Cornyn noted, his statistics come from a document produced by the Joint Committee on Taxation, a respected bipartisan committee of Congress. The JCT found that for tax year 2009, roughly 22 percent of "tax units" (not exactly "households," but we’ll give Cornyn a pass on the terminology) ended up without any tax liability. Another 30 percent got money back from the government, through mechanisms such as the Earned Income Tax Credit, a longstanding policy that encourages low-income Americans to work by refunding money through the tax code. By contrast, JCT found just 49 percent of Americans owed anything to the government."

http://www.politifact.com/truth-o-meter/statements/2011/jul/08/john-cornyn/john-cornyn-says-51-percent-american-households-pa/

it was also cited on this blog.

only 49% of americans pay any net federal income tax.

 
At 8/02/2011 2:07 PM, Blogger Ron H. said...

"How is one paying more? They both p the same percentage on the same maximum, and get the same benefit."

That's what I wrote. What don't you understand? Go back and reread my comment, and the one I responded to. The suggestion was made that for some reason those with higher incomes should pay more for the same level of benefit.


"But the higher earner gets and additional benefit, because he no longer pays in and can invest his remaning money any way he sees fit, a benefit lower income earners do not get."

I can't believe you write crap like this. This is one of the dumbest things you've written so far on this thread.

Do you actually believe everyone should have the same income, no matter what their contribution?

Shouldn't a person who earns more get to spend the additional money as they see fit?

A lower earner does NOT get to spend money they haven't earned, except in your world of near perfect income redistribution.

 
At 8/02/2011 2:26 PM, Blogger Ron H. said...

"To a large extent we individuals and we corporations get the regulation that we earn through our own bad behavior.:"

So our Big Brother gets to decide who is naughty and who is nice, and punish us all for any perceived misbehavior? Who, exactly, gets to decide these things? Are there angels among us who know what is best for everybody?

"Picking on the use of "we" as if you are somehow different, and lame adhominem name calling do not advance your argument."

Yes, I am different. There are over 300 million people in the US, and every one of them is different, and entitled to speak and act for themselves. You can only speak for one of them, so your use of the collective "we" is quite telling.

"In particular the argument that I don't want my money to go to " them" is a common and singularly lame argument."

The actual argument is that I don't want where my money goes to be decided for me by someone like you. I may want my money to go to "them", because I am a caring and compassionate person, but I will decide how & how much.

 
At 8/02/2011 2:35 PM, Blogger Ron H. said...

"As for the ready availibility of suitable investments for everyone, that is just revisionist."

No one argues that it's not easier to invest now than in the past, but as has been repeatedly pointed out, your original claim that -

"When I was young and had only a small amount of money there was no prudent and inexpensive way to invest in the market..."

- just shows that you were ignorant even then. You can cling to the narrow term "the market" if you want to make a small point, but it doesn't help you much. Investing was available to people of modest means. Technology has made it easier, that's all.

 
At 8/02/2011 2:49 PM, Blogger Ron H. said...

"Yes, I think there is reason enough. You say that if you kept your money you would support yourself, but I don't trust you to do so..."

Whether you trust me or not is irrelevant. You aren't responsible for me. Don't give me that lame welfare argument. It's also irrelevant.

"...and the reason I don't is the historical precedent that caused the need for social security."

And what is that? Reference please.

Just because the government destroyed peoples savings during the Great Depression isn't reason to believe they invented the cure, in fact just the opposite.

 
At 8/02/2011 2:53 PM, Blogger Ron H. said...

"It is not to support them, it is to support you."

But I neither need or want this kind of support through theft.

Surely you understand that OASDI is a pay as you go Ponzi scheme, with no assets, and a looming shortfall.

 
At 8/02/2011 4:10 PM, Blogger morganovich said...

""How is one paying more? They both p the same percentage on the same maximum, and get the same benefit"

wow. i think we need a quick math lesson here.

if i pay 6% of 100k for my whole career, and you pay 6% of 50 k, i have paid twice as much as you have.

you will get more from SS that you paid, i will get less.

we will get the same medicare, for which you paid half as much.

paying the same percentage of income is not the same as paying the same amount.

you would not expect to pay twice as much for a big mac as i do because you earned twice as much.

but somehow you paying half as much as i do for medicare is "the same"?

not remotely.

people talk about FICA like it's regressive because they stop collecting it at 107k or whatever the number is.

but it's still bigtime progressive for the 85% of americans earning less than that.

it's only flat for the 15% that make more.

pay $6500 a year or $650 a year, you get the same medicare, but the high earner pays 10X as much.

if you think that's "the same" i have some very interesting financial propositions for you.

