If Private, Social Security Would Be Illegal
"The fundamental problem of Social Security is that the irresponsible way its finances are set up, and the changing demographics of the country, mean that there is simply not going to be enough money in its trust fund to pay today's young people what they are legally entitled to, when time comes for them to retire.
Declining birth rates and greatly increasing lifespans have created havoc with Social Security's finances, which are based on having the first generation's pensions paid with money collected from the second generation -- and the second generation's pensions paid by the next generation, etc.
Any private financial scheme set up in a similar way would be illegal. That is why Charles Ponzi went to prison."
329 Comments:
Any private financial scheme set up in a similar way would be illegal. That is why Charles Ponzi went to prison.
Ponzi's scheme was much more moral. While it stole from people it was strictly voluntary.
"there is simply not going to be enough money in its trust fund to pay today's young people what they are legally entitled to, when time comes for them to retire."
i think sowell is misframing this a bit.
legally, the payments drop when the "trust fund" is depleted and income drops below required payout.
his notion of "legally entitled" seems to miss this. that is the law.
this doesn't make the proposition any better as an investor though.
it's a terrible deal. no rational 30 year old would participate.
it's the coercion from the feds that's the issue, not legal entitlement.
i'd happily surrender every SS payment i have made through fica to date to be exempted from the taxes in the future.
i'd still come out WAY ahead on that.
if you took ANY pay-as-you-go insurance product and you put the stimulation on it that no matter what happened in the future - they had to collect the same premiums and pay the same benefits - it would go broke.
All pay-as-you-go insurance will not sell you permanent life long insurance for the term of your life (except for life insurance) and all insurance limits their commitment to one or two years at which point you can renew but they can - and do alter what they charge and what they cover.
If you put the stipulation on health insurance, for instance, that we say should be on SS - there would simply be no more health insurance as each company would crash and burn once the payouts exceeded the premiums and they would be restricted from raising their rates.
the problem with SS is that it is a defined benefit program in a defined contribution world but we won't accept that reality.
It is hard believe how many top notch people actually believe that the SS Trust Fund contains money or any other actual asset.
If you ignore the lies, SS is actually easy to understand. Economically speaking, this years tax receipts are paid out in benefits this year. Both the benefits and the taxes are arbitrary levels which only rarely balance and cannot possibly be tied to any particular future level of purchasing power.
If taxes exceed benefits, Congress spends typically 172% of the surplus and the SSTF gets an IOU for the amount of the surplus. If benefits exceed taxes, SS redeems enough of the IOUs from the Treasury to make up the shortfall.
If the SSTF becomes exhausted, The Congress would, without any doubt, allow the Treasury to borrow to make up the shortfall directly. The reason we can be sure that this would happen is that the Treasury would be responsible for borrowing exactly the same amount of money whether it is redeeming an SSTF IOU or making up the shortfall directly if the SSTF is exhausted.
The IOUs are called bonds, but are restricted in their usefulness because the only thing they can do is cause a shortfall to be funded. This means that the Congress could just add 100 trillion dollars to the SSTF balance with no negative economic impact at all. All that matters about SS is taxes and benefits.
It was a total economic mistake to raise the taxes to try to prefund the SSTF, because the SSTF balance is fundamentally irrelevant.
But, given that a surplus was incurred, it is economically preferable
for Congress to return the surplus to the economy, rather than store the money in an SSTF vault. Of course what really matters is the future supply of goods and services, rather than the precise distribution of purchasing power. It seems likely that leaving the surplus in the hands of the workers would be more effective in increasing the future supply of goods and services than letting Congress spend it.
Regards, Don
morganovich: i think sowell is misframing this a bit. legally, the payments drop when the "trust fund" is depleted and income drops below required payout. his notion of "legally entitled" seems to miss this. that is the law.
Yes, for an economist, he doesn't seem to understand the subject very well.
Thomas Sowell: Declining birth rates and greatly increasing lifespans have created havoc with Social Security's finances,
Life span at age 65 has only increased about 5 years since Social Security began.
Thomas Sowell: Any private financial scheme set up in a similar way would be illegal. That is why Charles Ponzi went to prison.
No. Ponzi went to prison for running a fraudulent scheme, in particular, by call the same dollar both principal for one investor, and profit for another investor. Social Security is an income transfer program.
Zachriel,
"Life span at age 65 has only increased about 5 years since Social Security began."
Life expectancy in 1930 was 58 for men, well below the eligibility age of 65. He's also dead on about declining birthrates.
"Social Security is an income transfer program."
Yet liberals are always going on about how it's an "investment" in government bonds, at least that's what I've heard them say my whole life. Perhaps they are changing their tactics now. Originally, it was sold as "old age insurance."
Just to add a bit to what Paul said, life expectancy at 65 isn't the point, or at least not the whole point. People who die before 65, but after paying a bunch of Social Security taxes, help Social Security's financial situation a lot. Especially if they don't leave minor children or non-employed spouses.
@Paul: Overall Life Expectancy At Birth is not what matters, as that is very much influenced by changes in infant and child mortality, which does not affect SS contributions and disbursements. Life expectancy from the middle of one's working age is what matters. Hence, why the claim of overall increasing life expectancy = necessity of dramatically decreased benefits is not true. That fact that a lot more babies and children survived to adulthood does not put excess pressure on SS, and they were alive and working to pay into it.
Life expectancy for an adult-age white-collar worker has gone up by about 5 years. For an adult blue-collar worker, not very much increase: ~1 year. Increasing the age at which one can draw SS benefits, based on overall life expectancy increases, is a net reductions of benefits to blue-collar workers.
No. Ponzi went to prison for running a fraudulent scheme, in particular, by call the same dollar both principal for one investor, and profit for another investor. Social Security is an income transfer program.
For somebody criticizing Sowell for not understanding the subject matter very well, you don't seem to understand the subject matter very well.
zach-
"Life span at age 65 has only increased about 5 years since Social Security began."
i don't think this is true.
in 1940, US life expectancy was 62.9 years.
http://www.census.gov/statab/hist/HS-16.pdf
it's currently 78.3.
so the average SS recipient used to get nothing.
now they get 13.3 years.
it's a 15.4 year change.
that is a really big difference.
"No. Ponzi went to prison for running a fraudulent scheme, in particular, by call the same dollar both principal for one investor, and profit for another investor. Social Security is an income transfer program."
sure, but people participated willingly. SS is a proposition so bad that few would even consider participating without being forced to do so. that makes it worse, not better.
if i could mug you repeatedly, it would not be a great deal, fair, nor attractive just because it was legal.
Paul: Life expectancy in 1930 was 58 for men, well below the eligibility age of 65.
What matters to payout is life expectancy at age of retirement. Life expectancy in 1940 for someone 65 was about 13.7 years. Life expectancy in 1990 for someone 65 was about 17.5.
Paul: Yet liberals are always going on about how it's an "investment" in government bonds, at least that's what I've heard them say my whole life.
No. The Trust Fund is only to even out economic and demographic fluctuations. In particular, baby boomers have been overpaying somewhat to account for their large numbers when they reach retirement.
Social Security is a "pay-as-you-go" system, albeit one that is partially advance-funded.
Zachriel: Life span at age 65 has only increased about 5 years since Social Security began.
morganovich: i don't think this is true {and provides life expectancy at birth as evidence}.
Life Expectancy at age 65
http://www.ssa.gov/history/lifeexpect.html
" SS is a proposition so bad that few would even consider participating without being forced to do so. that makes it worse, not better."
but every industrialized country i the world has a payroll tax/ss system.....
does that mean that SS is a evil govt conspiracy or that a vast majority of people support it?
I tend to think the later... and we just have some mouthy discontents...
"No. The Trust Fund is only to even out economic and demographic fluctuations. In particular, baby boomers have been overpaying somewhat to account for their large numbers when they reach retirement.
Since LBJ, it is also used to cover up the true size of the deficit, allowing government to grow.
"No. Ponzi went to prison for running a fraudulent scheme, in particular, by call the same dollar both principal for one investor, and profit for another investor. Social Security is an income transfer program." -- Zach
Then why has the government spent the last 60+ years collecting taxes in excess of those transfer payments?
zach-
life expectancy at 65 is the wrong way to look at it.
it fails to take into account all the people who dies before 65.
that was about 60% of the population in 1940 and is maybe 35% today.
if you pay SS for 40 years and die at 60, you are a big contributor to the program who never takes anything.
you cannot ignore that.
it has a huge effect on the number of people paying in relative to the number taking out.
"Then why has the government spent the last 60+ years collecting taxes in excess of those transfer payments?"
because calling it theft might have gotten it voted down?
"does that mean that SS is a evil govt conspiracy or that a vast majority of people support it?"
it means that A) the poor will always vote for income transfers from the rich
B) most democracies are terrible at math (most people think they make money on their house over 30 years. very few actually do)
C) that it was a better proposition while it was solvent. a 30 year old now is never going to get back anything like what he pays in.
the social welfare programs are in the process of failing and becoming insolvent all over the world.
let's see how popular it is when people start having to pay as much as ever and get less and less every year.
Also, Zach, maybe you could explain why, if this is simply "an income transfer program" ,people been receiving transfer payments in excess of the actuarial value of what they have paid into the system?
larry-
are you seriously telling me that you would not happily forfeit all the SS taxes you have paid to date to get out of the tax for the rest of your life?
anyone under about 50 years old and making over about 40k would rationally do so.
i'd do it in a heartbeat.
take the money you would have been taxed, invest it at 6% return, then buy an annuity. you'll get far more money that way.
i did the math on my SS statement. i'm getting negative nominal returns. if i had saved that money myself, i could buy an annuity worth 12X my SS payout when i turn 65.
so yeah, it's a really, really bad deal.
what else could you possibly call negative nominal returns and forced participation?
are there any countries that have abandoned SS as a result of these problems?
what countries don't have payroll taxes and as a result of not having that payroll tax - are better off economically?
I've yet to see a ranked list of the worlds best economies that don't have payroll taxes and SS.
:-)
" ,people been receiving transfer payments in excess of the actuarial value of what they have paid into the system? "
that's why it's called "insurance".
when you receive a 20K payment for a wreck and you only payed 18K of insurance premiums - you collect "in excess" of the actuarial.
Che is dead: Then why has the government spent the last 60+ years collecting taxes in excess of those transfer payments?
The Trust Fund is a prepaid reserve used to even out fluctuations in economic and demographic cycles. Contrary to your statement, Social Security ran deficits from 1957 to 1962 and from 1975 to 1983. Changes were then made to the program in order to prepare for the retirement of the baby boom generation. The fund is again running deficits, though the Trust Fund is expected to last for many years.
morganovich: it fails to take into account all the people who dies before 65.
That's rather the point. The vast majority of recipients are retirees.
morganovich: if you pay SS for 40 years and die at 60, you are a big contributor to the program who never takes anything.
Your parents did. Remember, it's pay-as-you-go.
Che is dead: if this is simply "an income transfer program" ,people been receiving transfer payments in excess of the actuarial value of what they have paid into the system?
That's a typical result when starting a pension system. Early recipients only pay a few years then retire. Only later does the system reach balance where people have been paying their whole lives.
morganovich: anyone under about 50 years old and making over about 40k would rationally do so.
Remember, it's a pay-as-you-go system. Don't forget to send your parents and grandparents a check each month!
"The Trust Fund is a prepaid reserve used to even out fluctuations in economic and demographic cycles. Contrary to your statement ..." -- Zach
I made no statement other than to note that the Ponzi scheme that you insist on calling "an income transfer program" has been collecting taxes in excess of transfer payments and making payments in excess of the actuarial values of contributions made by current recipients. The fact that the system ran deficits in prior years suggests that your claim of a reserve being used to even out fluctuations in economic and demographic cycles is bullshit, since both of these factors were present at the time that the system ran deficits. Why didn't the previously established reserves cover these "fluctuations"? And why were taxes raised to cover increased payments since, as you and others have argued, the law requires that payments be cut if income from payroll taxes is depleted?
"That's a typical result when starting a pension system. Early recipients only pay a few years then retire. Only later does the system reach balance where people have been paying their whole lives." -- Zach
Pension system? You mean "income transfer program", right? Approximately what date did the system reach "balance" and recipients started drawing only the actuarial value of the payments they made earlier?
the trust fund HAS made up short-term shortfalls caused by cyclic recessions...
but the baby boom is not temporary.. it is structural..
and the increase in FICA was not meant as a permanent solution - but it WAS intended to buy enough time (until 2037) to make other changes.
but I'm glad to see that some folks are now starting to accept the reality of what the trust funds really are - and are not.
the trust fund is nothing more than a check book balance.
there are 3 trust funds for FICA and each one has a different balance and indeed - the DI has a structural negative balance that is not temporary....because the actual numbers of people getting DI have exceeded original projections.
the trust fund HAS made up short-term shortfalls caused by cyclic recessions...
but the baby boom is not temporary.. it is structural..
and the increase in FICA was not meant as a permanent solution - but it WAS intended to buy enough time (until 2037) to make other changes.
but I'm glad to see that some folks are now starting to accept the reality of what the trust funds really are - and are not.
the trust fund is nothing more than a check book balance.
there are 3 trust funds for FICA and each one has a different balance and indeed - the DI has a structural negative balance that is not temporary....because the actual numbers of people getting DI have exceeded original projections.
but every industrialized country i the world has a payroll tax/ss system.....
The point is still the same. If SS were a private system the regulators would declare it insolvent. And the fact that other governments have similar Ponzi schemes is not material to the argument that SS is a Ponzi scheme. To see your future look to the Greek government's pension program.
does that mean that SS is a evil govt conspiracy or that a vast majority of people support it?
I would have no problem if people voluntarily chose to enter the SS programs and live with the consequences. It is the mandates that bother me. Give people a choice to opt out and see just how great the system is.
" Approximately what date did the system reach "balance" and recipients started drawing only the actuarial value of the payments they made earlier? "
when it started generating surpluses in the trust fund balance.
it means that A) the poor will always vote for income transfers from the rich
The rich are not a golden goose. They cannot support the huge level of government spending that they are asked to pay for.
are there any countries that have abandoned SS as a result of these problems?
There are many con tries that have defaulted and gone on to set up a new program with a new currency. They solved their problem by resorting to inflation that made the unfunded liabilities go away.
zach-
"That's rather the point. The vast majority of recipients are retirees."
you are still missing the point.
survival from 65 determines how long the average recipient gets paid.
but to determine how many people paid in to pay that recipient out, you need to know how many live to 65 at all.
in 1940, that was well under half of all people as life expectancy for someone born in 1940 was under 63.
it's even worse if you consider theta the folks retiring in 1940 had a life expectancy of more like 75%.
the percentage of the population over 65 relative to workforce has increased in multiples since 1940.
that's why the payer to recipient ration has dropped from over 7 to more like 2.5.
"morganovich: if you pay SS for 40 years and die at 60, you are a big contributor to the program who never takes anything.
Your parents did. Remember, it's pay-as-you-go."
this doesn't make any sense.
i have no idea why you are getting at (and my parents are alive)
and what does paygo have to do with anything?
in a few years, that mean i will pay the same for less and less every year.
how is that supposed to be a good thing?
"the trust fund HAS made up short-term shortfalls caused by cyclic recessions. ... I'm glad to see that some folks are now starting to accept the reality of what the trust funds really are - and are not.
... the trust fund is nothing more than a check book balance." -- Larry
If the "trust fund" is simply an accounting fiction, then it did not make-up for "short-term shortfalls during cyclic recessions". The shortfalls were covered through increased borrowing.
but every industrialized country i the world has a payroll tax/ss system.....
The point is still the same. If SS were a private system the regulators would declare it insolvent. And the fact that other governments have similar Ponzi schemes is not material to the argument that SS is a Ponzi scheme. To see your future look to the Greek government's pension program.
no. look at the dozens of other systems that still work. Greeces problems are not due to payroll taxes alone.
does that mean that SS is a evil govt conspiracy or that a vast majority of people support it?
I would have no problem if people voluntarily chose to enter the SS programs and live with the consequences. It is the mandates that bother me. Give people a choice to opt out and see just how great the system is.
I'd not have a problem if we had an answer as to what to do with people who do not save for their retirement.
it's one thing to have an ideological "solution" - it's quite another to provide a real solution.
With SS - we'd end up with a pension equivalent to EMTALA ...and that would cost all taxpayers more...
the stock answer of "we'd let them die in the streets" is not acceptable to a majority who vote.
Given the choice between taxpayer programs for the retired who did not save verses mandatory saving - the vast majority of people - indeed the vast majority of government CHOOSE mandatory payroll on the front end verses EMTALA-like programs on the back-end.
" There are many con tries that have defaulted and gone on to set up a new program with a new currency. They solved their problem by resorting to inflation that made the unfunded liabilities go away. "
really?
can you supply list of countries that defaulted because of payroll taxes and subsequently abandoned them?
larry
"that's why it's called "insurance".
when you receive a 20K payment for a wreck and you only payed 18K of insurance premiums - you collect "in excess" of the actuarial."
that's a bad analysis.
insurance companies take in more than they pay out, otherwise they go out of business.