 
At 8/02/2011 5:29 PM, Blogger Hydra said...

if i pay 6% of 100k for my whole career, and you pay 6% of 50 k, i have paid twice as much as you have. you will get more from SS that you paid, i will get less. we will get the same medicare,......

================

That is not the same proposition as you stated above.

You do not pay the same price for your auto insurance, and may not collect the same either.

Grow up. Sometimes life isn't fair.

How do you know how much the first gets and how much the second? Isn't it proportional to how long you worked and how much you paid in? What would be the actual payout for your example?

Besides, if this is such a raw deal, i will bet that the $50k Guy would gladly change places with the $100k Guy.

 
At 8/02/2011 5:30 PM, Blogger Hydra said...

Is what you are saying now that you would be ok with social security if the payouts were proportionate to pay ins?

 
At 8/02/2011 5:51 PM, Blogger Hydra said...

But I neither need or want this kind of support through theft.


=================>>=

So you say now, but I don't trust you, because statisically and historically we know you are wrong. Therefore government is empowered to set aside some of your earnings to protect others from having to support you, and it sets aside some of theirs so that you don't wind up supporting them.




Ever been disabled? Know what the odds are you will be?

You have private disability insurance? Cool, the amount it pays is reduced by the social security you collect. The price you pay is subsidized as a result, and the $50k Guy probably neither gets private insurance, nor can he afford it.

If yours was the only money taken you would have a beef, but we all contribute under the same rules and collect under the same rules. If those rules are so terribly unfair you can always take advantage of them by earning less.

 
At 8/02/2011 5:51 PM, Blogger Hydra said...

This comment has been removed by the author.

 
At 8/02/2011 5:55 PM, Blogger Hydra said...

Don't have private disability and you are certain you wont need it?

What is your complaint? That you have too much money to be bothered with social security or insurance?

Boo hoo

 
At 8/02/2011 5:55 PM, Blogger Hydra said...

This comment has been removed by the author.

 
At 8/02/2011 7:17 PM, Blogger Hydra said...

I don't want MY tax money to go to (someone elses) social security, or abortion, or war, or to educate children of illegals, or police surveillance, or whatever.

It is the universal argument that anyone can use against anything. As such it has zero value for persuasion. And it is dishonest besides. If you could be shown that none of your money went to abortion, or whatever, you would still be opposed to it. It is not about the money, it is about control. At least for most people.

A free market purist might support unregulated abortion. Or private security firms with nukes.

 
At 8/02/2011 7:21 PM, Blogger Larry G said...

" I had a friednd who died suddenly of brain cancer in his early fifties. He paid in to SS most of his life and got nothing out.

Where did the money go?

that's how an insurance annuity works - whether it's a private plan or SS.

It's the way that most other insurance works also.

You don't get your premiums back if you never have a wreck.....or your house never burns down either.

People confuse SS with retirement accounts.

SS provides you with INSURANCE that if you become disabled - you get benefits - and when you retire, you get an annuity - for as long as you live even if the benefits end up exceeding what you paid into it.

Conversely if you die earlier, you don't get anything - because they're using that money to pay the guy that outlived what he paid into FICA.

Nothing strange or untoward about this. You can buy the same type of plan from a private provider.

The primary difference is that FICA is mandated because, like with health insurance, people would not save and then when they were no longer able to work and penniless... they would expect the govt to pay for their food, shelter and medical care.

This is the essence of the "individual mandate" that is used in virtually ALL industrialized health care AND pension systems in the world INCLUDING Singapore.

 
At 8/02/2011 7:33 PM, Blogger Hydra said...

Thank you Larry, my point exactly.

And if you did privatize social security, who. Would you trust to run it? AIG? First thing you would want is some kind of govt insutance. Whose pocket would the profit come from?

 
At 8/02/2011 7:53 PM, Blogger Larry G said...

the KEY to ALL industrialized countries health care and pension systems IS the individual mandate.

As I said previously - if you don't want that system - then you have to be willing to outlaw EMTALA and literally have people dying in the streets without access to health care or without a place to live - LIKE what is the norm in most 3rd world countries.

The American People will not go along with that but they WILL go along with the individual mandate as will a solid majority of people in ALL industrialized countries INCLUDING Singapore.

To make ANY of these systems voluntary would doom those systems and basically have us end up with millions of people who did not save for the time when they could not work.

And if the idea of individual responsibility REALLY DID WORK - then every 3rd world country in the world would have a better health care and pension system than the industrialized countries.

This is why I ask for examples of countries that have the LEAST govt influence, the LEAST individual mandates and health care/pension systems that rival the countries that DO have individual mandates.

the proof is in the pudding.

rank the countries that do better with no govt involvement....

 
At 8/02/2011 9:52 PM, Blogger Hydra said...

Pesky facts interfere with theory.

 
At 8/02/2011 11:19 PM, Blogger Ron H. said...

"What is your complaint? That you have too much money to be bothered
with social security or insurance?
"

What is my complaint? You're kidding, right?

Ive explained to you several times that my complaint is that I am being forced to pay for something I haven't asked for, and don't want. I would like to make my own decisions about how to spend my own money, as would most people who aren't in need of a nanny, like you.

What was originally promoted as a retirement plan, has since been exposed as a pay as you go ponzi scheme that hasn't had any actual money in reserve for decades, if ever, and is now broke. The money collected to support the ponzi scheme is no longer enough to cover the payouts, which is inevitable with any such scam.

To continue to make payments, the taxpayers will now be forced to redeem some of the IOUs in the trust fund. It can't possibly continue in it's present form much longer.

If a private company ran a scam like this, all the principals would be in prison.

 
At 8/03/2011 1:17 AM, Blogger Ron H. said...

"And if you did privatize social security, who. Would you trust to run it? AIG? First thing you would want is some kind of govt insutance. Whose pocket would the profit come from?"

You really don't understand this stuff, do you. If you privatized SS you wouldn't need anyone to run it. People could chose their own form of saving and investing for retirement in any way they saw fit.

Who would you trust? Do you really trust politicians and their appointees to manage your retirement plan? They have taken every dime from the reserve intended for future obligations, and they can no longer hide the fact that current contributions directly finance current beneficiaries. Private actors who ran a fund in this manner would be jailed. Why would you trust these people but not private businesses?

 
At 8/03/2011 1:21 AM, Blogger Ron H. said...

"If yours was the only money taken you would have a beef, but we all contribute under the same rules and collect under the same rules. If those rules are so terribly unfair you can always take advantage of them by earning less."

This is nonsense. It isn't OK to steal from everybody. Fairness isn't the issue.

 
At 8/03/2011 6:11 AM, Blogger Hydra said...

This isn't stealing, it is trading. You pay some money and you get two securities: some money back in the future and the security that others wont be more of a drag on your economy later. You have a broker making the trade for you ( Congress) and you disagree with the deal they cut.

 
At 8/03/2011 6:27 AM, Blogger Hydra said...

You really don't understand this stuff, do you. If you privatized SS you wouldn't need anyone to run it. People could chose their own form of saving and investing for retirement in any way they see fit.

=================

You don't understand thisw stuff. With that much money there will be big players putting a lot of other peoples money at risk. The scenario you suggest is mostly nonsense, which is why big earners hire money managers.

The people did choose how to save for retirement, and it is called social security. You are still free to invest additional money any way you like, and the fact of social security in fact makes you more free to make risky investments. The price is that you must put some money in a more secure place first, whichever any prudent investor would do anyway.

I agree that as might not be the best, or the one they would choose, but I would wager that not all of your other money is in the " best" investment either. You make some trade offs in your investments, same as ss.

 
At 8/03/2011 6:45 AM, Blogger Hydra said...

They have taken every dime from the reserve intended for future obligations, and they can no longer hide the fact....

===========>==

No one ever hid the facts about social security. The people I don't trust are those like yourself who try to make out public information to be some kind of conspiracy.

We wanted low taxes and a bunch of other stuff, too. So we allowed and encouraged our representatives to borrow from our national 401k. Now you want us to not pay back the money we owe to ourselves, and when we default on paying the money we owe ourselves, we declare the social security system insolvent, when it is the REST of the government system that has been underfunded, largely because people like you think that paying for what you get through taxes is stealing.

That is backwards, taking what you get and refusing to pay for it is stealing.

You have hundreds of other choices, after all. Go pick another country with less government if you like. Or stay here and exercise your ( limited) right to change this one. Just don't expect to get too far by claiming public knowledge is a conspiracy.

 
At 8/03/2011 7:01 AM, Blogger Hydra said...

If you borrowed from your 401k for a BMW and did not pay it back, later you would not have money you planned on. Would you blame the 401k?

We live longer and have fewer children. No one claims ss does not need some actuarial adjustments. We also earn more, so we can afford to make the adjustments. We could make some fairness changes, too. But none of that makes it a total failure that should be scrapped just because you do not wish to sign a social contract.