SS is nothing like insurance. it's supposed to be a pension plan.
in that respect, it's a terrible one. it loses you money. it provides about 8% of the return private savings would (which is to say you'd have 12X as much if you saved yourself).
in reality, it's just a vast wealth redistribution scheme that is going to leave anyone who is currently under about 50 holding a very short end of a diminishing stick.
that's a bad analysis.
insurance companies take in more than they pay out, otherwise they go out of business.
indeed - it's a REAL analysis
"SS is nothing like insurance. it's supposed to be a pension plan."
it has always been defined as a pay-as-you-go insurance not a pension.
in that respect, it's a terrible one. it loses you money. it provides about 8% of the return private savings would (which is to say you'd have 12X as much if you saved yourself).
a pension does not pay you if you become disabled nor our survivor if you use up the pension.
SS provides an income if you become disabled. it provides an income in you outlive what you paid into it and it provides benefits to a survivor.
these are insurance benefits.
"in reality, it's just a vast wealth redistribution scheme that is going to leave anyone who is currently under about 50 holding a very short end of a diminishing stick."
It IS an income distribution scheme.
If someone earns 15-20K a year and they pay a plus/minus a 1000 a year into SS - they'll get a $1000 a month as long as they live.
that's true.
in that regard SS is considered a safety net - in part -because the reality is - you're probably going to tax taxpayers to pay for hat guys food and shelter anyhow.
larry-
"indeed - it's a REAL analysis"
no it's not, unless by "real" you mean doomed to fail.
"real" insurance has premiums that exceed payouts. SS does not work that way. real insurance companies get positive returns on invested premiums or they rapidly go out of business. SS does not.
it has not "always been defined as insurance".
you are just making that up.
unemployment is insurance.
SS is a defined benefit plan. always has been.
welfare is a social safety net. (and note you can get welfare and SS)
Morg - SS has ALWAYS been defined as a pay-as-you-go INSURANCE...
SS is a defined benefit plan - yes but the definition of the benefit has changed .. and there is a process for changing benefits... and it has been exercised more than a dozen times in the 65 year history.
the problem with SS is that it is a defined benefit program
That's not a problem, and switching to defined contribution makes things worse off - for it is little more than a gamble.
"That's not a problem, and switching to defined contribution makes things worse off - for it is little more than a gamble." -- sethstorm
With almost $10 TRILLION in unfunded liabilities, you are going to find out just how much of a gamble depending on government programs, like SS, can be.
As for defined contribution personal accounts:
Part of the employer contribution in the Alternate Plan goes toward a term life insurance policy, which pays four times the employee’s salary tax free, up to a maximum of $215,000. That’s nearly 850 times Social Security’s death benefit.
... if a worker participating in Social Security dies before retirement, he loses his contribution (though part of that money might go to surviving children, if any, or a spouse who didn’t work and therefore didn’t establish his or her own benefits). But a worker in the Alternate Plan owns his account, so the entire account belongs to the estate. There is also, among other benefits, a disability benefit that pays immediately upon injury, rather than waiting six months, plus other restrictions, as under Social Security.
And those who retire under the Galveston model do much better than Social Security. For example:
•A lower-middle income worker making about $26,000 at retirement would get about $1,007 a month under Social Security, but $1,826 under the Alternate Plan, according to First Financial’s calculations.
•A middle-income worker making $51,200 would get about $1,540 monthly from Social Security, but $3,600 from the banking model.
•And a high-income worker who maxed out on his Social Security contribution every year would receive about $2,500 a month from Social Security vs. $5,000 to $6,000 a month from the Alternate Plan.
What the Alternate Plan has demonstrated over 30 years is that personal retirement accounts work, with many retirees making more than twice what they would have made under Social Security.
How Three Texas Counties Created Personal Social Security Accounts and Prospered, Forbes
And with no unfunded liabilities, those payments are much more secure than SS.
just to keep things even:
http://www.ssa.gov/policy/docs/ssb/v62n1/v62n1p47.pdf
the Galveston plan is not superior in all areas...
it's trade-offs....
"the Galveston plan is not superior in all areas... it's trade-offs...." -- Larry
You're delusional. The employees of Galveston have a plan with REAL assets, REAL wealth. You, on the other hand, are comparing it to a system with TEN TRILLION DOLLARS of unfunded liabilities. There are going to have to be major adjustments to SS. And after those adjustments are made, the employees of Galveston will look even better by comparison.
The Galveston plan is essentially a 403B plan as opposed to the pay-as-you-go insurance that SS is.
The Galveston plan has supplementary coverage for permanent disability and for spousal and children survivors to make it more like SS but unlike SS - it is a retirement plan and employees own the funds and can convert them to lump sums.
but Galveston was allowed to substitute it's 403B plan instead of SS.
403B plans are different from 401k plans.. in some key areas...but as far as I know only teachers can now invest in 403B plans
this is one of those mysteries (at least to me) as to why..
anyone know what only some people can have 403B plans?
This is your third run at this ponzi crap. It was wrong the first two times and it is wrong now.
Funny how these phrases catch on and are endlessly repeated, as if those quoting them have no thoughts of their own.
Endlessly repeating this chorus wont make the song any sweeter.
Che is dead: The fact that the system ran deficits in prior years suggests that your claim of a reserve being used to even out fluctuations in economic and demographic cycles is bullshit, since both of these factors were present at the time that the system ran deficits.
Actually, that's evidence of fluctuations, as it runs surpluses and deficits at different times.
Che is dead: Why didn't the previously established reserves cover these "fluctuations"?
Because sometimes the economy runs hot and sometimes cold. Sometimes people make lots of babies, and other times not so much. The program is adjusted, and the Trust Fund allows some continuity on benefits.
Che is dead: And why were taxes raised to cover increased payments since, as you and others have argued, the law requires that payments be cut if income from payroll taxes is depleted?
You mean if the Trust Fund is depleted and the system is in deficit. The reason is simply because the majority of people want the program to continue more-or-less in its present form. When confronted with the question of the baby boomers, the American people decided to increase payroll taxes in order to build up a cushion in anticipation of their retirement.
Larry G: but the baby boom is not temporary..
This too shall pass.
VangelV: If SS were a private system the regulators would declare it insolvent.
Hardly. It has reserves to last for years, and can adjust benefits under the law, if new revenues do not become available.
morganovich: survival from 65 determines how long the average recipient gets paid.
This is the claim by Thomas Sowell: Declining birth rates and greatly increasing lifespans have created havoc with Social Security's finances
The life span of retirees has increased, but not as much as he implies.
morganovich: but to determine how many people paid in to pay that recipient out, you need to know how many live to 65 at all.
That works in favor of Social Security balances. Fewer people dying of childhood diseases means more workers paying into the system.
morganovich: that's why the payer to recipient ration has dropped from over 7 to more like 2.5.
No, it dropped as a natural consequence of the start up of the system. Few were eligible in the first years of the program, but nearly everyone was paying in.
morganovich: i have no idea why you are getting at (and my parents are alive)
If your parents are receiving Social Security, that is coming from your payroll contributions. If you opt out of the system, you are opting out of contributing to your parents benefits. Remember, Social Security is not you saving for your retirement, but paying for your parents retirement. It transfer money from the young to the old, and provides a minimum floor for retirement.
Che is dead: If the "trust fund" is simply an accounting fiction,
By law, Social Security Trust Funds are backed by the full faith and credit of the United States.
morganovich: in that respect, it's a terrible one. it loses you money. it provides about 8% of the return private savings would (which is to say you'd have 12X as much if you saved yourself).
Social Security not an investment vehicle. There's *no* savings account. The money goes for your parents' benefits. Overhead costs are less than 1%.
this doesn't make the proposition any better as an investor though. it's a terrible deal. no rational 30 year old would participate.
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A rational investor would have part of his money in secure but usually low paying investments anyway. Probably in government bonds, or maybe gold. The existence ce of social security frees our thirty year old to invest the rest of his money as aggressively or even recklessly as he likes.
Those who live very long lives will win the social security lottery, and collect more than they paid in.
Objectively, it is not the bad deal that you paint it to be, and neither are the better outcomes you claim assured. In fact, history already proved such promises are false, which is why we require social security, and why we will require health insurance.
The most probable total value of your proposal is far less than the alternative.
i'd still come out WAY ahead on that.
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Maybe, or you might go bust.
because the SSTF balance is fundamentally irrelevant. But, given that a surplus was returned to the economy.......
No, the balance is not irrelevant, because it records the amount of OTHER stuff we got and never paid for.
Mostly, we owe the money to ourselves, for stuff we already got.
We can either pay for it by letting sfs go bust, or we can now pay up all the back taxes we owe for stuff we already got.
When conservatives say no new taxes, they are forgetting that they are not new: they are back taxes now being collected for previous spending - by both parties over many years.
the trust fund HAS made up short-term shortfalls caused by cyclic recessions...
This is not true. The funds were taking in more money than they were paying out until recently. The current shortfall can't be made up by the trust fund because it has no marketable assets. All it can do is ask the Treasury to borrow more.
. The money goes for your parents' benefits. Overhead costs are ......
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The money goes to your parents, but you are credited for the input, which calculates the amount you will receive later, unless troglodytes force the government to renege, thus creating a self fulfilling prophecy.
If there are fewer children, they will pay more. But, one reason we have fewer children is so we can afford to help make them better off. It is not as if " demographics" happen by accident.
All it can do is ask the Treasury to borrow more. 9/20/2011 8:2l0 PM
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Or the government can raise taxes in order to cover its previous untaxed expenditures.
no. look at the dozens of other systems that still work. Greeces problems are not due to payroll taxes alone.
Italy's pension plan is looking at bankruptcy within a decade. It too is a Ponzi scheme at a time when demographics are working against it. France's system is unsustainable because it has too many people working for the government and too many pensioners who have retired early. Germany, Spain, the UK and other nations face serious shortfalls and are looking to increase retirement ages and to cut benefits. No matter where you look, you are likely to find serious problems driven by lousy financing, generous pension benefits and terrible demographics. It looks to me as if the party is about to end. The problems will be 'fixed' by inflating away the purchasing power of the promised payments or by outright defaults.
Given the choice between taxpayer programs for the retired who did not save verses mandatory saving - the vast majority of people - indeed the vast majority of government CHOOSE mandatory payroll on the front end verses EMTALA-like programs on the back-end.
Drivel. Nobody is given a choice. In a free country you are responsible for your own savings and your own plans. Mutual societies did a fine job before there were public pension schemes and provided far better returns for more people at a lower cost than SS could.
the trust fund HAS made up short-term shortfalls caused by cyclic recessions...
This is not true. The funds were taking in more money than they were paying out until recently.
" Has Social Security always taken in more money each year than it needed to pay benefits?
So far there have been 11 years in which the Social Security program did not take enough in FICA taxes to pay the current year's benefits. During these years, Trust Fund bonds in the amount of about $24 billion made up the difference."
http://www.ssa.gov/history/hfaq.html question 26
next myth....
Hardly. It has reserves to last for years, and can adjust benefits under the law, if new revenues do not become available.
The trust fund has no reserves. It has IOUs, not marketable securities that can be sold to provide benefits. That is not permitted in the private sector where any such attempts would send the pension administrators to jail.
During these years, Trust Fund bonds in the amount of about $24 billion made up the difference.
The trust fund has no bonds that could be sold to make up shortfalls. At this time all that is left in the fund are IOUs.
Next myth...
Drivel. Nobody is given a choice. In a free country you are responsible for your own savings and your own plans. Mutual societies did a fine job before there were public pension schemes and provided far better returns for more people at a lower cost than SS could.
then why was SS created ?
not only here but worldwide?
we have EMTALA and MedicAid for those that won't buy health insurance - and no "mutual societies" stepped in or else EMTALA would have never been enacted in the first place.
I've asked you and others to name countries that don't have EMTALA and SS that you feel are better off because they don't have them.
I've never seen a single country named much less a list purported to be countries clearly better off as a result of not having EMTALA, Medicare and SS.
what are those countries?
oh you mean that SS did not make up the deficits?
that's not true.
in each case - the money was obtained from the trust fund and made up the deficits..
next lie.
morganovich: "legally, the payments drop when the "trust fund" is depleted and income drops below required payout.
his notion of "legally entitled" seems to miss this. that is the law."
Actually there is no legal entitlement at all. Carefully written to separate tax and benefit so as to avoid challenges on constitutional grounds, SS guarantees no benefit at all.
Flemming vs Nestor made it clear that despite paying FICA for 19 years, Nestor had no contractual rught to any benefit.
All it can do is ask the Treasury to borrow more. 9/20/2011 8:2l0 PM
-----------------
Or the government can raise taxes in order to cover its previous untaxed expenditures.
Mutual societies did a fine job before there were public pension schemes and provided far better returns for more people at a lower cost than SS
-----------------------------
Horse manure. My father got stuffed by one. His costs on that deal were much higher than his costs on ss.
Next lie
"Life span at age 65 has only increased about 5 years since Social Security began."
But that isn't the number that matters. the "aggregate" - love that word - life expectancy of all those making "contributions is what matters.
"Thomas Sowell: Any private financial scheme set up in a similar way would be illegal. That is why Charles Ponzi went to prison.
No. Ponzi went to prison for running a fraudulent scheme, in particular, by call the same dollar both principal for one investor, and profit for another investor. Social Security is an income transfer program."
...as opposed to Ponzi's scheme which transfers money from new investors to old investors.
And, SS calls the same dollar contributions from one person, and benefits for another, although deceptive language by SSA gives SS the appearance of being a retirement program.
As a private program, SS would in fact be illegal.
Steve: "Life expectancy from the middle of one's working age is what matters. Hence, why the claim of overall increasing life expectancy = necessity of dramatically decreased benefits is not true."
Actually, Steve, the average life expectancy of all those paying FICA taxes is what matters.
"Life expectancy for an adult-age white-collar worker has gone up by about 5 years. For an adult blue-collar worker, not very much increase: ~1 year. Increasing the age at which one can draw SS benefits, based on overall life expectancy increases, is a net reductions of benefits to blue-collar workers."
Does that mean there should be more than one SS program? One for white collar and one for blue collar workers? How will the new category of green collar workers fit in?
"That works in favor of Social Security balances. Fewer people dying of childhood diseases means more workers paying into the system. "
...and more retirees in the future.
An ever increasing supply of new investors. Hmm. What other scheme does that remind us of?
Oh yeah! That guy, what was his name? I think it starts with a P.
"we have EMTALA and MedicAid for those that won't buy health insurance - and no "mutual societies" stepped in or else EMTALA would have never been enacted in the first place."
Your ignorance is appalling.
Mutual societies don't 'step in". They aren't your mommy. Responsible adults know that to benefit from a mutual society you first need to *join* a mutual society.
As you know your nanny will take care of you no matter what, why should you bother joining a mutual society and being responsible for yourself?
"Horse manure. My father got stuffed by one. His costs on that deal were much higher than his costs on ss."
It must be a genetic thing. Haven't you had a similar experience?
In any case, personal anecdotes don't make good support if you want to be taken seriously.
Mutual societies don't 'step in". They aren't your mommy. Responsible adults know that to benefit from a mutual society you first need to *join* a mutual society.
As you know your nanny will take care of you no matter what, why should you bother joining a mutual society and being responsible for yourself? "
what would make you think that someone who would not prepare for their future financially would "join" a mutual society either?
the problem is what do you do with folks who won't plan ahead ...people who won't buy insurance and who end up destitute?
there are two basic options:
1. - spend tax dollars on them when they become destitute.
2. - mandatory payroll taxes to protect taxpayers in the future
there is no option to do nothing - not as long as voters will vote for EMTALA and MedicAid.
If you had a viable alternative to mandatory payroll taxes -you might convince enough to support abandoning payroll taxes.
but your basic "let them die in the streets" is not acceptable to a majority of people -
not only in this country - but worldwide...
most people believe that govt should represent what people want - that's the essence of representative govt - as opposed to dictatorships.
and most people support mandatory payroll taxes.
and as far as "failing" - I believe Germany had the first and it started more than a hundred years ago
... and as far as I know - not a single country in the world has decided that mandatory payroll taxes are wrong and a "failure" and have abandoned them.
I keep asking you for a list of countries that do not have a mandatory payroll tax/SS type system to demonstrate that a viable alternative exists - that there are actually two choices.
and you supply NONE...
what this proves to me is that you are essentially an ideologue.
you advocate for things that have no real world analogues.
not even countries that come "close" to what you advocate.
80% of voters in this country disagree with you.
Our founding fathers supported mandatory payroll taxes...
you talk about govt being a "nanny"...
well the US Military is a nanny.
the "common defense" of the country is a nanny concept, right?
the "health and welfare" of the country is a nanny concept, no?
VangelV: The current shortfall can't be made up by the trust fund because it has no marketable assets.
Americans used the money for tax cuts and wars saying they would pay it back, and that it was backed by the full faith and credit of the United States. They said the tax cuts and wars would pay for themselves.
VangelV: Mutual societies did a fine job before there were public pension schemes and provided far better returns for more people at a lower cost than SS could.
Except for the millions of elderly who lived in poverty. Keep in mind that it is possible for economies to collapse taking with the best laid plans. Some people just get sick and have to stop working and can't save for one reason or another. Some people are just unwise, but the majority of Americans have consistently voted that retirement should have a minimum floor.