 
At 8/03/2011 8:47 AM, Blogger Larry G said...

SS is not a "fund" and was never created as a "fund" and does not operate as a "fund".

You can buy private versions of SS annuities right now to SUPPLEMENT your SS and they work EXACTLY the same way.

If you wait to buy an annuity rather than early on - you'll have to come up with a lump sum (and true with SS also by the way).

but people who do not understand the difference between an annuity SS or private and a 401K need to because SS was NEVER INTENDED to operate like a 401K does.

If you look at a lot of private retirement plans, you will see that when you retire - you have the option of equal payments, a lump-sum OR an annuity.

An annuity usually pay you more than the equal payments and will go on even if you live longer than what you have in it - but the offset to that (that allows them to pay you more) is that if you die early - there is no fund to inherit.

You can ALSO BUY - at the same time you retire - a "survivor" annuity so that if you do die, your spouse will continue to receive payments.

The thing that doe make SS different is that it is mandatory - like virtually ever other country in the world is.

The reason it is mandatory is the same reason why young people won't buy insurance of any kind unless they are forced to.

How many people would drive a car without insurance - especially young people if they could?

The mandatory aspect of SS is there to PROTECT other taxpayers for having to pay for people's retirement - who did not save.

The alternative to not having it would be for taxpayers to pick up the tab for food and shelter for indigent elderly which we know before SS was created was about 40%.

MOST people who VOTE believe that SS is the correct path.

We certainly will have continuing debates on it but the program itself has proven effective and remained solvent for over 60 years - as an insurance/annuity NOT a 401K.

Not everyone is on SS by the way.

Some state and local govts were allowed to set up their own plans in lieu of SS but the rule was the same - mandatory participation.

http://www.ssa.gov/slge/mand_ssandmed_cov.htm

 
At 8/03/2011 8:58 AM, Blogger Larry G said...

" To continue to make payments, the taxpayers will now be forced to redeem some of the IOUs in the trust fund. It can't possibly continue in it's present form much longer."

the purpose and use of the trust fund is totally misunderstood with the "help" of those who would demonize it.

SS is a "pay as you go" system.

http://en.wikipedia.org/wiki/Social_Security_Trust_Fund

it works the SAME WAY in virtually every other industrialized country.

The sole purpose of the trust fund is to receive FICA revenue and distribute it as benefits - keeping any that is left over - for those times when the economy fails to generate sufficient FICA taxes (during recessions) to pay all benefits.

There was at least one time in the past when the trust fund DID go BROKE as benefits exceeded the FICA tax AND exhausted trust fund but changes were made to the program to return it to being able to pay 100% benefits.

The thing to remember here is that SS is never "broke" - not when FICA is generating almost as much in revenues as income taxes.

What happens to FICA/SS if FICA fails to produce sufficient revenues is the benefits are reduced but people would STILL get their checks - just not 100% of the "scheduled benefits".

And if you actually tried to compare what you paid in to SS to what you'd get out of it - you'd not be able to do it unless you really understood actuarial.

You also could not do that with a private annuity either - for the same reason.

the bottom line is that the vast, vast majority of people simply do not understand how SS really works and as a result when those are opposed to SS in CONCEPT utilize propaganda and disinformation to undermine people's confidence in the system - it works.

Of ALL the programs that have supposed "unfunded liabilities" for the 75-year horizon line (which is a Social Security standard not an actuarial one), SS is by far the smallest... and Medicare Part B and MedicAid several times larger and even Medicare Part D, the subsidized prescription drug program has higher unfunded liabilities than SS.

 
At 8/03/2011 10:29 AM, Blogger Hydra said...

the taxpayers will now be forced to redeem some of the IOUs in the trust fund.

============================

Forced to redeem them? They are the taxpayers own IOUs. They are for taxes we should have raised yeas ago to pay for things we were buying, but borrowed money for.

 
At 8/03/2011 10:33 AM, Blogger Hydra said...

because SS was NEVER INTENDED to operate like a 401K does.

========================

Nevertheless we did operate it that way and we did borrow from it.

Your life insurance company lends money too, and it expects to be paid back. If it does not get paid back, it will go bust or increase premiums and reduce benefits.


Same as SS.
Only, since WE are the ones who borrowed the money WE cant very well complain about the results if WE refuse to pay it back.

 
At 8/03/2011 10:35 AM, Blogger Hydra said...

Not everyone is on SS by the way.

Some state and local govts were allowed to set up their own plans in lieu of SS but the rule was the same - mandatory participation.

===============================

Do Mormons and some other religions also shun social security, also with mandatory participation in their own plan?

 
At 8/03/2011 10:40 AM, Blogger Hydra said...

Who would you trust? Do you really trust politicians and their appointees to manage your retirement plan?

========================

No, but I trust bankers even less.
I make more money in my non SS investments, but I also take more risk.

 
At 8/03/2011 10:47 AM, Blogger Hydra said...

Ive explained to you several times that my complaint is that I am being forced to pay for something I haven't asked for, and don't want. I would like to make my own decisions about how to spend my own money,

===========================

And you wold either put some of it in secure investemnts, most likely treasuries, or you would invest all of it in more risky investments. Based on your statements, I'm guessing the latter.

It is exactly because a certain number of morons do that and fail at it, that we insist they buy social security.

If that isnt the case, and you would have chosen some percentage of secure investments anyway, then your argument carries very little weight, because the difference in result is small.

Granted, the pay out plans are uneven, and unfair. We could esily fix that if we paid our workers enough to live on now, AND to save for their retirement both. We barely do the former, let alone the latter, and so we created the need for SS ourselves.

 
At 8/03/2011 5:43 PM, OpenID Sprewell said...

Larry, there are plenty of countries with the policies I listed, just because you haven't heard of them doesn't mean they don't exist. How do you make the leap from talking about a model country we can copy to "no political support?" Considering the backlash against Romneycare and now Obamacare, it is you who has little political support. Yes, it is true that all the existing medical systems in the world suck in various ways, but it's a matter of degrees, so you find the parts that work in each and adopt them. HSAs work in Singapore, might as well use them here too.

You may not understand that "repealing Obamacare, then removing the tax deduction on employer-provided insurance, then making sure HSAs are not disadvantaged over insurance" is a very particular concept and practical strategy, but most people do. And when did we start talking about implementation? Funny how you have no argument against my plan, so you change the subject to how I should have given a detailed implementation, as though that was ever the topic. I call it whimsical dreaming that you think people want more govt in medicine. I did not provide a list of countries because I didn't and still don't see the point: every country is a mixed bag and none has all of the policies I want, but they're all implemented somewhere. Instead, I gave you a specific list of policies, which you proceeded to ignore.

 
At 8/03/2011 5:51 PM, OpenID Sprewell said...

Singapore's mandate is for HSAs, big difference from Obama's unconstitutional mandate for insurance, merely forcing third-party payers into the mix, a dumb idea. "Universal coverage" in Singapore is limited to "basic healthcare services... subject to tight expenditure control." Subsidized catastrophic is optional. I don't believe there are any "insurance exchanges" in Singapore, so I'm not sure how you think Obama got the idea from them. The only person "AWOL" on doing anything about medical price inflation is Obama. McCain said he would end the employer deduction on medical insurance, which Obama shamefully demagogued as the "end of employer-provided insurance as we know it." Of course, he left out the part where he wanted to end it too, only for single-payer. Typical politics, the guy who honestly says what he wants to do gets attacked for it and loses, while the liar who avoids the issue till he gets the job wins.

Of course we're opposed to Obama and the Democrats' crazy ideas on how to fuck up medicine, and that's because we know exactly which ideas will work: bring the market back into medicine. As for political support, I wouldn't be braying about that considering all or part of Obamacare is about to be struck down by the Supreme Court, if Congress doesn't get to it first. :) Why would I get mad about a FICA tax like Singapore's when they actually get to choose where that money is spent, which is what I argued for above, letting us decide how our SS and medicare money is spent by putting it in 401ks and HSAs? Considering Singapore only spends 3.7% of their GDP on medicine, I doubt the tax is really that high, that's probably just the maximum rate. Yes, I don't want the govt influence of Singapore, because I want the parts that actually work. :) I still don't understand your obsession with an irrelevant "top 5": since I already said the US is no. 1, everywhere else is going to be behind the US by definition.

 
At 8/03/2011 6:08 PM, OpenID Sprewell said...

Wow, you are dumb. Simply because I say no country's medical system has it all figured out, I'm "opposed" to every system. No, it means I don't start with your crude mindset of, "let's find some other country's system, madly declare it 'perfect,' then copy it blindly." If you think that's practical, no wonder you don't really understand these issues. I can see why people insult you considering all the mistakes you make and all the dumb arguments you put forward, like repeatedly calling Stockman a "supply-sider" when it was pointed out to you that he never was one.