VangelV: The trust fund has no reserves. It has IOUs, not marketable securities that can be sold to provide benefits.
The IOUs are U.S. special securities, and by law, are backed by the full faith and credit of the United States. They are being cashed right now due to short term cuts in the payroll tax. The U.S. government can either borrow elsewhere to redeem these securities, raise taxes, cut benefits, or some combination of these.
Ron H: Actually there is no legal entitlement at all.
The entitlement is written into law.
Ron H: Flemming vs Nestor made it clear that despite paying FICA for 19 years, Nestor had no contractual rught to any benefit.
No contractual right. The law can be changed at any time.
Ron H: But that isn't the number that matters. the "aggregate" - love that word - life expectancy of all those making "contributions is what matters.
Yes, and that is a plus. The negative is the increase in life expectancy of retirees, as well as the decreased birth rate.
Sowell's point was that people live so much longer in retirement that they are straining the system. People do live longer in retirement, just not as long as Sowell suggests or as some commenters have said. The primary cause of the increase in life expectancy from birth is the rarity of lethal childhood diseases. This helps counteract the lower birth rate, of course.
Ron H: And, SS calls the same dollar contributions from one person, and benefits for another, although deceptive language by SSA gives SS the appearance of being a retirement program.
Social Security is quite clear that they are a pay-as-you-go system, and that changes can be made at any time by law.
Ron H: An ever increasing supply of new investors. Hmm. What other scheme does that remind us of?
To reiterate, Ponzi lied by called one investor's principal another investor's profit. It is inherently fraudulent and unsustainable, while Social Security has been going for 75 years.
Ron H: In any case, personal anecdotes don't make good support if you want to be taken seriously.
Anecdotes can't be considered to represent a statistical sample, but can represent an example. In one case at least, the mutual society did not provide a value. At that point, we would want to know not only the average returns, but the worst returns as it is being advocated as a safeguard against poverty in old age.
Keep in mind that Social Security was implemented because of the failure of the existing institutions to protect the elderly. Families were fractured by the Great Depression and even the most careful planners were left destitute.
" Social Security is quite clear that they are a pay-as-you-go system, and that changes can be made at any time by law. "
indeed - the Nestor "link" preamble says this:
" But like all federal entitlement programs, Congress can change the rules regarding eligibility--and it has done so many times over the years. The rules can be made more generous, or they can be made more restrictive. Benefits which are granted at one time can be withdrawn, as for example with student benefits, which were substantially scaled-back in the 1983 Amendments.
There has been a temptation throughout the program's history for some people to suppose that their FICA payroll taxes entitle them to a benefit in a legal, contractual sense. That is to say, if a person makes FICA contributions over a number of years, Congress cannot, according to this reasoning, change the rules in such a way that deprives a contributor of a promised future benefit. Under this reasoning, benefits under Social Security could probably only be increased, never decreased, if the Act could be amended at all. Congress clearly had no such limitation in mind when crafting the law. Section 1104 of the 1935 Act, entitled "RESERVATION OF POWER," specifically said: "The right to alter, amend, or repeal any provision of this Act is hereby reserved to the Congress." Even so, some have thought that this reservation was in some way unconstitutional. This is the issue finally settled by Flemming v. Nestor."
http://www.ssa.gov/history/nestor.html
some of the folks commenting here display either a willful ignorance of the facts or they know the facts but choose to engage in misinformation and disinformation... a disreputable way to debate in my view.
I think there are some legitimate issues worthy of legitimate debate but the current approach of the ideologues seems to be that lies and disinformation and propaganda are fair game... and bombthrowing words like "ponzi" "illegal" and "pyramid" are just fine.
the fact that virtually every industrialized and developing country in the world has a social-security type system and none (that I know of have ever abandoned them) leaves the anti-folks with the silly proposition that governments around the world support ponzi schemes....
which basically boils down to a view that all govts are illicit.
only problem is - most folks support having govts..representative govt... etc..as bad as they are - when presented with the alternatives of dictatorships and anarchy.
Mr. Perry apparently has a soft spot in his blogging heart for such folks because he does choose the "red meat" titles...
Or the government can raise taxes in order to cover its previous untaxed expenditures.
Yes. That would have to happen because the current system is insolvent. Which is the point that many of us have been making. A private system that had IOUs instead of marketable securities would be closed by the regulators and its administrators would be in jail.
Horse manure. My father got stuffed by one. His costs on that deal were much higher than his costs on ss.
Mutual and Fraternal societies worked very well. Which is the reason why they thrived as they did before government pushed them out.
From Mutual Aid to the Welfare State: Fraternal Societies and Social Services, 1890-1967
VangelV: That would have to happen because the current system is insolvent.
Though sometimes the term "solvency" is used with Social Security, that it not technically correct. The system is designed to automatically cut benefits to meet revenues once it exhausts the Trust Fund. As such, it can continue indefinitely.
Your ignorance is appalling.
Mutual societies don't 'step in". They aren't your mommy. Responsible adults know that to benefit from a mutual society you first need to *join* a mutual society.
As you know your nanny will take care of you no matter what, why should you bother joining a mutual society and being responsible for yourself?
Actually, his ignorance is to be expected. Given the number of postings he is either totally ignorant of the facts, the dumbest person ever, or a shill for the system who expects to benefit from his propaganda.
" Yes. That would have to happen because the current system is insolvent. Which is the point that many of us have been making. A private system that had IOUs instead of marketable securities would be closed by the regulators and its administrators would be in jail."
ha ha ha
DOD and Medicare Part B and MedicAid are MUCH MORE "INSOLVENT" right now and have been for a while - while SS WILL BE "insolvent" if nothing is done.
more silliness on your part.
according to you govt itself is "insolvent" and "illegal" not only here but around the world.
"To reiterate, Ponzi lied by called one investor's principal another investor's profit. It is inherently fraudulent and unsustainable, while Social Security has been going for 75 years."
this had more to do with how big the pyramid was than anything else.
also note: premiums have been hiked repeatedly over this time.
if ponzi had been allowed to force you to participate in ever increasing amounts, he could have gone on for 75 years too.
if fica were as low as it once was, SS would have failed long ago.
how is SS any different? my payments (principal) that ought to be earning interest but are not are the early contributors payout.
it's a terrible deal for me. i get negative nominal return. that puts me 9% points below long term market returns for savings. over a 40 year career, that means i would have 30 times as much money if i saved privately as opposed to be coerced into SS.
we should be glad ponzi didn't have a police force, not supportive of this huge federal wealth destruction engine.
also note: even the SS trustees are predicting failure. it will come on the form of reduced payout and deeply negative returns, but that's still a failure.
the key issue is the huge drop in the payers to recipients ratio.
in 1950 there were 16 payers per recipient. now the number is more like 3 (and more like 2.5 full time workers). by 2030, it's projected to be 2 (including part time).
that's simply unsupportable with paygo barring deep cuts to benefits.
avg income is what, $46k?
2 people and employers paying 12.5% mean the program gets $11.5k in per recipient. that's less that $1000/month.
those are some deep cuts.
it gets even nastier since 1992 when they changed CPI to read lower and keep SS COLAs down. note that they are looking to do it again by moving to chained.
after actual inflation, you are getting killed.
oh, and zach, you mentioned "hey, you are paying for you parents.
but that's part of the problem.
they A) don't need it and B) would be much better off if i was paying for them by saving privately.
SS needs to be means tested.
that right there could save the program by cutting costs by at least a third. up the age to 75, and you get back to sustainable payer/recipient ratios.
but it would also mean admitting the it really is a social transfer program, something the left seems loathe to do.
better still, it should be private accounts.
if the "trust fund" actually was individual accounts, it would not have been spent by a federal government who has no plausible way to repay it other than printing money (which, of course, hurts all savers).
" Mutual and Fraternal societies worked very well. Which is the reason why they thrived as they did before government pushed them out. "
such societies won't help the people who do not join....
those societies do not answer the question as to what do you do with people who won't be financially responsible and other taxpayers have to pay for their needs.
your only solution for this is to "let them die in the streets".
80% of most people don't like your solution...
what would make you think that someone who would not prepare for their future financially would "join" a mutual society either?
The knowledge that if s/he didn't s/he would be at the mercy of charity or have to rely on the good will of friends and family. Poor people one hundred years ago were not all that smarter or naturally more responsible than poor people today. They joined because they knew that if they didn't they took huge risks that could make their last days much more miserable.
The reason why many people do not work or save today is because they are more than happy to rely on the taxpayer funded government programs. But now that those programs are insolvent and unfunded liabilities stand at more than $100 trillion there is no way out other than the printing press.
SS does not "fail" when FICA continues to deliver a trillion dollars a year.
it reduces - automatically by law to self-balance - revenue with payouts.
SS is a "bad deal" for you in the same way that DOD and MedicAid is a "bad deal" for those who have to pay taxes to fund them.
so what?
I don't like spending more on DOD than we take in in income taxes
suck it up.
you got a vote - use it.
what whiners you boys are.
" The knowledge that if s/he didn't s/he would be at the mercy of charity or have to rely on the good will of friends and family. Poor people one hundred years ago were not all that smarter or naturally more responsible than poor people today. They joined because they knew that if they didn't they took huge risks that could make their last days much more miserable. "
nope.
we tax people to pay for their care.
80% of voters disagree with you.
you lose.
virtually 100% of industrialized and developing countries in the world reject your view.
the problem is what do you do with folks who won't plan ahead ...people who won't buy insurance and who end up destitute?
You remove the incentive that allows them to make that decision easily. People don't save because they believe that the government will give them handouts. They don't plan because they expect the government to look after them.
The problem is that the government has no money. It can only take money from the productive class. And that productive class cannot support such a high burden because it already pays most of the taxes. Any increases in taxes to try to make good the plans will cause many at the margins to pull back and reduce their economic activities. The high tax rates will take in even less revenue and domestic capital formation will fall below depreciation.
there are two basic options:
1. - spend tax dollars on them when they become destitute.
2. - mandatory payroll taxes to protect taxpayers in the future
There are other options. One is to tell them that they must work and save for themselves because it is not moral to force others to pay for them. Another is to make plans voluntary and tell those that opt out that they will not be taken care of by the taxpayer. Another is to allow competition to SS. Let private plans take the money and invest it as they wish to meet obligations to the membership. They would not be as stupid as to take contributions and exchange them for IOUs issued by a bankrupt government.
Of course, I do not expect a socialist like you to think that people are capable of looking after themselves or forming institutions that will meet their needs. You do not have much respect for individuals being able to learn and look after themselves and somehow think that they would be better off if some faceless bureaucrat did all the thinking for them.
Well, history has shown that did not work out so well. The bureaucrats cleaned out the trust funds and replaced the contributions with IOUs. Now you are asking the taxpayers to make up the shortfall because you want the stolen money to be handed back to those that stole it so that they can do a better job at administering it.
Sorry but nobody but an idiot would think that 'solution' is viable.
Americans used the money for tax cuts and wars saying they would pay it back, and that it was backed by the full faith and credit of the United States. They said the tax cuts and wars would pay for themselves.
There were no 'tax cuts'. The money was stolen and used to support programs that taxpayers would not support if they had to pay for them outright. And I have never claimed that the Republicans are any better than the Democrats on the issue of government or spending. Both are thieves who want power over others and both have robbed the taxpayer every chance they could. I only argue for the taxpayer and the individual and the last time I looked the initiation of force and theft were still immoral.
Except for the millions of elderly who lived in poverty. Keep in mind that it is possible for economies to collapse taking with the best laid plans. Some people just get sick and have to stop working and can't save for one reason or another. Some people are just unwise, but the majority of Americans have consistently voted that retirement should have a minimum floor.
That is what the Mutual and Fraternal societies did; protect members when they got sick. People joined and paid their fees. When they got sick they got to use the hospitals built by the societies, the old age homes, or simply got payments until they got better. They were insurance plans that had to remain solvent.
You really need to read up on the subject because it is clear that you do not know what you are talking about.
The IOUs are U.S. special securities, and by law, are backed by the full faith and credit of the United States.
They are IOUs that can't be sold to anyone and have no market. They are a promise to tax so that the stolen money can be replaced. Private plans cannot accept IOUs from a bankrupt entity and count them as assets. They have to have marketable securities.
Social Security is quite clear that they are a pay-as-you-go system, and that changes can be made at any time by law.
Or by national bankruptcy. We do not live in a make believe world. We live here and now and in this world it is easy to see where the SS program stands. It has no marketable assets and a growing shortfall. That makes it bankrupt and reliant on future borrowing by the treasury to make up those shortfalls. But even if the treasury borrows or prints the money savers and workers are robbed because they are looking at either deferred taxation or a huge loss of purchasing power.
When the currency dies I hope that you and the other clowns like you can take a look in the mirror and take responsibility for it. Without useful idiots like you Congress could not have allowed the Fed to destroy the dollar.
the problem is what do you do with folks who won't plan ahead ...people who won't buy insurance and who end up destitute?
You remove the incentive that allows them to make that decision easily. People don't save because they believe that the government will give them handouts. They don't plan because they expect the government to look after them.
but people LIKE payroll deductions!
if that is what they want and it benefits other taxpayers then why not?
" The problem is that the government has no money. It can only take money from the productive class. And that productive class cannot support such a high burden because it already pays most of the taxes. Any increases in taxes to try to make good the plans will cause many at the margins to pull back and reduce their economic activities. The high tax rates will take in even less revenue and domestic capital formation will fall below depreciation. "
the govt has no money for ANYTHING and in a representative form of govt - we decide what we are going to pay to have a govt.
high tax rates is a canard.
what is high to you is not high to someone else.
no govt in the world has no tax rates and guys like you think that ANY tax rates are too much.
you don't want to pay for govt but you want protection provided by the govt.
" Sorry but nobody but an idiot would think that 'solution' is viable. "
you're talking about 80% of the country and much of the rest of the world.
I would say the "idiot" is the one who cannot recognize realities.
" There were no 'tax cuts'"
ha ha ha
we had tax cuts and two wars and instead of paying for them we raided the trust funds and when that wasn't enough we borrowed it.
Now that the time has come to pay it back - you want to STEAL from those who did not want the wars and want to pay for SS.
you comprise a very small percentage of people... and no matter how much you lie and propagandize - 80% still are not buying what you are selling.
VangelV: Mutual and Fraternal societies worked very well.
Thousands of mutual aid societies failed during the Great Depression.
morganovich: this had more to do with how big the pyramid was than anything else.
It's not a pyramid, but a pipeline.
http://www.ssa.gov/history/pics/pipeline.jpg
morganovich: if ponzi had been allowed to force you to participate in ever increasing amounts, he could have gone on for 75 years too.
That is incorrect. That's the difference with a pyramid in that it will quickly exhaust the supply of new investors even if everyone gets sucked in. Again, Ponzi used one investor's principal to pay another investor's profits. When people ask for their principal, it's not there. There is no principal with Social Security.
morganovich: how is SS any different? my payments (principal) that ought to be earning interest but are not are the early contributors payout.
Not sure why this is so hard for you to understand. Your payments are not principal, but your parents' and grandparents' Social Security. It's a transfer.
morganovich: that's simply unsupportable with paygo barring deep cuts to benefits.
An increase in payroll taxes equivalent to 0.7% of GDP will put the system back into balance.
morganovich: avg income is what, $46k?
It's reasonable to expect that GDP will grow over the long run.
morganovich: that's less that $1000/month.
Average benefits are about $1100.
morganovich: they A) don't need it and
One suggestion is to have means testing. Another is to raise the age of eligibility. Another to raise payroll taxes. Still another to lower benefits somewhat. Any of these can bring the system into balance in perpetuity, something not possible for a Ponzi scheme.
morganovich: B) would be much better off if i was paying for them by saving privately.
Don't forget to mail them their monthly check!
In any case, not everyone will be as successful at saving. Some people get sick, or their children get sick, and they can't save. Other people are just not savvy about money and get taken or don't bother to save. Sometimes economic conditions are such that even the most careful saver can lose their investments. Social Security provides a minimum floor, and is supported by the vast majority of Americans.
VangelV: There were no 'tax cuts'.
Economic Growth and Tax Relief Reconciliation Act of 2001
Jobs and Growth Tax Relief Reconciliation Act of 2003
VangelV: They are IOUs that can't be sold to anyone and have no market.
In fact, government guarantees are economically substantial (AAA,AAA,AA+), and most banks will lend money based on such guarantees, such as VA and SBA loans. In any case, the law says they are backed by the full faith and credit of the United States.
VangelV: Or by national bankruptcy.
It's not Social Security that is the fundamental problem with the federal budget. Medicare is far more of a problem.
Though sometimes the term "solvency" is used with Social Security, that it not technically correct. The system is designed to automatically cut benefits to meet revenues once it exhausts the Trust Fund. As such, it can continue indefinitely.
The point being made is clear. You wont' get what you are promised. End of story. Even if the government resorted to printing and borrowing and you received all your nominal payments you would still lose in purchasing power. There is no free lunch and the consequences of economic reality have to be dealt with.
DOD and Medicare Part B and MedicAid are MUCH MORE "INSOLVENT" right now and have been for a while - while SS WILL BE "insolvent" if nothing is done.
more silliness on your part.