Hydra, your friend with brain cancer probably had his money go to his survivors. Nobody's making anybody work, if seniors want to starve, that's their choice. Are you nuts? If they want to stop working someday, they should save enough to afford it. Of course it affects your argument when you say most people will "invest" in treasuries anyway, then admit that they don't have to. And you don't address the real point I made, that treasuries won't be secure going forward, as their credit rating is about to be downgraded because this debt deal does not cut enough of the future debt that the Dems plan to rack up, forget about paying down what we have now. Your ignorance of the investments available to you in your youth is the only matter subject to revisionism now. :)

 
At 8/03/2011 7:08 PM, Blogger Larry G said...

with respect to Social Security and Medicare funding/revenues - there is a simple report that shows the truth:

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

Now if you skip down to where it says: "What are the Trust Funds", it will explain SS, DI, HI and SMI which are: social security, disability insurance, Hospitalization insurance and SMI is Medicare Parts A & B.

if you look just below there you'll see a table that shows how these things are funded and their current status:

Pay special attention to the row that says PAYROLL TAXES and the row that says GENERAL REVENUES.

You'll notice two important things:

Social Security, DI, HI (medicare part A) are NOT funded from income taxes/general revenues but payroll taxes and they are NOT in major deficit - certainly nowhere to the tune of even a billion dollars.,

SMI - Medicare Part A and D DO REQUIRE general revenues/income taxes - true enough but look at how much for this year: 204 billion dollars.

Not chump change for sure, but our deficit is well over a trillion dollars and clearly shown here - only 204 billion is owned by social security/Medicare.

It's GOING TO GROW because of demographics/baby boomers so we must do something but as a component of the current deficit and debt - they are not huge at this point.

 
At 8/03/2011 7:16 PM, Blogger Larry G said...

@Sprewell

name the countries guy...

and re: Singapore...

you're dreaming or smoking something,

It's a govt mandated system - individual mandates - payroll taxes for HSAs and yes the catastrophic is "optional" but it is also subsidized for those who can't pay.

strict price controls? more govt dictates?

ObamaCare had the SAME individual mandate in terms that each person had to have coverage but it was more flexible than Singapore in that it did not require ANYONE to pay payroll taxes for it but rather allowed them to obtain it in a number of different ways.

The bottom line here is that Singapore is a govt-run system that is far superior to our system in part because everyone has to have insurance and that provides a very large pool of payers who generate sufficient revenues to pay benefits.

Do you support the US replacing ObamaCare with Singapore Care?

No waffling or equivocating here.

yes or no.

name the countries guy that do health care better that are not govt-dictated.

bet you can't.

 
At 8/03/2011 7:17 PM, Blogger Larry G said...

Oh.. and Sprewell if you want to hurl insults..fair enough ..but be forewarned they go both ways - dummy.

 
At 8/03/2011 7:27 PM, Blogger Ron H. said...

"This isn't stealing, it is trading."

You have a great imagination. This isn't stealing and is trading in the same manner that my holding a gun to your head and demanding "Your money or your life!" is a trade. You may chose to trade your money for your life under those circumstances.

Taking something from someone against their will is stealing. there's no way you can spin it into something else.

"You have a broker making the trade for you ( Congress) and you disagree with the deal they cut."

Of course I do. I didn't ask them to make a trade for me.

If your stock broker bought some IBM stock for you without your knowledge and demanded payment for it, I don't think you would like it either.

There is no one in Congress more qualified to determine how your money is spent than you are.

 
At 8/03/2011 7:33 PM, OpenID Sprewell said...

See, this is exactly why I didn't name the countries, because I knew you would then idiotically claim that it was the govt-controlled portions of their medical system that was responsible for the benefits, not to mention you still haven't given a reason why a "top 5" matters. Obviously Singapore still has a govt mandate that pays for 33% of services, that's still much better than our system where the US govt pays for 45% of medical services. Subsidies for catastrophic shouldn't even be necessary if you're doing it right, so they must be fucking it up somehow, probably by having too low a deductible before it's labeled catastrophic, if they need to subsidize it. They regulate prices, so do we, so that's not much worse than us. I already pointed out to you that it's not the "SAME individual mandate" because Obama's dumb mandate is for insurance, which tends to drive prices up, while Singapore's is for HSAs, which keep prices in line. According to Obama, his insurance mandate is a tax, except if any voters are listening, ;) when he runs away from the word.

Singapore is a largely private system which still unfortunately has a fair amount of govt interference in certain aspects, detailed in the links I gave. To call that a govt-run system is just stupid, by that rationale, ie any govt interference, our system is "govt-run" also. Wow, the lies don't stop with you do they, "everyone has to have insurance" in Singapore? Everyone pays into an HSA, completely different. I like the aspects of Singapore that actually work, ie HSAs and primarily catastropic insurance coverage. I don't like the aspects that force govt choices on patients, ie disallowing certain technology or putting in price controls because the govt thinks its too expensive, when the patient obviously doesn't. I'm not going to name any countries, because you have yet to give a reason why that matters and you appear incapable of understanding the ones I already did name and discuss. :)

 
At 8/03/2011 7:35 PM, Blogger Ron H. said...

"Only, since WE are the ones who borrowed the money WE cant very well complain about the results if WE refuse to pay it back."

So, if we've borrowed all the money out of our 401k plan, what do you suppose will happen when we want to start drawing income from it?

I believe both you and Larry live in Virginia. Is there something in the water there? You both appear to have the same defect when it comes to logical thinking.

 
At 8/03/2011 7:49 PM, Blogger Larry G said...

" See, this is exactly why I didn't name the countries, because I knew you would then idiotically claim that it was the govt-controlled portions of their medical system that was responsible for the benefits, not to mention you still haven't given a reason why a "top 5" matters"

NOW, you are running away....

name the countries or admit that you can't ...

Singapore poor guy is a much more govt-influenced system than the majority of industrialized nations including us and the PROOF of that is that folks like you WOULD NEVER agree to have a system LIKE Singapores.

So you can't have it both ways guy.

You can't hold it up as a "mostly private system" and then opposed it for implementation in this country.

That's hypocritical as hell.

 
At 8/03/2011 7:54 PM, Blogger Larry G said...

re: borrowed money...

go read how the trust fund works and if you can't comprehend it then that explains the idiocy... here...

the trust fund is basically a checking account where FICA money is put and benefit checks get written to recipients.

Some years.. most years prior... FICA generated a little excess.

Over the 60 year history of ups and downs, it managed to accumulate about 2 trillion.

To keep this in perspective... this is about 2 years worth of benefits if FICA stopped tomorrow.

Social Security was explicitly designed as a pay-as-you-go program not a fund.

People who think it is a fund are either ill informed or playing the dumb-ass propaganda games that some here continue to play.

When I ask these folks to tell me how to compute "unfunded liabilities" for Medicare Part B, TRUST FUND, they wet their panties.

 
At 8/03/2011 8:12 PM, OpenID Sprewell said...

Larry, no, you are running away. We were talking about how to remake the US system, so I brought up several ways to do so. Apparently you can't handle that discussion, so you keep changing the subject to what I think the "top 5" systems are, as if that has anything to do with anything. You've already basically admitted that you can't give a reason why the "top 5" matters, by not giving any reason when repeatedly asked, so it hardly matters whether I can come up with one or not. :D Singapore is perhaps a more govt-influenced system than the US, not "much more," because as great as it is in many ways- HSAs, catastrophic insurance, more private funding- the govt still controls what you can spend your money on. So it probably ends up being worse on regulation, despite being better on funding, and likely worse overall.

But to say Singapore is much more govt-influenced than "the majority of industrialized nations" just displays your total ignorance of this issue. I suppose you've never heard of Europe, the UK, and Canada? Why would I want to switch to a Singaporean system that is more govt-influenced than the US, when I can instead bring the market aspects of their system here? :) The only one who sees things both ways here is you, because you apparently don't even understand which side is up in on these topics. I can laud Singapore and then not want to copy them wholesale, because obviously it's not private enough. :) But I do want to replace our govt-run concept, Medicare, with their more market-oriented approach, HSAs. That's only hypocritical to a simple-minded buffoon like you, who believes that because I praise the aspects of Singapore that work, I must want to copy their entire system.

Well, it's been nice routing you in this debate, Larry, but I can see you have nothing cogent to add to a discussion of medical systems, so I'm out.

 
At 8/03/2011 8:23 PM, Blogger Larry G said...

" Larry, no, you are running away. We were talking about how to remake the US system, so I brought up several ways to do so"

ha ha ha

I ASKED you to name 5 countries who might serve as models for what you are contemplation.. and YOU RUN AWAY.

how much govt influence with Singapore?

Too much to use it for the US?

yes or no guy.

you have NO ANALOG for your proposed healthcare system.

It's a totally roll-your-own experimental system that has no basis in reality and you can't or won't' name the current systems in the world that are most like it.

Singapore is a soup-to-nuts govt system.

Go read some OBJECTIVE material NOT the right wing web sites.

I can give you links if you wish.

But their system is totally govt designed and operated from the mandatory payroll tax to the subsidized catastrophic insurance to the price controls put on providers.