Have you ever seen a posting in which I claimed that Medicare was not insolvent? What is silly is being happy because you have less unpayable debt than the next guy. The fact is that you are both bankrupt.
larry-
that's a ridiculous post.
1. "SS does not "fail" when FICA continues to deliver a trillion dollars a year.
it reduces - automatically by law to self-balance - revenue with payouts."
that is failure. when investment yield negative returns, we call that "failed investment". how is losing my money success?
2. "suck it up.
you got a vote - use it.
what whiners you boys are."
we also have rights.
we'd like to see them protected.
what a capricious tyrant you are when you find yourself in the majority.
such societies won't help the people who do not join....
True. That is why poor people used to join.
hose societies do not answer the question as to what do you do with people who won't be financially responsible and other taxpayers have to pay for their needs.
That is what churches, charities, friends, and families are for. If someone is totally irresponsible s/he has to ask for help from others. They have a choice to offer help or turn the person away. The person has no right to demand free stuff.
your only solution for this is to "let them die in the streets".
But they didn't die on the streets. Once people understood that the charity was only temporary and that they had to find something useful to do in order to survive they did.
80% of most people don't like your solution...
It does not matter. Those 80% cannot ignore the consequences of their failed ideology. When the system is broke all of them will lose their SS benefits.
zach-
"Not sure why this is so hard for you to understand. Your payments are not principal, but your parents' and grandparents' Social Security. It's a transfer."
that is not how the system was designed. it was supposed to have a trust fund. also, i'm not sure why you cannot grasp that it's still principal.
a pure transfer is not something i expect to get back. (like welfare)
this is not a transfer, it's a buy in. my principal buys me an income stream later (paid for by others). i have ownership in a system and a future revenue stream.
it absolutely is principal. it's just being cared for very badly.
"An increase in payroll taxes equivalent to 0.7% of GDP will put the system back into balance."
1. that's a big number.
2. that's what they said last time and the time before. that's just a very expensive band aid.
"Average benefits are about $1100."
and they would drop to $960 with current paygo.
that's a 13% cut and will keep getting worse.
"It's reasonable to expect that GDP will grow over the long run. "
it's also reasonable to assume prices will rise and that, just as the did in the 90's, the fed will find ways to lower COLA adjustments so retirees cannot keep pace.
"One suggestion is to have means testing. Another is to raise the age of eligibility. Another to raise payroll taxes. Still another to lower benefits somewhat. Any of these can bring the system into balance in perpetuity, something not possible for a Ponzi scheme. "
that's ridiculous.
if ponzi had been able to force investors to keep coming in, pay more, and take less than they paid, he too could have gone on forever.
"Don't forget to mail them their monthly check!
In any case, not everyone will be as successful at saving. Some people get sick, or their children get sick, and they can't save. Other people are just not savvy about money and get taken or don't bother to save. Sometimes economic conditions are such that even the most careful saver can lose their investments. Social Security provides a minimum floor, and is supported by the vast majority of Americans."
this is a VERY weak argument. SS is a massive value destroyer. savings over a 40 year career would be an order of magnitude higher.
your first dollars in would be worth 30X more. the annuity you could buy (with the same money) would yield 10X what SS does.
people don't save because they know they have a net.
SS is supposed to be a pension, not a welfare net.
for those who get sick etc, that's a separate issue and a very small part of the issue that could be easily handled on its own.
disability is also about the most abused program in the US.
VangelV: You wont' get what you are promised.
There are several valid proposals to ensure benefits, but it is up to the American people to decide how or if they want the program to continue.
morganovich: that is not how the system was designed.
That is exactly how the system was designed, pay-as-you-go.
morganovich: it was supposed to have a trust fund.
The Trust Fund was designed for float, a prepayment to allow for some stability in expenditures.
morganovich: this is not a transfer, it's a buy in. my principal buys me an income stream later (paid for by others). i have ownership in a system and a future revenue stream.
You are misinformed. You have not bought into anything. There is no principal.
morganovich: if ponzi had been able to force investors to keep coming in, pay more, and take less than they paid, he too could have gone on forever.
Sorry, that is simply incorrect. At Ponzi's promised rate of return, it would have exceeded the world's GDP in ~10 years. In real life, of course, people would begin demanding their principal back long before then.
zach-
"
That is exactly how the system was designed, pay-as-you-go. "
no, that's not how it was designed. it was designed to SAVE excess income and invest it. instead it was plundered by the rest of the federal government. if that trust fund had been retained and earned 6%, we would not be having these problems.
"You are misinformed. You have not bought into anything. There is no principal. "
nonsense.
you pay in, you get out. it costs you premium now to get payments later. the fact that there is no principal is because it was stolen, not because there was not intended to be any.
what you buy for your contributions, is the contributions of later participants. that's why it works so much like a ponzi scheme.
"Sorry, that is simply incorrect. At Ponzi's promised rate of return, it would have exceeded the world's GDP in ~10 years. In real life, of course, people would begin demanding their principal back long before then."
and at SS's promised rate of return, it would have been defunct decades ago.
they ratchet down return, and ratchet up payments while forcing you to participate.
original FICA was 3%. it's now 12.5%. the returns to the early participants were quite high, now they are negative.
if ponzi could adjust return down to negative levels and payment up, while forcing you to participate, he too could have kept it going indefinitely.
he was constrained by a need to offer attractive terms to entice participation.
the feds have no such constraint.
they make the proposition worse and worse, but you cannot back out.
we tax people to pay for their care.
No. You tax people to create social transfer programs that increase the power of government. If the government really cared about SS recipients it would not have stolen the excess contributions that were paid to make up the shortfalls when the demographic profile turned negative.
80% of voters disagree with you.
you lose.
You are kidding. My private pension plan has exploded because 80% of voters disagree with me. I have always believed that we get what we deserve. In this case the voters deserve to get fleeced and robbed of their purchasing power and those of us who bet on their inability to do the right thing deserve to get rich.
virtually 100% of industrialized and developing countries in the world reject your view.
Whether I am right or wrong does not depend on how many people disagree with me, particularly when those are the people you deem incapable of making rational choices about their own retirement. Whether I am right or wrong will be shown by the passage of time. We will have to see how Greek, German, French, Irish, Italian, Spanish, American, and British pensioners do over the next few years and how well the purchasing power of their currencies holds up. If the value of future benefits goes down I will be proven right. If it stays the same or goes up than you will be right.
but people LIKE payroll deductions!
Then give them a choice to stay in the current system or to go with another system.
if that is what they want and it benefits other taxpayers then why not
Your premise is wrong. You claim that people like having their money held back and going into SS. There is no evidence that is true because they have never been given another choice. There are many people like me who opted out of the public pension scheme and have our own plans that we look after on our own. I can tell you that the returns are a lot better. And I would guess that if more were given the choice more would opt out immediately.
the govt has no money for ANYTHING and in a representative form of govt - we decide what we are going to pay to have a govt.
Who exactly is 'we?' Were voters asked if they wanted to hand out billions to Egypt, Israel, and Turkey? Were voters asked if they wanted to guarantee loans to the USSR? Or if they wanted to fight for more than a decade in Vietnam? Did anyone vote to have the EPA regulate CO2? Or for the FDA to increase the regulations on vitamins?
high tax rates is a canard.
what is high to you is not high to someone else.
Your argument is a canard. If you want to pay more in taxes you are free to do so. Buffett is perfectly free to pay as much as he wants. So is Gates or other morons who claim that their taxes are too low.
If voters think taxes are too low then they should vote to have everyone pay the same 'correct' rate.
no govt in the world has no tax rates and guys like you think that ANY tax rates are too much.
Taxation is theft. I own my own body so the earnings by that body are my own. If I want something I should be able to purchase it from whoever wants to offer it to me. And if three of my friends don't have the right to get together and force me to pay a fee to them why should a bunch of thieves who call themselves the government have that right?
But note that I have not given the argument above in this thread. All I claim is that the taxes are too high. People were asked to pay a large amount of their earnings into SS but saw those payments stolen and diverted for other purposes. Now the scheme is full of IOUs that have no market value and they are asked to pay again to make up the shortfall. Why not start by taking the people who stole the money and put them in jail? Confiscate all their property and put it up for sale. Take the proceeds and put the money back in the SS fund. That would be far more just than having the victims get raped once again.
you're talking about 80% of the country and much of the rest of the world.
Please support your contention. Show me polls that claim that 80% believe that SS is sustainable and that they will get what they have been promised.
I would say the "idiot" is the one who cannot recognize realities.
How ironic. We agree.
we had tax cuts and two wars and instead of paying for them we raided the trust funds and when that wasn't enough we borrowed it.
First, tax revenues went UP after tax rates were cut. Second, the trust fund was raided long before the stupid Bush wars, which were overwhelmingly supported by Democrats.
Now that the time has come to pay it back - you want to STEAL from those who did not want the wars and want to pay for SS.
No. I want those in Congress and in government who stole it to be put in jail and have all their assets confiscated to pay back the theft. There should be no tax increases at all because the problem has never been tax revenues but spending.
Economic Growth and Tax Relief Reconciliation Act of 2001
Jobs and Growth Tax Relief Reconciliation Act of 2003
Tax revenues went up. See my comment above.
In fact, government guarantees are economically substantial (AAA,AAA,AA+), and most banks will lend money based on such guarantees, such as VA and SBA loans. In any case, the law says they are backed by the full faith and credit of the United States.
They have no market value. All you have are IOUs that depend on the Treasury borrowing to pay back the stolen money while the federal government is running massive peacetime deficits.
It's not Social Security that is the fundamental problem with the federal budget. Medicare is far more of a problem.
I agree. All of the programs are in big trouble. But this thread is about SS so let us not divert from the issue.
morganovich: no, that's not how it was designed. it was designed to SAVE excess income and invest it.
"Social Security is and always has been either a "pay-as-you-go" system or one that was partially advance-funded."
http://www.ssa.gov/history/ponzi.htm
VangelV: Taxation is theft.
A position removed from the concerns of real people who know that government is necessary, so a representative government with power to tax is the best alternative.
VangelV: Why not start by taking the people who stole the money and put them in jail?
That shouldn't be necessary. Those that benefited from tax cuts just have to realize they need to pay a bit more in taxes to make up the difference. Or you could cut benefits.
VangelV: I want those in Congress and in government who stole it to be put in jail and have all their assets confiscated to pay back the theft.
Sorry, but they did nothing illegal, and millions of Americans people supported the tax cuts and unfunded wars. Perhaps they were foolish. Don't worry; it's not the end of the world.
VangelV: Tax revenues went up.
Of course they went up. The economy expanded. It still meant deficits.
VangelV: They have no market value.
Provide us a U.S. government guarantee for $1 million, and we will show you the money.
" we also have rights.
we'd like to see them protected.
what a capricious tyrant you are when you find yourself in the majority. "
we all are in the minority on some things.
I think it's monstrous that we spend as much as we do on DOD and HOmeland Security.
I think it was/is asinine to engage in two wars and nation-building and not pay for it and then later on try to steal money from SS to pay for it.
but if we refuse to accept the realities to start with then no reasonable debate is possible.
and what is going on with the SS debate is lies, misinformation and propaganda instead of dealing with the facts.
and the FACTS .... ARE that SS was explicitly designed as a pay-as-you-go insurance program and not a retirement fund and that the trust funds were just a place to park surpluses that could then be used for rainy days (recessions).
that's the truth.
there is no Ponzi, no pyramid scheme... no worthless IOUS... no bankruptcy, no "insolvency", etc... those are all misrepresentations being promoted as a way to convince others that the program is financially unsustainable...
when the plain facts are that it was designed to be self-balancing and that benefits were never promised at a certain level but only at the level that a self-balancing fund could deliver.
"what would make you think that someone who would not prepare for their future financially would "join" a mutual society either?"
Oh, I don't know, maybe that fact that most people *did* plan for their future, and one of the ways they did it was by joining mutual societies.
You have an inaccurate view of history, probably due to your failure to study the subject, or reliance on your public education, which you may consider adequate.
Although many people, including the elderly, were much poorer in years past than they are now, there is no evidence for your assertion that they "died in the streets" through lack of caring on the part of others.
In the past, people expected to care for their aging relatives if and when they could no longer care for themselves. we have lost some important family ties now that Nanny takes care of everything.
How do you imagine people survived before smart people like you came along to direct us to care for each other, as we are incapable of caring or planning for ourselves?
You have an unreasonably low opinion of others, and an unreasonably high opinion of yourself, although there's absolutely no evidence those opinions are justified.
"the problem is what do you do with folks who won't plan ahead ...people who won't buy insurance and who end up destitute?"
If you consider this to be a problem, and few reasonable people would argue that it is, you should probably share as much as possible of your own undeserved wealth with those less fortunate, as they are too stupid to care for themselves.
But, don't suggest that all of us should have money taken from us to fix a problem that didn't exist before it was created by Nanny.
"Whether I am right or wrong does not depend on how many people disagree with me...
...it only takes one to prove me wrong."
Albert Einstein
" In the past, people expected to care for their aging relatives if and when they could no longer care for themselves. we have lost some important family ties now that Nanny takes care of everything."
yup... but the funny thing is that Medicare is going broke because it is being used to preserve wealth for seniors so they can pass it on to their heirs.
If there was no Medicare - seniors would die penniless as they'd have to see all their assets to pay for their medical bills.
MedicAid is just as bad.
People put their homes and assets into trusts and then claim they are penniless and need MedicAid.
they do this so their kids can inherit their assets.
in others words we are hypocrites.
" the problem is what do you do with folks who won't plan ahead ...people who won't buy insurance and who end up destitute?"
this would be the vast majority of seniors....who did not save up enough money for their medical care - so we sell them Medicare Part B for $100 a month even though 70% own their homes, vacation homes, cars, RVs..etc.
Medicare and MedicAid are far, far bigger threats to the country than SS...which is virtually no threat.
mandatory payroll tax deduction for retirement is one of the things that DOES WORK....
it is self-balancing whereas Medicare and MedicAid is doubling it's costs every 10 years.
and yet you folks attack SS as the problem.
why?
what is your priority?
" "Whether I am right or wrong does not depend on how many people disagree with me...
...it only takes one to prove me wrong."
right or wrong is a vote in a representative government...
it's not right or wrong for you - it's right or wrong for society as a whole.
a collective decision...
we're all in the minority - on various issues...
"Ron H: Actually there is no legal entitlement at all.
The entitlement is written into law.
Ron H: Flemming vs Nestor made it clear that despite paying FICA for 19 years, Nestor had no contractual rught to any benefit.
No contractual right. The law can be changed at any time. "
...and you accuse others of semantic tricks!
The law regarding a right to benefits has not changes. F vs N is the last word on the subject, and is what SSA itself argues.
A contract would guarantee benefits. SS does not. There is an implied retirement benefit, but no certainty exists. In the private sector, this would be called fraud, or a Ponzi scheme.
"A rational investor would have part of his money in secure but usually low paying investments anyway. Probably in government bonds, or maybe gold. The existence ce of social security frees our thirty year old to invest the rest of his money as aggressively or even recklessly as he likes."
So, we, who know what is best for others, can guess what others would do if they were smart like us, and then take money from them based on that guess, and they shouldn't mind, as that's what they most likely would do anyway if they only knew what was best for them - like we do.
You are such a fascist clown. Why are the words "voluntary" and "choice" so foreign to you?
" . In the private sector, this would be called fraud, or a Ponzi scheme. "
in the private sector it's called pay-as-you-go insurance and they deny benefits also... often times for unfair reasons...
I think you're opposed to the concept of insurance guy.
it's a socialistic concept right?
"If there are fewer children, they will pay more. But, one reason we have fewer children is so we can afford to help make them better off. It is not as if " demographics" happen by accident."
So, we will make our children better off by leaving them with mountains of debt and unfunded liabilities. Is that your claim?
" Why are the words "voluntary" and "choice" so foreign to you? "
what choice do you have when the govt take your money and gives it to a senior for medical care or some scofflaw without insurance that goes to the ER or for that matter some slug the govt is paying to build a drone?
what's your point?
that all taxation is wrong?
"you talk about govt being a "nanny"...
well the US Military is a nanny.
the "common defense" of the country is a nanny concept, right?
the "health and welfare" of the country is a nanny concept, no?"
No
No
yes
govt for any purpose is "nanny".
the only difference is that your idea of what "nanny" is - is different from someone else.
as soon as you say you want the govt to "protect" you - you're deep into nanny-land.
Ron H: The law regarding a right to benefits has not changes. F vs N is the last word on the subject, and is what SSA itself argues.
You're confusing a benefit determined by legislation, with a contractual right.
Ron H: In the private sector, this would be called fraud, or a Ponzi scheme.
Not sure why you are still confused ont his. Even if were fraud, it wouldn't be a Ponzi scheme.
In any case, it's not a fraud. It's the deal the American people, and people in may other countries, have made. They can change the terms of the deal through their legislatures.
There are several valid proposals to ensure benefits, but it is up to the American people to decide how or if they want the program to continue.
The American people did not vote to have Congress steal the money. They expected the money to be there as they were promised by the politicians. The system is now technically insolvent. End of story.
That is exactly how the system was designed, pay-as-you-go.
Sorry but your ignorance is showing. The system was supposed to generate an investable surplus that wold allow the trustees to sell assets when contributions fell below payouts.