The HSAs can only be spent on govt-approved services and providers and expressly limits how much you can pay for a procedure.

but if you like it and it sounds like you do then why not say it's a model you support for the US?

 
At 8/03/2011 8:24 PM, Blogger Larry G said...

yes... I know... your mommy is calling you now, eh?

:-)

 
At 8/03/2011 10:03 PM, Blogger Ron H. said...

"It is exactly because a certain number of morons do that and fail at it, that we insist they buy social security."

And who is "we"? You and those others who know best how people's money should be spent? You should respect morons enough to allow them to make their own decisions and their own mistakes. They are not your children. And, don't introduce the welfare argument: It is bogus.

It's not up to you, or anyone else to steal money from morons to save on their behalf.

"If that isnt the case, and you would have chosen some percentage of secure investments anyway, then your argument carries very little weight, because the difference in result is small."

You are ignoring my point for some reason. It has nothing to do with the security, or possible returns, or risk of any investment. The issue is free choice.

Just because you don't have confidence in your own ability to invest your own money, but feel you must rely on someone else to do it for you, doesn't mean that's a desirable method, or that others want that also. You could easily do so yourself, without expecting everyone else to do the same.

Whether or not treasuries are secure isn't pertinent to a discussion of Social Security. There are none in the SS trust fund.

No matter what my investment preferences and risk tolerance, I certainly wouldn't invest in a ponzi scheme that relied on nothing but the contributions of new participants to keep it going.

 
At 8/03/2011 11:06 PM, Blogger Ron H. said...

"You don't understand thisw stuff. With that much money there will be big players putting a lot of other peoples money at risk. The scenario you suggest is mostly nonsense, which is why big earners hire money managers."

There is nothing about any of this that would be different except that people wouldn't be forced to contribute to a ponzi scheme, and would have a lot more money to spend or invest as they wish. Think about it carefully before you write stuff like the above.

 
At 8/04/2011 3:05 PM, Blogger morganovich said...

"
go read how the trust fund works and if you can't comprehend it then that explains the idiocy... here...

the trust fund is basically a checking account where FICA money is put and benefit checks get written to recipients.

Some years.. most years prior... FICA generated a little exces"

uh, no.

that's not how it works at all.

if there were a "trust fund" there would be money in it earning interest.

there isn't.

it has all been appropriated and spent by federal agencies.

the "trust fund" is just a pile of unsecured IOU's written by government agencies that do not have the ability to pay them.

it's a pure accounting fiction.

social security has a $20-30 trillion unfunded liability (depending on who you ask) and it's widening.)

that's money that will not be covered by fica taxes.

the entire us federal income outside of fica is 1.3tn/yr. after interest expense, it's 1.1tn.

no way can a 20tn deficit be paid out of that, much less the 120tn unfunded liability if you include the medi programs.

 
At 8/04/2011 7:00 PM, Blogger Larry G said...

" that's not how it works at all.

if there were a "trust fund" there would be money in it earning interest.

there isn't."

Morg - either you don't understand how the SS (and about 10 other) govt trust funds were EXPLICITLY DESIGNED to work or you are parroting right wing propaganda.

Go read this:

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

skip down to the part that says:

"what are the trust funds"

now you can DISAGREE with what is said here but it is the truth - that you either choose to ignore or purposely corrupt.

" As of the end of calendar year 2010, the accumulated surplus stood at just over $2.6 trillion.[8] Projections are that current receipts will continue to exceed expenditures until 2017. Thereafter, there will be a shortfall that will be made up by withdrawals from the Trust Fund, although the Trust Fund will continue to show net growth until 2025 because of the interest generated by its bonds"

http://en.wikipedia.org/wiki/Social_Security_Trust_Fund

you folks just plain LIE about this.

You're not really interested in a discussion on the merits and facts but instead right-wing propaganda and misinformation.

Get smart,

deal with the facts,

stop lying and show some scruples and character in your debates.

 
At 8/04/2011 9:01 PM, Blogger Ron H. said...

This comment has been removed by the author.

 
At 8/04/2011 9:43 PM, Blogger Larry G said...

all I've said Mr. FOOL is that you guys are incapable of reading and understanding simple authoritative descriptions of the SS Trust Funds which you by mental softness cannot fathom.

You PORTRAY it as something it is not,

That's what I said.

You say it is one thing when it clearly is not.

You don't seem to understand the meaning of trust fund in context and it has several/many INCLUDING the clearly defined ones used in govt.

Medicare Part B has a TRust Fund also. Explain to me how that fund works.. since it is funded with income taxes....and not payroll taxes.. something else you had no clue about.

 

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