A position removed from the concerns of real people who know that government is necessary, so a representative government with power to tax is the best alternative.
Where exactly is the power to levy an income tax in the Constitution? Where is the power to tax the same activity differently?
That shouldn't be necessary. Those that benefited from tax cuts just have to realize they need to pay a bit more in taxes to make up the difference. Or you could cut benefits.
Are you going to tax all those people who received welfare programs, companies who received subsidies, the government workers who were hired thanks to the extra funding, and the consultants who got fat contracts? That is who benefited, not the taxpayers and workers who were robbed by the thieves in Congress.
Sorry, but they did nothing illegal, and millions of Americans people supported the tax cuts and unfunded wars. Perhaps they were foolish. Don't worry; it's not the end of the world.
They stole money paid to the SS fund and spent it. That is wrong. If a company had done the same thing its directors and executives would be in jail.
Of course they went up. The economy expanded. It still meant deficits.
It expanded because lower taxes provided an incentive. Deficits were created by more spending, not by lower tax revenues. That is why you need to cut spending and cut taxes. Wind up insolent programs and fire all employees in departments not authorized by the Constitution.
" The system was supposed to generate an investable surplus that wold allow the trustees to sell assets when contributions fell below payouts."
that's the first half.
the second half says if there is no trust fund or it is depleted that benefits are then cut to 75% equal to what FICA generates.
why do you misrepresent the facts?
SS is designed to not spend more than it takes in.
it takes an act on Congress to override that law.
" Where exactly is the power to levy an income tax in the Constitution?"
where does it say in the Constitution that the same folks who wrote the Constitution enacted this law:
" Thomas Jefferson Also Supported Government Run Health Care"
http://www.forbes.com/sites/rickungar/2011/01/21/thomas-jefferson-also-supported-government-run-health-care/
Provide us a U.S. government guarantee for $1 million, and we will show you the money.
As I wrote, they have no market value. They cannot be sold by the trustees to finance the shortfall. To pay people what they are owned the Treasury has to inject new money.
VangelV: Sorry but your ignorance is showing.
We cited the Social Security Administration.
VangelV: The American people did not vote to have Congress steal the money.
Congress didn't steal the money. They spent it on wars and tax cuts, and they had a lot of political support from the American people to do this.
VangelV: The system was supposed to generate an investable surplus that wold allow the trustees to sell assets when contributions fell below payouts.
The Social Security system is pay-as-you-go with some prepayment. We cited Social Security on this. The surplus is a float to even out economic and demographic fluctuations. The surplus is invested in interest-bearing special securities backed by the full faith and credit of the United States. U.S. securities are in high demand, so it's not as if the rate of interest is not sufficient to attract other investors.
VangelV: Where exactly is the power to levy an income tax in the Constitution?
Article I, Section 8, Clause 1 gives Congress the power to tax. The Sixteenth Amendment gives Congress specific power to tax income.
VangelV: They stole money paid to the SS fund and spent it.
They passed legislation under powers granted them by the Constitution. It may have been unwise. It may have been contrary to your wishes. But that doesn't make it illegal.
Zachriel: Provide us a U.S. government guarantee for $1 million, and we will show you the money.
VangelV: As I wrote, they have no market value.
You posted words, but didn't answer. If you provide the guarantee, we will show you the money.
what's your point?
that all taxation is wrong?
I cannot write for anyone else but that would be my point.
" Thomas Jefferson Also Supported Government Run Health Care"
http://www.forbes.com/sites/rickungar/2011/01/21/thomas-jefferson-also-supported-government-run-health-care/
Unger is a fool who makes claims that he cannot support. Mr. Unger certainly has not provided any evidence that Jefferson ever supported taxing people to form government run health care. Until he does your reference is just another piece of useless BS.
evidence:
" An Act for the relief of sick and disabled seamen[1] was passed by the 5th Congress. It was signed by President John Adams on July 16, 1798. The Act authorized the deduction of twenty cents per month from the wages of seamen, for the sole purpose of funding medical care for sick and disabled seamen, as well as building additional hospitals for the treatment of seamen."
http://en.wikipedia.org/wiki/An_Act_for_the_relief_of_sick_and_disabled_seamen
so it appears that some of the same folks who wrote the Constitution supported mandated payroll taxes for health care.
right?
looks like the founding fathers were socialists, eh?
" Where exactly is the power to levy an income tax in the Constitution?"
where does it say in the Constitution that the same folks who wrote the Constitution enacted this law:
"Thomas Jefferson Also Supported Government Run Health Care"
http://www.forbes.com/sites/rickungar/2011/01/21/thomas-jefferson-also-supported-government-run-health-care/
Given your ignorance let me clarify the point I made above. First, the word tax does not appear in 1 Stat. 605. Second, Congress does have the power to regulate maritime activities under the Commerce Clause. Third, most of the activities that are done by Congress or the President are not authorized by the Constitution as written, including the current income tax scheme.
We cited the Social Security Administration.
Yes you did. But you claim that the taking of surpluses and spending them on other activities was the way the system was designed. It wasn't.
That means that you are either ignorant or just a plain old liar.
Congress didn't steal the money. They spent it on wars and tax cuts, and they had a lot of political support from the American people to do this.
If a company takes money out of its pension plan to buy a new drill press it is stealing. When Congress takes excess contributions to fund welfare or warfare programs it is stealing. There is no difference.
The Social Security system is pay-as-you-go with some prepayment. We cited Social Security on this. The surplus is a float to even out economic and demographic fluctuations. The surplus is invested in interest-bearing special securities backed by the full faith and credit of the United States. U.S. securities are in high demand, so it's not as if the rate of interest is not sufficient to attract other investors.
Nowhere was it written that the money could be taken, counted as general revenue and spent for other purposes. And stop lying about the great demand for the special issue securities because there is no market for IOUs. They can't be sold on any exchange to make up the shortfall. The only way to make up that shortfall is with new borrowing.
" Second, Congress does have the power to regulate maritime activities under the Commerce Clause."
does that include the right to levy payroll taxes under that clause?
"Benefits which are granted at one time can be withdrawn, as for example with student benefits, which were substantially scaled-back in the 1983 Amendments."
LOL admitting you are running a Ponzi scheme doesn't make it any less a Ponzi scheme.
Look, SSA has always said there are no guarantees, the SCOTUS affirmed that, almost every one commenting on the subject here says there are no guarantees, now even Larry says there are no guarantees.
What, exactly, is your point?
"right or wrong is a vote in a representative government...
it's not right or wrong for you - it's right or wrong for society as a whole."
You should consider carefully what you have just said.
There is no absolute right and wrong, no morality except as it is definesd by the majority.
Majority rule makes slavery right, or killing millions of Jews, or stoning women as adulterers if they are raped, or mutilating the genitals of young girls, or any other view that is held by a majority, or gets a majority vote.
You don't really understand the concept of tyranny of the majority, do you.
Nor do you understand why so many people fear it, and why the Founders tried so hard to limit government to prevent it.
"a collective decision..."
There is no collective decision, Larry, only individual decisions.
As much as you would like to, you can't speak for anyone but yourself.
"Actually, his ignorance is to be expected. Given the number of postings he is either totally ignorant of the facts, the dumbest person ever, or a shill for the system who expects to benefit from his propaganda."
You are probably correct on all three, except as a shill, his value may be negative. His comments make the positions he supports look ridiculous.
"yup... but the funny thing is that Medicare is going broke because it is being used to preserve wealth for seniors so they can pass it on to their heirs."
This is an argument against continuing Medicare.
"People put their homes and assets into trusts and then claim they are penniless and need MedicAid.
they do this so their kids can inherit their assets."
This is an argument against continuing Medicaid.
"In others words we are hypocrites."
Another word you fail to know the meaning of.
There is nothing hypocritical about using a system that exists, to your best advantage.
If it fails to serve the purpose for which it was intended, it should be scrapped.
"this would be the vast majority of seniors....who did not save up enough money for their medical care - so we sell them Medicare Part B for $100 a month even though 70% own their homes, vacation homes, cars, RVs..etc."
But seniors *do* save up enough for their medical care. As they are promised Medicare at a cheap price, they don't need to save large amounts. Medicare is part of their retirement planning, and they can afford the vacation homes, RVs, etc. because of it.
Seniors and their heirs have spent large amounts on supporting those two systems, and feel no guilt about getting some of their money back.
The solution is not to whine about the systems, but eliminate them.
Medicare has *caused* the problem you complain about, not the other way around.
Your comment, as before, is an argument against
continuing Medicare.
"Sorry, that is simply incorrect. At Ponzi's promised rate of return, it would have exceeded the world's GDP in ~10 years. In real life, of course, people would begin demanding their principal back long before then."
We aren't sure why you think the rate of return promised by Ponzi is important, or why promised rate of return can somehow determine whether a scheme can be called "Ponzi" or not.
Were Ponzi's promises unrealistic? More than world GDP in 10 years? SS isn't quite that bad, but is $16tn short of meeting its promises, and adding $1tn to that amount every year.
You seem determined to stick to your guns on this naming issue, despite evidence that you are being arbitrary.
A picture comes to mind of you closing your eyes, covering your ears, and chanting "Nya, nya, nya"
"I think you're opposed to the concept of insurance guy."
Insurance is a great concept. Forcing people to pay taxes, and suggesting it's for a retirement plan isn't.
I can't believe some of the stupid things you write.
"what choice do you have when the govt take your money and gives it to a senior for medical care or some scofflaw without insurance that goes to the ER or for that matter some slug the govt is paying to build a drone?
what's your point?"
My point? You just made my point for me. We should have choice. Government should not be able to take money without our consent, and spend it in ways we don't want it spent.
"...that all taxation is wrong?"
Yes. Direct taxation is wrong.
" We should have choice. Government should not be able to take money without our consent, and spend it in ways we don't want it spent."
how would that work?
we already have elections right?
re: taxation is wrong
so the founding fathers got it wrong by instituting payroll taxes with the "Act for the relief of sick and disabled seamen"?
and the mandatory Chilean payroll taxes are another example of the abuse of govt?
are there _any_ govts that get it right?
can you name a couple?
" My point? You just made my point for me. We should have choice. Government should not be able to take money without our consent, and spend it in ways we don't want it spent."
so.. this is really not about Social Security - it's just a proxy for your overall views about govt and taxation...
VangelV: Yes you did. But you claim that the taking of surpluses and spending them on other activities was the way the system was designed.
The Trust Fund has always been invested in U.S. securities. It was never put into tangible assets. They were always IOU's.
VangelV: Nowhere was it written that the money could be taken, counted as general revenue and spent for other purposes.
The surplus is swapped for securities, i.e. IOU's. Always has been.
VangelV: And stop lying about the great demand for the special issue securities because there is no market for IOUs.
By law, they can be swapped for cash at any time.
Ron H What, exactly, is your point?
Not only does Ponzi say your principal is safely invested, but that the investments will return exorbitant profits. Social Security is a simple transfer program. There is no principal (other than the float in the Trust Fund).
Ron H You don't really understand the concept of tyranny of the majority, do you.
We do. However, reasonable taxation with representation is hardly tyranny. You reject all taxation, unlike the Founders who rejected taxation without representation.
Ron H If it fails to serve the purpose for which it was intended, it should be scrapped.
Or reformed. In any case, it does largely fulfill its purpose, but there is a lot of waste, and many well-to-do make believe they are poor to qualify for assistance to the poor in the form of Medicaid.
Ron H: Medicare is part of their retirement planning, and they can afford the vacation homes, RVs, etc. because of it.
Don't confuse Medicare, which is available to everyone, with Medicaid, which is meant to help the poor. The latter is often misused through legal maneuvering. The former is a reasonable component of retirement planning, as is Social Security.
Ron H: We aren't sure why you think the rate of return promised by Ponzi is important, or why promised rate of return can somehow determine whether a scheme can be called "Ponzi" or not.
It's absolutely essential. It pretends to be an investment. That means principal and profit. It has to promise profits larger than other conventional investments in order to attract investors. In order to maintain the pretense, it shifts new principal into paying profits. As the rates of return are beyond what Ponzi can actually generate, it means the original principal dwindles as more and more people join the scheme. Eventually, people call for their principal, and the empty vault is revealed.
Ron H: More than world GDP in 10 years?
Well, that's starting with a $1 investment.
Ron H: SS isn't quite that bad, but is $16tn short of meeting its promises, and adding $1tn to that amount every year.
Except that's there's no principal involved. Social Security can be put in balance in perpetuity by simply cutting benefits by 20% or so. Ponzi can never be sustainable.
Ron H: You just made my point for me. We should have choice. Government should not be able to take money without our consent, and spend it in ways we don't want it spent.
Well, most people recognize that taxation is necessary to government, and that if people don't control the government, then the government will control them. That means representative democracy, and an elected parliament responsible for taxation.
Larry G: so.. this is really not about Social Security - it's just a proxy for your overall views about govt and taxation...
That seems to be the case. Both Ron H and VangelV think that all taxation, and probably just about all laws, are tyranny. They live in an abstraction detached from the human condition and the struggle for representative government. They reject social contracts such as the U.S. Constitution and the ideals which underlay the Constitutions, such as those expressed in the U.S. Declaration of Independence concerning the institution of governments. That is their privilege, but there are very few who will be persuaded by their arguments.
" Don't confuse Medicare, which is available to everyone, with Medicaid, which is meant to help the poor. The latter is often misused through legal maneuvering. The former is a reasonable component of retirement planning, as is Social Security. "
SS in terms of a threat to the budget and economic health of the country is a gnat on a dogs butt.
SS has a long history of changes - mid-course corrections to keep it solvent:
http://www.ssa.gov/history/reports/crsleghist2.html
those who attack it as "not supposed to change" are simply ignorant of it's original purpose and subsequent history.
It's like they suddenly discovered how SS actually works and they don't agree ....
What's also not well understood by both supporters and opponents as well is that there are actually 4 Medicare(s) ( not to be confused with MedicAid) and each of the 4 Medicares has it's own trust fund.
but 3 of the Medicares are subsidized from tax dollars while Medicare Part A is funded from FICA taxes.
Medicare Part A is hospitalization
Part B is fee for service for medical providers
Part C is subsidized "gap" insurance from the private sector
Part D is subsidized prescription drugs.
Part B consumes 210 billion dollars of tax dollars - not FICA.
Part D is about 50 billion if I recall.. and not sure what the Part C subsidy is.
Parts B, C, and D are not limited as to how much subsidy is required.
the govt pays whatever the costs are - and costs are doubling every decade (like most all health care costs are).
Unbounded Medicare Parts B,C,D are a far bigger threat to the budget and economic vitality of the country than SS will ever be.
that's what is so curious about folks like Ron and Van... who are vociferous in their opposition to SS and relatively sanguine about the more immediate and direct threats posed by Medicare Part B.
In a logical world - you'd want to deal with the biggest threats first.
When I say Medicare Part B is a wealth-preservation program - it means that we charge seniors $100 a month for coverage they could not find on the open market much less for $100 a month.
and the seniors who pay $100 a month are not poor - they are relatively wealthy..own their own homes.. some own vacation homes and RVs... several cars and have significant personal assets so it's not like they cannot afford to pay for health care.
The effect of Medicare Part B is to essentially preserve the assets of seniors who use the subsidized health care as a way to maximize their lifestyles and what they eventually pass on to their kids ....
and the irony is that the dialogue with respect to Medicare subsidies alludes to the fact that we are passing a "crushing" debt onto kids... and these would be the kids whose parents are using Medicare to ensure their kids inherit their wealth.
I defend SS not so much as a concept but from just plain dumb lies and propaganda.
we can't have a serious debate about the concept of SS when the opponents are not connected to facts and realities and argue about their ignorant perceptions and feelings.
I do not defend Medicare Part B because it has to be reformed.
I do not believe that it will every be repealed but I do believe that seniors need to pay more for premiums and need to have more skin in the game for procedures - even though - Medicare does not cover 20% (but the subsidized gap coverage does).
Not at all, although that is what the socialists like to claim. It is easy to make claims when you are actually ignorant of the facts or will do whatever you can to actually misinterpret actual actions.
does that include the right to levy payroll taxes under that clause?
Your ignorance is still showing.
1 Stat. 605 was based on an earlier British law, which was accepted by the American colonists before the Revolution as regulation of commerce within the empire. The regulation of navigation is clearly a part of the authority that Congress was given to regulate commerce, and that includes sailors.
Nowhere in the Constitution does Congress get the power to tax income to create pension plans or mandate healthcare taxes. Instead of citing brainless progressives who seem to have the same ignorance of history and the Constitution that you do try actually reading what the Constitution says and checking the facts. You can start by finding the word tax in 1 Stat. 605.
And let me point this little fact to you. Congress can levy taxes in the form of duties on imports because such duties are a part of the power to regulate commerce. (Whether that is a good idea is another issue.) No such power seems to be given to Congress to tax income unequally. (Or at all.)
so the founding fathers got it wrong by instituting payroll taxes with the "Act for the relief of sick and disabled seamen"?
As I pointed out above, Congress has the power to regulate navigation under the commerce clause. (You may not know this but sailors were a part of the navigation process.)
Congress has no such power under any clause to create national retirement or healthcare plans.
" No such power seems to be given to Congress to tax income unequally. (Or at all.) "
from the act:
"and shall
pay to the said collector, at the rate of twenty cents per month for every seaman so employed; which sumi he is hereby authorized to retain out of the wages of such seamen."
http://history.nih.gov/research/downloads/1StatL605.pdf
so.. did the guys that wrote the Constitution violate their own work or did they believe the Constitution allowed them to tax all seaman the same amount regardless of their wages?
The Trust Fund has always been invested in U.S. securities. It was never put into tangible assets. They were always IOU's.
....
The surplus is swapped for securities, i.e. IOU's. Always has been.
Your statements are not true. It hasn't always been that way.
I believe that you or Larry provided a citation that showed that SS surpluses also used to be invested in marketable treasuries. Those are legitimate because the trustees can go to the market and sell the bonds to raise the funds that are required to make up any shortfall. Over time Congress sold or redeemed those marketable bonds to fund spending and replaced the stolen money with IOUs.
By law, they can be swapped for cash at any time.
The IOUs can't be sold in the market. The trustees are at the mercy of the Treasury. And as Obama pointed out, unless the Treasury is permitted to keep borrowing people may not get their money.
"The investment rules governing payroll tax income were also established in the 1935, and are essentially the same ones in use today. Specifically, the 1935 Act stated: "It shall be the duty of the Secretary of the Treasury to invest such portion of the amounts credited to the Account as is not, in his judgment, required to meet current withdrawals. Such investment may be made only in interest-bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States." (See Title II, Section 201of the 1935 law)"
Both the 1935 and the 1939 laws specified three types of purchases that might be made: 1) securities on original issue at par; 2) by purchase of outstanding obligations at the market price; and 3) via the issuance of "special obligation bonds" that could be issued only to the Social Security Trust Fund. These special obligation bonds were not to be marketable, although the other two forms of securities could be. The idea of special obligation bonds was not new nor unique to the Social Security program. Similar bonds were used during World War I and World War II, and it was in fact the Second Liberty Bond Act that was the law amended in 1939 to allow the Social Security program to make use of this type of government bond.
Consequently, over time the Social Security Trust Funds have included a mix of marketable and non-marketable Treasury securities. Over the years, the proportion has shifted heavily in favor of special obligation bonds as the main asset held by the Social Security Trust Funds. Prior to 1960, the Treasury's policy was to invest primarily in marketable securities, although this policy was not always followed. Since 1960, the policy has been to invest principally in special obligation bonds, unless the Managing Trustee of the funds (i.e., the Secretary of the Treasury) determines that investment in marketable securities would be "in the public interest." In fact, since 1980 no marketable securities have been added to the Trust Funds. (For a more detailed explanation see the Office of the Actuary's Actuarial Note #142.)
Since the assets in the Social Security trust funds consists of Treasury securities, this means that the taxes collected under the Social Security payroll tax are in effect being lent to the federal government to be expended for whatever present purposes the government requires. In this indirect sense, one could say that the Social Security trust funds are being spent for non-Social Security purposes. However, all this really means is that the trust funds hold their assets in the form of Treasury securities.
http://www.ssa.gov/history/BudgetTreatment.html
" The trustees are at the mercy of the Treasury."
in the same way that DOD or any other govt-financed entity is.
why would you think SS would be selected out for different treatment?
you could easily cover the current SS deficit by cutting DOD by that amount, right?
"and shall
pay to the said collector, at the rate of twenty cents per month for every seaman so employed; which sumi he is hereby authorized to retain out of the wages of such seamen."
http://history.nih.gov/research/downloads/1StatL605.pdf
so.. did the guys that wrote the Constitution violate their own work or did they believe the Constitution allowed them to tax all seaman the same amount regardless of their wages?
Try to keep up dumdum.
First, nowhere does the word TAX appear in the act.
Second, Congress has the power to regulate navigation under the commerce clause, which means that the act is complaint with the Constitution.
Prior to 1960, the Treasury's policy was to invest primarily in marketable securities, although this policy was not always followed. Since 1960, the policy has been to invest principally in special obligation bonds, unless the Managing Trustee of the funds (i.e., the Secretary of the Treasury) determines that investment in marketable securities would be "in the public interest." In fact, since 1980 no marketable securities have been added to the Trust Funds.
Thank you for supporting my point. SS trustees used to put in most of the surpluses into marketable treasuries. Since the 1960s Congress has stolen the money and issued IOUs instead. (How else can you fund a welfare state that is always at war?)
Now you have the President telling voters that if the government is not permitted to borrow SS checks may not go out. That would not be the case if the IOUs were marketable.
in the same way that DOD or any other govt-financed entity is.
why would you think SS would be selected out for different treatment?
Because it is supposed to have assets that can be used when there are shortfalls. That is not how DOD or other government departments are supposed to be funded.
"Because it is supposed to have assets that can be used when there are shortfalls. That is not how DOD or other government departments are supposed to be funded. "
but the original assets were taken to spend on DOD, no?
so DOD should pay them back, right?
I am not misrepresenting the facts. I am pointing out that SS has unfunded liabilities of $16 trillion that are growing at around $1 trillion per year or more. That makes the system insolvent and dependent on the Treasury's ability to keep borrowing.
This is why I see it crashing and beneficiaries losing most of their purchasing power. Obama has done nothing about the problem and neither have Republicans. There is no will to face up to reality because most people are either delusional fools like you or dumb like you.
But ignoring reality does not mean that you can escape the consequences of that reality. Over the next few years we will see job losses, a collapse in housing, and a contraction in the real economy. Eventually something will break and no amount of political posturing will help anyone.
" I am not misrepresenting the facts. I am pointing out that SS has unfunded liabilities of $16 trillion that are growing at around $1 trillion per year or more. That makes the system insolvent and dependent on the Treasury's ability to keep borrowing. "
that's one of your more blatant and oft-repeated misrepresentations as SS has changed many times over the years to keep it in balance and by law must be funded primarily from FICA.
http://www.ssa.gov/history/reports/crsleghist2.html
SS looks ahead 75 years to compare current taxes and benefits with projections.
if you did that with ANY Federal program or private insurance, you'd see similar "unfunded liabilities" and similar changes to re-balance.
there is nothing unique to SS about this process.
it's misrepresentation.
the thing that is different about SS is that the tempo or cycle for changes is longer than for private sector pay-as-you-go insurance which looks ahead to a much shorter horizon period and re balances at a more frequent interval.
the process of looking ahead and re-balancing is a responsible process that any insurance has to perform if they are going to pay claims.
when you get your new auto or homeowners insurance premium / renewal - usually yearly - it is usually accompanies by changes in price and changes in coverage.
they must do this to keep their productive financially sustainable even though it may well result in increased costs and/or less coverage for you.
SS does this same exact process but on a more distant horizon and a slower premium/benefit change interval.
but if you look at the changes made to the program over the last 65 years - here:
http://www.ssa.gov/history/reports/crsleghist2.html
there can be no doubt that SS undergoes continuous changes to keep it solvent... and
that's not a bad thing..
that's a GOOD thing - a RESPONSIBLE thing...
to characterize it as a bad thing is deliberately misrepresenting the process and purpose ...
to say that SS is a failed program because it actually generated a surplus - but had the money spent by other govt is also a blatant misrepresentation.
ANY trust fund that generates a surplus would be subject to the same risks.
and actually of the other 20 trust funds - it's the reverse that is true - those trust funds usually pull dollars out of the treasury.
Van sez that since the money is spent already that they can't pay back SS.
what about the gasoline trust fund or the Drug Prescription program Medicare part D or part B ?
if you can't pay back SS - then how can you pay for Part B...or for that matter DOD or Homeland Security?
why does Van select SS - the only program that actually generated surpluses as THE candidate to def-fund?
and why does he say that if the govt won't pay back the money that SS is then bankrupt/broke/insolvent when the fact is that it will still pay out a trillion dollar a year in benefits - for a 100 years or more?
these are misrepresentations.
these are a refusal to deal with facts... and a willingness to misrepresent.. lie if you will... as part of a larger agenda to depict SS as a fiscally unsustainable program - when the facts prove that it will go on for as long as we collect FICA taxes.
VangelV: I believe that you or Larry provided a citation that showed that SS surpluses also used to be invested in marketable treasuries.
Yes, the Trust Fund has invested in marketable securities. They're still IOU's.
VangelV: The IOUs can't be sold in the market.
Don't have to be. They are swapped directly for cash.
VangelV: First, nowhere does the word TAX appear in the act.
Authorizing the withholding of money from someone's salary is a tax.
VangelV: Second, Congress has the power to regulate navigation under the commerce clause, which means that the act is complaint with the Constitution.
The Sixteenth Amendment gives Congress the power to levy taxes on income.
VangelV: SS trustees used to put in most of the surpluses into marketable treasuries.
Special securities can be surrendered for cash.
that's one of your more blatant and oft-repeated misrepresentations as SS has changed many times over the years to keep it in balance and by law must be funded primarily from FICA.
What misrepresentation. It is a fact that SS unfunded liabilities stand are more than $16 trillion. It is a fact that outflows are higher than contributions. It is a fact that there are no marketable assets in the trust fund, which means that the trustees need to have the Treasury make good on its promises by borrowing money. It is also true that Obama told voters that SS checks may not go out if the debt ceiling were not extended.
If the IOUs were not there and the trustees could sell off treasuries they would not need to rely on borrowing or have contributions increase.
SS looks ahead 75 years to compare current taxes and benefits with projections.
And after looking we see unfunded liabilities of $16 trillion.
if you did that with ANY Federal program or private insurance, you'd see similar "unfunded liabilities" and similar changes to re-balance.
No. If a private insurance program had the same problem its managers would be in jail. Ron gave you the links on a previous post. Are you too stupid to understand them? If you are, why do you keep posting your usual drivel?
the thing that is different about SS is that the tempo or cycle for changes is longer than for private sector pay-as-you-go insurance which looks ahead to a much shorter horizon period and re balances at a more frequent interval.
This is not true. GE's defined benefit plans have to look at very long periods too because current contributors will be around for a long period of time. If you are that ignorant you need to learn before you post.
why does Van select SS - the only program that actually generated surpluses as THE candidate to def-fund?
I don't. I would cut 95% of the things that are done by the federal government and eliminate most federal taxes and regulations.
Yes, the Trust Fund has invested in marketable securities. They're still IOU's.
Deception alert. As usual you lie. I can take a bond and sell it on the open market within minutes. I can't do that with an IOU. That makes the IOUs very different than treasuries, which have a very liquid market.
Don't have to be. They are swapped directly for cash.
Only if the Treasury is authorized to borrow. Obama pointed out that SS recipients were in danger of not getting paid if the deb ceiling were not lifted. If the trustees had actual treasuries they would not care if the debt limit went up or not because they could get the money from the bond market.
If you do not understand the difference you are stupid. If you do but ignore it you are just a typical ideologue and liar.
Authorizing the withholding of money from someone's salary is a tax.
As I said, Congress has the authority to regulate maritime activities under the commerce clause. It has no such authority to regulate pensions, health care, or other activities.
VangelV: And after looking we see unfunded liabilities of $16 trillion.
In order to maintain current benefits. According to current law, there are no unfunded liabilities as benefits are automatically cut.
VangelV: It is a fact that there are no marketable assets in the trust fund, which means that the trustees need to have the Treasury make good on its promises by borrowing money.
Yes, they are promises, as you say.
VangelV: I can take a bond and sell it on the open market within minutes.
Depending on the market. The special securities in the Social Security Trust Fund can be directly exchanged for cash.
VangelV: Only if the Treasury is authorized to borrow.
Yes, if the special securities are not redeemed when presented, then the U.S. would be in default.
"What misrepresentation. It is a fact that SS unfunded liabilities stand are more than $16 trillion."
that's true but it's not unique to SS alone nor even private insurance.
It's a look ahead analysis that tells you what you have to do in the shorter term to deal with them.
only if you don't act do they mean anything.
"It is a fact that outflows are higher than contributions. It is a fact that there are no marketable assets in the trust fund, which means that the trustees need to have the Treasury make good on its promises by borrowing money. It is also true that Obama told voters that SS checks may not go out if the debt ceiling were not extended."
true - but it does not mean that SS is not able to pay benefits as a result of the trust fund depletion.
and the inability to pay benefits is not due to anything specific about SS - it applies to ALL Federal spending.
again - you are dishonestly attributing things to SS that are not unique to SS nor the direct fault of SS.
"If the IOUs were not there and the trustees could sell off treasuries they would not need to rely on borrowing or have contributions increase. "
there are a hundred or more trust funds and none of them can do what you say and they all rely on the same trust fund relationship with the treasury.
"SS looks ahead 75 years to compare current taxes and benefits with projections.
And after looking we see unfunded liabilities of $16 trillion.
if you did that with ANY Federal program or private insurance, you'd see similar "unfunded liabilities" and similar changes to re-balance.
No. If a private insurance program had the same problem its managers would be in jail. Ron gave you the links on a previous post. Are you too stupid to understand them? If you are, why do you keep posting your usual drivel?"
ha ha ha
insurance has EXACTLY THE SAME PROBLEM fool.
that's WHY they increase their premiums and reduce coverage.
you're getting hopelessly confused or deeply dishonest by not understanding what unfunded liabilities really mean.
they mean problems in the future IF NOTHING IS DONE BEFORE THEN
In SS's case there have been HUNDREDS of changes over the years - made to keep it in balance.
SS works in that regard the same way that any insurance that must keep altering it's premiums and coverage to remain sustainable.
you say this proves SS is in trouble.
it flies in the face of simple history - of SS.
that's yet another blatant misrepresentation.
It's a common tactic with Heritage and other right wing fools.
they string together a series of facts and then proceed to twist them into things that are not true.
it's called disinformation and propaganda.
it's not something you should be proud of guy. It's a serious character flaw.
you want to be honest in your arguments.
honesty in your arguments is powerful.
but dishonestly just shows what a weasel you are...
we need less weasels and more honesty... step up.
FICA generated a surplus and gave it to the Fed and the Feds turned around and spent it on DOD...
right? the DOD budget doubled since 2000 so they sucked up the SS surplus...
now they owe it back...
No. Congress stole the money to fund many programs, including DOD activities. But the point is the same. DOD has no trust fund and gets its cash from Congress each year. So do all the welfare programs, agricultural subsidies, foreign aid, etc.
The point is that the money was stolen from the SS trust funds, something that could not happen in a private fund without sending the trustees in jail. You are just playing your usual idiotic language games where you try to implicate the idiots on the right for their DOD spending. But you forget that the idiots on the left went along and made deals to support the warfare state so that they could get a bigger welfare state. Both sides are run by charlatans and mountebanks and deserve to be turfed out. The best thing that could happen in the US is for Obama to be the last Democratic president ever and Bush to be the last Republican president ever. Both parties should join the Federalists and find their way in the historical graveyard.
that's true but it's not unique to SS alone nor even private insurance.
Cite one plan that has had that kind of shortfall but was allowed to continue.
It's a look ahead analysis that tells you what you have to do in the shorter term to deal with them.
I know that your math skills are not very good but there is no way to make up a $16 trillion unfunded liability in a $16 trillion economy where the government tax receipts are $2 trillion and the deficit is $1.3 trillion.
true - but it does not mean that SS is not able to pay benefits as a result of the trust fund depletion.
That is what it means. The plan has to have the Treasury borrow money and inject it into the trust funds if it is to remain solvent. Not long ago Obama warned that the cheques would not be going out if the debt ceiling were not raised. As I pointed out, if the trust funds had marketable funds they would remain solvent even if the government could not borrow any more money.
insurance has EXACTLY THE SAME PROBLEM fool.
that's WHY they increase their premiums and reduce coverage.
No fool. My life insurance premiums have remained the same as has my coverage. They will remain the same until the term is over. The same is true of any house, automobile, or health insurance you buy. The conditions and premiums will remain the same for duration of the term. Costs only go up or down after the term is over and you look for new coverage.
" Cite one plan that has had that kind of shortfall but was allowed to continue"
the "shortfall" is in the future if nothing is done before then.
it happens to a lot of funds and insurances both public and private and as a result of that analysis - changes are made ...premiums increased...benefits reduced.
it happened to a lot of defined benefit contribution plans and as a result they converted those plans to defined contribution plans.
It happens to 401(K)s where people realize that their 401(k) lost money instead of making money and as a result they'll either have to work longer or retire on less money than planned.
you're either not understanding it or you're misrepresenting the concept.
I asked you some time ago how you'd figure unfunded liabilities for tax-funded agencies.... and what the solution would be if it were found that they'd be spending more in the future than they are now....
Medicare Part B falls in that category as well as DOD...
what do you do about Medicare Part B when it shows ... 8 times the unfunded liabilities than SS in a 75year look ahead?
Do you abolish the program because it's projected to grow?
would you abolish DOD under the same circumstances?
and you're bound up over the trust fund in the same manner.
There are easily more than a hundred SS systems in the world - and most of all them are projecting similar unfunded liabilities because of demographics.
Would you abolish them all or would you reform them ?
the trust fund is not really germane because it's not the primary funding mechanism for SS - it's a reserve fund...a rainy day fund and if for some reason it goes away... SS goes on... but the date where benefits drop to 75% advances...
the 25% is the unfunded liability guy.
that 25% shortfall is ONE way of handling an unfunded liability - you just reduce benefits.
the other way is to make other changes on the revenue and benefits side....
VangelV: The point is that the money was stolen from the SS trust funds, something that could not happen in a private fund without sending the trustees in jail.
Again, that his incorrect. The Congress has the constitutional prerogative to tax, borrow and spend. With the consent of a decided majority of the American people, they ran deficits for tax cuts, wars and a Medicare expansion, while maintaining spending for existing programs.
VangelV: I know that your math skills are not very good but there is no way to make up a $16 trillion unfunded liability in a $16 trillion economy where the government tax receipts are $2 trillion and the deficit is $1.3 trillion.
Sure there is. The liability is over a 75 year time horizon. It will take about 0.7% of GDP increase in revenues. Of course, they could slowly increase the age of retirement, or any number of other options to reduce spending.
VangelV: Not long ago Obama warned that the cheques would not be going out if the debt ceiling were not raised.
Yes, if there's a default, U.S. securities would lose their value.
" Cite one plan that has had that kind of shortfall but was allowed to continue"
the "shortfall" is in the future if nothing is done before then.
Well, by law private plans have to be fully funded. Any temporary shortfalls have to be made up very rapidly by having the plan operator inject equity. That cannot happen with SS because the unfunded liabilities are more than $16 trillion, around eight times higher than the total tax revenue. No private plan would be able to get so out of line, which is the reason why you can't cite one that has been allowed to operate even as it grew its unfunded liabilities.
it happens to a lot of funds and insurances both public and private and as a result of that analysis - changes are made ...premiums increased...benefits reduced.
No it does not. Regulators do not allow companies to reduce their pensions because they have a shortfall. All shortfalls must be made up and all plans must be made solvent quickly. No private plan could have a large unfunded liability and still be allowed to operate.
Take a look at the material Ron provided and the arguments that he gave on the other thread. Obviously you have learned nothing about insurance since your last idiotic postings and you are driven by ideology rather than knowledge.
it happened to a lot of defined benefit contribution plans and as a result they converted those plans to defined contribution plans.
You are just waving your hands and making crap up. By law, when a defined benefit plan is converted the company has to make sure that it is fully funded. In the case of SS the government would have to inject eight years worth of tax revenues immediately.
It happens to 401(K)s where people realize that their 401(k) lost money instead of making money and as a result they'll either have to work longer or retire on less money than planned.
410Ks are not a defined benefit plan. Nobody gets a statement that tells them how much they will receive at retirement for life.
you're either not understanding it or you're misrepresenting the concept.
The irony; we have one of the stupidest or most ignorant posters accusing others of not understanding.
Again, that his incorrect. The Congress has the constitutional prerogative to tax, borrow and spend. With the consent of a decided majority of the American people, they ran deficits for tax cuts, wars and a Medicare expansion, while maintaining spending for existing programs.
No majority voted to steal SS contributions and replace them with IOUs that ensured further borrowing and more taxes in the future. The American voter was sold a bill of goods by being told that all those programs would not really have to be paid for.
Sure there is. The liability is over a 75 year time horizon. It will take about 0.7% of GDP increase in revenues. Of course, they could slowly increase the age of retirement, or any number of other options to reduce spending.
No. You need $16 trillion now and an extra $1 trillion plus every year you don't act. That is eight years of tax revenues NOW and a 50% of tax revenue increase next year, the year after that, the year after that, etc, until the system collapses or the currency is devalued. Raising the age of retirement slowly will not save the system because the demographics do not work. There are simply too few workers in the system to pay for all the retirees. The other problem is the wages earned by those workers. You have high wage retirees supported by a mix of lower wage workers. As I said, the math does not work.
If a private company pulled this scam lefties like you would be screaming fraud and demanding jail time. But if the government does it the lefties fall silent and make up all kinds of false excuses.
Yes, if there's a default, U.S. securities would lose their value.
The US takes in plenty of tax revenues to pay off the interest it owes on its bonds so there would not be a default. The default tangent is a red herring. SS would default if the debt ceiling is not increased and the Treasury could not borrow more money.
" Cite one plan that has had that kind of shortfall but was allowed to continue"
the "shortfall" is in the future if nothing is done before then.
Well, by law private plans have to be fully funded. Any temporary shortfalls have to be made up very rapidly by having the plan operator inject equity."
with private pay-as-you-go insurance?
if State Farm collects premiums and their own analysis shows unfunded liabilities in the future if they do not raise the price - who is going to know other than them and even if the govt knows what would the govt tell them to do ? raise prices or cut coverage?
" That cannot happen with SS because the unfunded liabilities are more than $16 trillion, around eight times higher than the total tax revenue. No private plan would be able to get so out of line, which is the reason why you can't cite one that has been allowed to operate even as it grew its unfunded liabilities. "
the unfunded liabilities are the 25% automatic cut in benefits guy.
who is riding herd on the private plans guy?
"it happens to a lot of funds and insurances both public and private and as a result of that analysis - changes are made ...premiums increased...benefits reduced.
No it does not. Regulators do not allow companies to reduce their pensions because they have a shortfall. All shortfalls must be made up and all plans must be made solvent quickly. No private plan could have a large unfunded liability and still be allowed to operate."
or what? they get taken over by taxpayers?
"Take a look at the material Ron provided and the arguments that he gave on the other thread. Obviously you have learned nothing about insurance since your last idiotic postings and you are driven by ideology rather than knowledge."
what I have learned is that both you and he spout offal....
it happened to a lot of defined benefit contribution plans and as a result they converted those plans to defined contribution plans.
You are just waving your hands and making crap up. By law, when a defined benefit plan is converted the company has to make sure that it is fully funded. In the case of SS the government would have to inject eight years worth of tax revenues immediately."
then explain how the Federal Govt converted defined benefit pensions to defined contribution pensions - along with a lot of private sector companies.
what does the govt do when a private pension plan has unfunded liabilities guy?
does the govt take it over?
and then who is responsible for the benefits? the taxpayers? and when they take it over do they pay 100% of "scheduled" benefits? Nope.
It happens to 401(K)s where people realize that their 401(k) lost money instead of making money and as a result they'll either have to work longer or retire on less money than planned.
410Ks are not a defined benefit plan. Nobody gets a statement that tells them how much they will receive at retirement for life."
401K's are "planned" to generate x number of dollars by a certain date - like a retirement.
when the market does not perform then they end up with their very own "unfunded liabilities" and they have to either extend their retirement date, pay more into the plan or get reduced benefits.
it works pretty much the same way.
you're either not understanding it or you're misrepresenting the concept.
The irony; we have one of the stupidest or most ignorant posters accusing others of not understanding.
we have self-proclaimed 'experts' here who only know how to parrot propaganda and when challenged on the facts, get surly....
the "unfunded liabilities" was originally blathered by the Heritage folks as a scare tactic.
the whole narrative was based on the premise that most people were ignorant of what is actually means but it "sounds" really bad.
anyone willing to take a cursory look at it realizes that it's an actuarial analysis that is used as a tool to determine how to set prices and coverage NOW so problems seen in the future do not materialize.
Ron and Van just pinball from one propaganda talking point to another... without ever really dealing with facts and realities but now days it's the "right wing way".
Rick Perry trotted out the same propaganda in the debates and got smacked down on it... and that ought to tell you guys something.
No fellow Republicans - not even Ron Paul came to his aid - why?
"Rick Perry trotted out the same propaganda in the debates and got smacked down on it... and that ought to tell you guys something.
No fellow Republicans - not even Ron Paul came to his aid - why?"
Wow! And yet another subject - political debates - that Larry fails to understand.
Larry, all the debaters are Republicans. They are each hoping to score points at the expense of everyone else.
Do Jeopardy players give each other help with difficult questions?
It sure would be refreshing to read an actual intelligent comment from you, but I'm not expecting any.
think Bush - without brains...
;-)
actually they ALL agreed on a number of issues including opposing ObamaCare and higher taxes... govt mandates... etc...
but Ponzi Perry stood alone - no one else supported Perry's "Ponzi" idea and even Perry himself is walking it back...
so what happened to political backbone on the "ponzi" idea?
are you agreeing that all the GOP candidates are SS weasels?
with private pay-as-you-go insurance?
Cite any pay-as-you-go private pension plan. You can't because they would be illegal. Private plans have to have reserves set aside to pay their obligations. They cannot build huge unfunded liabilities and keep going for decades.
if State Farm collects premiums and their own analysis shows unfunded liabilities in the future if they do not raise the price - who is going to know other than them and even if the govt knows what would the govt tell them to do ? raise prices or cut coverage?
State Farm cannot change the premiums until the term is over. If I buy a life insurance plan it has to set aside reserves to ensure that it will be able to pay off its obligations. It cannot pay less if it fell short because it is required to make up any shortfall with its own equity. If it can't the regulators shut it down and sell off the assets to another insurance company.
As I said, you are making crap up. How many times has State Farm changed your premiums for your house or car insurance before your term was over? Or any other private company? The answer is never.
the unfunded liabilities are the 25% automatic cut in benefits guy.
That would make the plan insolvent.
who is riding herd on the private plans guy?
The regulators. They would shut down any plan that has that has no assets to prevent it from further damaging contributors.
This is how pension plans work. Why don't you learn about it before you post any more drivel? And if you think I am wrong then please cite private pension plans that are not funded and will be allowed to continue indefinitely without immediate action that would ensure that full funding is obtained within a reasonable period of time.
or what? they get taken over by taxpayers?
They get wound up and recipients get benefits as determined by the amount of actual assets in the fund. In the case of SS that would be zero. This is why regulators don't get the underfunding get out of hand and demand that companies top up the funds on a regular basis as required by the regulations.
what I have learned is that both you and he spout offal....
Actually, you have learned nothing. Your comments show that you still have no idea what unfunded liabilities means, the difference between marketable securities and IOUs, or the magnitude of the shortfalls in actuarial terms.
then explain how the Federal Govt converted defined benefit pensions to defined contribution pensions - along with a lot of private sector companies.
Moving from a defined benefit to a defined contribution plan is not a problem if the defined benefit plan fully funded. Companies are not allowed to default on their obligations by creating a new plan.
Again I suggest that you do some reading because this is as basic as it gets.
what does the govt do when a private pension plan has unfunded liabilities guy?
does the govt take it over?
It is simple. The plan is wound and the assets are transferred to new trustees who determine what benefits are possible given the funding shortfall. In the case of SS, it would have been shut down a long time ago.
and then who is responsible for the benefits? the taxpayers? and when they take it over do they pay 100% of "scheduled" benefits? Nope.
No. By law there is a minimum guarantee. Anything in excess is written off and the beneficiaries will have to do with less. This was why the unions wanted Obama to save GM and Chrysler. Had they gone to bankruptcy court employees would have gotten the statutory minimum.
401K's are "planned" to generate x number of dollars by a certain date - like a retirement.
when the market does not perform then they end up with their very own "unfunded liabilities" and they have to either extend their retirement date, pay more into the plan or get reduced benefits.
Your ignorance and stupidity are showing. I am not an American but the last time I looked the 401(k) was not a defined benefit plan. As such there is no unfunded liability because there is no defined liability.
Hit the books. And try not to show how stupid you are.
we have self-proclaimed 'experts' here who only know how to parrot propaganda and when challenged on the facts, get surly....
The facts are clear. SS has a $16 trillion unfunded liability. The IOUs are not marketable bonds. The Treasury can only make up shortfalls if it is permitted to borrow. There is no way to make up a $16 trillion shortfall by a government that takes in $2 trillion in tax revenues each year but spends $3 trillion. 401(k) plans are not defined benefit plans. When private plans have large shortfalls that cannot be corrected within a reasonable period of time they are wound up. Trustees of private plans must hold marketable assets, not IOUs. Etc. Etc. Etc.
If you do not understand basic concepts and do not understand basic definitions you are not in any position to challenge the facts.
Cite any pay-as-you-go private pension plan.
"whole" life insurance is a pay-as-you-go annuity plan.
there are others... similar..
annuities come in all flavors and many pension plans end up being lumps-sum annuities upon retirement (but are pre-funded).
but whole life insurance is a product where you make monthly payments and it builds a cash-value that can be taken as a lump-sum or an annuity.
" You can't because they would be illegal. Private plans have to have reserves set aside to pay their obligations. They cannot build huge unfunded liabilities and keep going for decades."
and they don't - and they use actuarial analysis to determine future unfunded liabilities and they use that info to take steps to "fund" in advance so there is no future unfunded liabilities.
"if State Farm collects premiums and their own analysis shows unfunded liabilities in the future if they do not raise the price - who is going to know other than them and even if the govt knows what would the govt tell them to do ? raise prices or cut coverage?
State Farm cannot change the premiums until the term is over."
that's true but the term is not 75 years but one year.
" If I buy a life insurance plan it has to set aside reserves to ensure that it will be able to pay off its obligations. It cannot pay less if it fell short because it is required to make up any shortfall with its own equity. If it can't the regulators shut it down and sell off the assets to another insurance company."
that's true for life insurance but not for home or auto or flood or any insurance in which the term is measured in months or years.
"As I said, you are making crap up. How many times has State Farm changed your premiums for your house or car insurance before your term was over? Or any other private company? The answer is never."
has State Farm ever raised their premiums one year later at renewal time?
yup. all the time..
"the unfunded liabilities are the 25% automatic cut in benefits guy.
That would make the plan insolvent."
no.. the opposite.. that's how you KEEP the plan SOLVENT by balancing payout with revenues.
"who is riding herd on the private plans guy?
The regulators. They would shut down any plan that has that has no assets to prevent it from further damaging contributors."
and do what with the folks who have the plans?
"This is how pension plans work. Why don't you learn about it before you post any more drivel?"
you're confusing pension plans with insurance.
"And if you think I am wrong then please cite private pension plans that are not funded and will be allowed to continue indefinitely without immediate action that would ensure that full funding is obtained within a reasonable period of time."
last time I heard there was a bunch of companies with massive future unfunded liabilities and the govt wrote a new reg to deal with it.
right?
or what? they get taken over by taxpayers?
"They get wound up and recipients get benefits as determined by the amount of actual assets in the fund. In the case of SS that would be zero. This is why regulators don't get the underfunding get out of hand and demand that companies top up the funds on a regular basis as required by the regulations. "
"wound up" meaning the tax-payer funded pension guarantee agency takes over?
why do you trust the govt to ride herd on these guys? the same govt you say has massive unfunded liabilities of it's own?
I thought you were opposed to govt and regulation...
"what I have learned is that both you and he spout offal....
Actually, you have learned nothing. Your comments show that you still have no idea what unfunded liabilities means, the difference between marketable securities and IOUs, or the magnitude of the shortfalls in actuarial terms."
oh but I have... learned a lot... about ...posers...
"then explain how the Federal Govt converted defined benefit pensions to defined contribution pensions - along with a lot of private sector companies.
Moving from a defined benefit to a defined contribution plan is not a problem if the defined benefit plan fully funded. Companies are not allowed to default on their obligations by creating a new plan.
Again I suggest that you do some reading because this is as basic as it gets.
I read guy.. and I know when someone else is spouting drivel...
" There is no way to make up a $16 trillion shortfall"
Social Security Policy Options
http://www.cbo.gov/ftpdocs/115xx/doc11580/07-01-SSOptions_forWeb.pdf
If you do not understand basic concepts and do not understand basic definitions you are not in any position to challenge the facts.
indeed...
especially when your "facts" are propaganda parroted by propaganda whores...
"whole" life insurance is a pay-as-you-go annuity plan.
In what way would that be true? If you own a non-participating plan the premiums are fixed and do not change. The payouts are known ahead of time. If you have a participating plan you may get dividends but your premiums stay the same. You can choose as plan where your premium can decline if the returns are above projections but you will not pay above the maximum contract rate.
Once again your stupidity is showing. In no way can whole life be considered a pay-as-you-go scheme.
there are others... similar..
Your first example was wrong. There aren't any examples.
annuities come in all flavors and many pension plans end up being lumps-sum annuities upon retirement (but are pre-funded).
A lump sum payment is not an annuity dumdum. Try again.
but whole life insurance is a product where you make monthly payments and it builds a cash-value that can be taken as a lump-sum or an annuity.
The beneficiary gets a payment upon the death of the policy holder. That holder can get a lump sum payment on the 'savings' portion of the insurance contract at a specified age. In no way is this considered a pay-as-you-go scheme like SS.
and they don't - and they use actuarial analysis to determine future unfunded liabilities and they use that info to take steps to "fund" in advance so there is no future unfunded liabilities.
Note that SS does not do this. If there are no assets in the reserve fund and unfunded liabilities are high the program does not have to inject any equity. Private plans do. If a company's plan falls below 100% funding automatic steps are triggered to make up the shortfall within a short period of time. It is up to the company to inject equity, not the policy holders. Again, this is not the case with SS.
Correct. Some policies have a short term. But State Farm has insurance policies in which the terms are very long and for those the premiums and payments are set and cannot be changed. SS does not work that way.
that's true for life insurance but not for home or auto or flood or any insurance in which the term is measured in months or years.
But it is not true. The company has to put aside money to cover payouts. If it guesses wrong and the payouts are higher than expected it has to inject equity and change the premiums on future policies, not change the premiums on existing policies.
has State Farm ever raised their premiums one year later at renewal time?
yup. all the time..
But that is a different policy. State Farm cannot change the premiums or payments on an existing insurance contract. State Farm has to honour its agreements as long as the policy is in place, which in the case of a pension plan would be until retirement. This is very different than SS even if you are too stupid to see it.
no.. the opposite.. that's how you KEEP the plan SOLVENT by balancing payout with revenues.
No. When the plan cannot pay what was promised it becomes insolvent.
The payouts are known ahead of time. ....
how do they know what they can pay into the future?
Once again your stupidity is showing.
any annuity plan that you make monthly payments into - is by definition a pay-as-you-go plan..
The beneficiary gets a payment upon the death of the policy holder. That holder can get a lump sum payment on the 'savings' portion of the insurance contract at a specified age. In no way is this considered a pay-as-you-go scheme like SS.
you're making monthly payments into it all along as opposed to providing a one-time lump sum for an annuity.
..take steps to "fund" in advance so there is no future unfunded liabilities.
Note that SS does not do this.
they certainly do - defus...
http://www.ssa.gov/history/reports/crsleghist2.html
If there are no assets in the reserve fund and unfunded liabilities are high the program does not have to inject any equity.
they automatically reduce benefits fool. that's how you stop the unfunded liabilities. you're such a dolt...
Private plans do.
private insurance does not.
If a company's plan falls below 100% funding automatic steps are triggered to make up the shortfall within a short period of time. It is up to the company to inject equity, not the policy holders. Again, this is not the case with SS.
that's not true fool. How many companies and states are showing unfunded liabilities and have yet to deal with them?
Correct. Some policies have a short term. But State Farm has insurance policies in which the terms are very long and for those the premiums and payments are set and cannot be changed. SS does not work that way.
State Farm and most insurance do NOT have LONG TERMS guy... on purpose.
Most people get annual renewals and often price and coverage changes to go with it... usually a thick envelope...
I can't believe how dumb you are... all mouth and pea brain..
that's true for life insurance but not for home or auto or flood or any insurance in which the term is measured in months or years.
But it is not true. The company has to put aside money to cover payouts. If it guesses wrong and the payouts are higher than expected it has to inject equity and change the premiums on future policies, not change the premiums on existing policies.
how do insurance companies "pre-fund" ?
where do they get that money?
when they change premiums guy - it is most often ANNUAL...
you will never ever see an auto policy for one price for 75 years of coverage...
" But that is a different policy. State Farm cannot change the premiums or payments on an existing insurance contract. State Farm has to honour its agreements as long as the policy is in place, which in the case of a pension plan would be until retirement. This is very different than SS even if you are too stupid to see it. "
it's a renewal and they do them on a much more frequent basis than SS ...
again you confuse insurance with pensions...
insurance is pay-as-you-go - WITH ADJUSTMENTS...
private insurance has FREQUENT adjustments.
SS have LESS FREQUENT adjustments but they have had MANY of their 65 year history...
http://www.ssa.gov/history/reports/crsleghist2.html
" no.. the opposite.. that's how you KEEP the plan SOLVENT by balancing payout with revenues.
No. When the plan cannot pay what was promised it becomes insolvent. "
you can call it what you want but the program goes on...
FICA is still collected and benefits still paid ... just reduced to match what comes in...
that's not "insolvent"..
it is, by definition "solvent".
you do all of this crap for a program that has existed for 65 years and over that time has generated a 2.1 trillion surplus - as a direct result of prior changes to keep it solvent..
and at the same time we have a 1.5T deficit that you ignore...
why is this the most important problem?
and why do you lie your butt off when discussing it?
I'd not believe anything you say about anything based on your way of debating... quite dishonest..
and do what with the folks who have the plans?
The people in the plans get the payments that are possible given the assets that are in the plans. That is why you are not supposed to let the assets be stolen and replaced with IOUs. Regulators will close down any plans once the underfunding becomes an issue and they feel the company is incapable of making the plan whole. SS would have been shut down decades ago because it never had sufficient funds to guarantee payments for contributors. As I said, private plans cannot be pay as you go.
you're confusing pension plans with insurance.
No I am not. The pension regulations are very specific about having marketable assets to cover future liabilities. They are not permitted to have non-marketable assets and count them as reserves against future liabilities.
last time I heard there was a bunch of companies with massive future unfunded liabilities and the govt wrote a new reg to deal with it.
right?
or what? they get taken over by taxpayers?
When private companies have plans that become underfunded they must put equity into them to protect the plan members. If the company is in no position to do so its plans are wound up to protect the plan members from a further decline.
If SS were a private defined benefit plan it would have been shut down decades ago.
"wound up" meaning the tax-payer funded pension guarantee agency takes over?
No. It means that plan members are credited with their share of the amount that is held by the trustees. The government does not have to take over and guarantee the plans. And there is no reason why companies cannot buy insurance against insolvency from other private companies.
why do you trust the govt to ride herd on these guys? the same govt you say has massive unfunded liabilities of it's own?
I don't. I think that the government does far more harm that good and discourages people to look after their own interests.
I thought you were opposed to govt and regulation...
Correct. I do.
oh but I have... learned a lot... about ...posers...
Only if you have looked in the mirror and learned how to think. But I do not believe that you are that self aware or smart.
I read guy.. and I know when someone else is spouting drivel...
If you had actually read anything you would not be writing so much crap. Try reading some contract and pension law and learn simple definitions.
Regulators will close down any plans once the underfunding becomes an issue and they feel the company is incapable of making the plan whole.
are you saying there is no such thing as a pay-as-you-go pension plan?
why don't you do a goggle search on that... and let me know what you find out
SS would have been shut down decades ago because it never had sufficient funds to guarantee payments for contributors. As I said, private plans cannot be pay as you go.
more blather... from someone who refuses to accept the reality of SS being explicitly designed as a pay-as-you-go plan - which is not unique in the world or in the private sector either.
you're confusing pension plans with insurance.
No I am not.
what part of pay-as-you-go do you not understand?
The pension regulations are very specific about having marketable assets to cover future liabilities. They are not permitted to have non-marketable assets and count them as reserves against future liabilities.
you need to provide a cite because I think you're blowing smoke..
"When private companies have plans that become underfunded they must put equity into them to protect the plan members. If the company is in no position to do so its plans are wound up to protect the plan members from a further decline."
"wound up means taken over by taxpayers = PBF?
If SS were a private defined benefit plan it would have been shut down decades ago.
nope..even pension funds can be pa-as-you-go... have you checked?
"wound up" meaning the tax-payer funded pension guarantee agency takes over?
No. It means that plan members are credited with their share of the amount that is held by the trustees. The government does not have to take over and guarantee the plans. And there is no reason why companies cannot buy insurance against insolvency from other private companies.
so why is PBD in deficit?
why do you trust the govt to ride herd on these guys? the same govt you say has massive unfunded liabilities of it's own?
I don't. I think that the government does far more harm that good and discourages people to look after their own interests.
I thought you were opposed to govt and regulation...
Correct. I do.
including regs on private pensions?
If you had actually read anything you would not be writing so much crap. Try reading some contract and pension law and learn simple definitions.
why don't you look up pay-as-you-go pensions and report back fool.
Social Security Policy Options
http://www.cbo.gov/ftpdocs/115xx/doc11580/07-01-SSOptions_forWeb.pdf
Did you read this? Let me quote the important bits.
Federal trust funds, including those for Social Security, essentially constitute an accounting mechanism. In a given year, the sum of receipts to a fund along with the interest that might be credited on previous balances, less spending for benefits and administrative costs, constitutes a fund’s surplus or deficit. The cash generated by a surplus in any year is turned over to the Treasury in exchange for special Treasury securities. The Treasury uses the cash to finance the government’s ongoing activities. If the trust funds’ cash receipts are less than their outlays, the Treasury securities they hold are redeemed for cash as needed. The Treasury obtains that cash from other revenues or by borrowing from the public.
Did you get that? The CBO assumes that the Treasury would be able to borrow to make up the shortfall and goes from there. But Obama just pointed out that without an increase in the debt ceiling SS would have had to default on some payments.
The trust fund has no marketable assets but is looking at $16 trillion in liabilities. The report shows that you can't make that up without cutting promised benefits, increasing taxes, changing the terms by moving the retirement age or cheating recipients by reducing the promised COL adjustments.
With that much trouble why not just close the plan so that you do not rob current workers of future savings and purchasing power?
" Did you read this?"
yup.. more than once..
first for ya?
" .... SS would have had to default on some payments. "
reduce benefits.. temporarily until things come back online.
problem is some recipients live month-to-month...
but ALL govt programs would have the same issue.. soldiers and DOD civilians would also not get paid... road contractors would not get paid.. Doctors would not get paid...
what's your real point ?
" The trust fund has no marketable assets but is looking at $16 trillion in liabilities."
which if none of the 30 CBO options is adopted, benefits will automatically reduce to 75% and the unfunded liability will go away.
got that?
do I need to explain it again?
Van -you're a hard case...
I suspect that you disagree with speed limit signs and no parking signs also..
VangelV: Well, by law private plans have to be fully funded.
The law regarding Social Security has and can be changed. Think of it like, well, a "representative democracy." The people get together periodically and elect "representatives." These "representatives" then look at the situation and make decisions about how much each "citizen" will contribute to the system in "taxes," and how much each "citizen" will receive in "benefits." If, in a given year, there is not enough money in the "Trust Fund" to pay the expected "benefits", the "law" passed by the "representatives" says to cut benefits to meet revenues. To avoid the unexpected, the "representatives" appoint a "committee" to look ahead and see what revenues will be required to maintain the desired "benefits". Then the "representatives" "vote" on whether to make changes to the system.
VangelV: No majority voted to steal SS contributions and replace them with IOUs that ensured further borrowing and more taxes in the future.
If you are not familiar with representative democracy, people elect representatives, who then meet and vote on various legislation. Yes, they were told that tax cuts and wars would pay for themselves. Millions voted for that guy. Even more voted for the other guy. Due to some peculiarity in the American system, the guy with the most votes didn't win.
Zachriel: The liability is over a 75 year time horizon. It will take about 0.7% of GDP increase in revenues. Of course, they could slowly increase the age of retirement, or any number of other options to reduce spending.
VangelV: No.
You are very confused. Social Security liabilities are stretched out over time, as are revenues. They can bring them into line, and maintain current benefit levels by raising the revenue stream.
Social Security Administration: "Through the end of 2085, the combined funds have a present-value unfunded obligation of $6.5 trillion. This unfunded obligation represents 2.1 percent of taxable payroll and 0.7 percent of GDP during the 75-year valuation period."
VangelV: There are simply too few workers in the system to pay for all the retirees.
That is incorrect. It will require an increase of 2.1% of taxable payroll over the 75-year horizon, or 3.6% over the infinite horizon.
http://www.ssa.gov/oact/tr/2011/II_D_project.html
VangelV: SS would default if the debt ceiling is not increased and the Treasury could not borrow more money.
If the U.S. refuses to raise its debt ceiling, then yes, it would be a voluntary default. The U.S. can repudiate their debt at any time. Though it's never happened in 200 years, the fact that an influential minority in Congress played brinkmanship with the debt ceiling caused a credit downgrade.
VangelV: The company has to put aside money to cover payouts. If it guesses wrong and the payouts are higher than expected it has to inject equity and change the premiums on future policies, not change the premiums on existing policies.
The Social Security "policy" is written that benefits are limited to revenues and reserves. That's your policy. As very few Americans want a large cut in benefits, that means they are discussing changes to the system, such as raising the retirement age or increasing the payroll tax.
VangelV: The pension regulations are very specific about having marketable assets to cover future liabilities.
What are those specifics? How much reserves are required?
The payouts are known ahead of time. ....
how do they know what they can pay into the future?
It is in the contract that you sign. The maximum premiums and minimum payouts are clearly specified. Some plans allow for extra payments in the form of dividends or in reductions of premiums. But the maximum premiums and minimum payouts are written in stone and known to all parties.
any annuity plan that you make monthly payments into - is by definition a pay-as-you-go plan..
By that definition so is any insurance plan. If you stop making the payments you violate the contract and do not get the payout when you die.
But that is not the way pension plans work. You don't pay a premium that is used to finance anyone else's retirement while no reserves are set aside to meet your future payments. As I said, try to learn a bit about logic, finance, and accounting. Your ignorance is really showing.
you're making monthly payments into it all along as opposed to providing a one-time lump sum for an annuity.
..take steps to "fund" in advance so there is no future unfunded liabilities.
There is no need to fund everything in advance. The actuaries actually figure out the payment structure to ensure that the payouts can be supported. Your premiums are set aside in a float that is used by the insurance company to earn returns. If an insurance company has an underwriting problem or is investing poorly it will have to inject equity into its plans and change pricing for new contracts. If its investment and underwriting strategies are good it will be able to use the float as free money to earn huge profits for its owners. Weak insurance companies with substandard returns are acquired by stronger ones who take over the obligations. The regulators usually make sure that the plans are fully funded and do not permit that the cash is exchanged for non-marketable securities.
they certainly do - defus...
http://www.ssa.gov/history/reports/crsleghist2.html
As I said, private plans have to make up any shortfalls and must have adequate reserves to meet the obligations. SS does not do this because they have no marketable securities to meet obligations and were close to default at a time when the actuaries expected no problem to be on the horizon. This is where the $16 trillion of unfunded liabilities come in 'dufus'. Any private plan trustees who gave up the premiums they collected for IOUs would have been in jail.
they automatically reduce benefits fool. that's how you stop the unfunded liabilities. you're such a dolt...
Private plans do.
No. Private plans cannot arbitrarily decide to reduce benefits. They have to make up any shortfall by injecting equity. If they cannot they are wound up and the company has to go through bankruptcy or negotiate with creditors, which include pension plan beneficiaries and contributors.
In the case of SS, it is allowed to keep running up unfunded liabilities and keep robbing workers who will never be able to get what has been promised to them.
that's not true fool. How many companies and states are showing unfunded liabilities and have yet to deal with them?
Companies have to keep adding equity into the plans every year. The regulations are very clear about the process and the time by which the plans have to be made whole or wound up. The state governments are a different matter. There politicians can make any assumptions that they wish and keep promising massive payouts even though they are broke.
But we know from experience that cities and states can default on their pension obligations. When they do the state is not put into bankruptcy as a company would be and state assets are not sold off to pay creditors. The government will usually pass some law that prevents it to keep on stealing from creditors and not make good on its promised obligations.
State Farm and most insurance do NOT have LONG TERMS guy... on purpose.
Most people get annual renewals and often price and coverage changes to go with it... usually a thick envelope...
I can't believe how dumb you are... all mouth and pea brain..
We are talking about life insurance plan 'pea brain.' There are no annual renewals in which the payments and payouts change. Both were set when the contract was initially signed.
how do insurance companies "pre-fund" ?
They don't. Obligations accrue and are funded by premium payments. This is why premiums are not contractually permitted to be exchanged for non-marketable securities. The money has to be set aside to pay off the beneficiaries as agreed upon.
where do they get that money?
Premiums.
when they change premiums guy - it is most often ANNUAL...
Not when your contract specifies a premium and payout over a fixed term or for life.
you will never ever see an auto policy for one price for 75 years of coverage...
Read the material that Ron posted previously. He explained the difference between auto insurance, life insurance, pensions and annuities. Some knowledge might do you good.
it's a renewal and they do them on a much more frequent basis than SS ...
again you confuse insurance with pensions...
No I do not confuse anything. A defined benefit pension is very clear. You get a certain payout that depends on years worked, when you retire, your average salary over the previous five years, etc. Once you have signed your employment contract the company cannot change the terms unless you agree, there is a statutory change, or it is going into bankruptcy.
insurance is pay-as-you-go - WITH ADJUSTMENTS...
No it isn't. Like I said, get a book and check definitions. You may start with what pay-as-you-go means in the context of this type of discussion.
Pay-as-you-go means paying off obligations as they are incurred. Insurance companies have to set aside reserves to offset accrued liabilities. There is a huge difference even if you are too ignorant to see or understand it.
you can call it what you want but the program goes on...
Not if it is a private plan. When a private plan defaults it is wound up so that contributors are not harmed any further.
are you saying there is no such thing as a pay-as-you-go pension plan?
Yes there is. It is called SS. Private companies can't have pay-as-you-go pension plans because they have to have reserves to offset accrued liabilities so that contributors are protected.
why don't you do a goggle search on that... and let me know what you find out
I don't need to do a google search. I have been looking at pension rules and accounting for more than two decades. And I have pointed out that you did not understand simple concepts and gave you links to sources where you can learn. Given your failure to do so and your continued misinterpretation of the facts giving you more reference material is a waste of my time.
more blather... from someone who refuses to accept the reality of SS being explicitly designed as a pay-as-you-go plan - which is not unique in the world or in the private sector either.
Give me an example of a single private sector defined benefit plan that is pay-as-you-go. And show me where in the legislation such plans are permitted.
This is not a political argument dumdum. It has to do with actuarial principles, contract law, and basic accounting and finance. Try learning something about the basics before you post more of your drivel. You and your lefty friends are just as ridiculous on this topic as the right is on foreign policy.
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