Clinton and Sanders have both advocated eliminating the cap on wages subject to SS taxes. Dean Baker, Nancy Altman etc, have also spoken up for changes to the cap.
Unless the House goes Dem in 2016 I see little chance for this – unless there is a meaningful compromise as part of a deal.
How about this to ‘balance the scales’ – increase the number of years one must work to get SS benefits.
The current minimum is 10 years (or 40 quarters). Raise the eligibility by 6 months every year for 10 years. The end result would be that one would have to be employed for 15 years (60 quarters).
BK,
Any such compromise will exclude ever more needy Americans from coverage — which our rich economy has no need to do at all. Imagine if we could just ax off the under 15 people now?
My theory (prediction, whatever) is that when FICA outgo exceeds income — and it is time to cash those TF bonds (those checks made out to ourselves) — cashing them with income tax — the cap for income tax paid SS will be (er, would be; never happen) reversed: the bottom 50% of incomes being effectively below the “reverse cap” and the top 10% taking the biggest hit (40% not 6%).
At this point in our practical all good things (only) go to the top politics that ain’t happening. The cap will go up.
“The second option, for those who choose to stay in solo or small practices, is for the physician to enter into a Merit-Based Incentive Payment System (MIPS), in which payment will be determined by where the doctor ranks on a physician scorecard. The kicker is that the pot of money remains constant – so even if every doctor makes an ‘A’ grade, half of them will be paid less money, just by nature of this “budget-neutral” payment system.
“And of course, this system begs the question: what happens to the doctors who care for sicker or less compliant patients? Will doctors have to cherry-pick, dismissing patients simply because they choose not to take a statin drug for cholesterol? What doctor will want to be paid less to care for patients in higher risk areas, such as centers of lower socioeconomic status, where patients may be inherently sicker?
“And is there a conflict of interest when doctors are paid more to do less? There is the potential not only for patients to suffer if doctors cut back on tests and treatments, but also for the physician to face malpractice lawsuits – the new Medicare law offers inadequate liability protection for doctors who are being required to keep medical expenses down simply to get paid for their work.”
We do not need to be making SS modifications that make it harder to get benefits for the people who need the benefits the most. That is crazy thinking!
Given that SS is by workers, it sort of sounds sensible, but two responses.
1) The Primary Insurance Amount already averages over 35 years, so I doubt you are saving as much as you think.
2) If you are saying that providing SS to people who don’t have much of a work history is welfare and that SS is not welfare, then you are obviating a need that is not now well covered. Increasing welfare to seniors sounds like a non-starter in with a Republican Congress.
Why the limitation on benefits based on work life duration? A worker that spends nine years working and contributing to the system through FICA contributions to the Trust Fund is entitled to draw a benefit based on those contributions. The same would be true if BK’s suggestion became the rule. Work and contribute for fourteen years and still receive no benefit based upon those contributions? How does that sound fair and balanced?
If you work 30 years at low wage you will have the same PIA as if you work 15 years at twice that wage. Working 30 years at the low wage approximately doubles your PIA, but since benefits are progressive, it does not double your benefit.
I can live with that, but I know some people think it is not fair.
If the reason you have fewer SS years is because you worked somewhere where you did not pay SS taxes, that would seem unfair to me. However, there is a windfall regulation that modifies benefits for that case.
SS is a complicated compromise. It works, but there is something there to dislike for anyone who looks hard enough.
“Work and contribute for fourteen years and still receive no benefit based upon those contributions? How does that sound fair and balanced?”
That’s essentially how things are now. If a person starts work at age 18 and retires at 67, he works and pays FICA taxes for 49 years, but only 35 of those years count. Fourteen years of “contributions” do him no good at all.
The problem is that we have everybody and their brother trying to game the system. Just look at all the pages in the tax code? Why? First we should allow only US citizens to get SS. Second we should allow only people who have paid into it to be able to draw from it. Third we should not allow any government borrowing from it. Fourth we should average all the years worked to find your withdraw amount. Fifth we should allow anybody who has paid into it to be allowed to withdraw their money from it ,not just one spouse or the other. Sixth we should not forfeit paid in money to SS when someone dies. They should get all their paid in money back to their family. SS is not welfare or the governments money. It is suppose to be a government retirement savings plan for the contributors, not a piggy bank for all types of extraneous government uses. Last thing is if one should want to pull all his money out of SS they should be allowed to do so. They should be allowed to privatize their own money… Lets not run SS like a casino was not the intent of the SS program…IMHO.
William Ryan – On your #3. SS has currently 2.8 Trillion in its TF. All of this is invested in US Government debt. So the government is borrowing this money from SS until it it is need to pay benefits. You say that the Money SS has should not be lent to the government. OK, but what would you do with the money? It has to be held someplace, and it must be invested in something. The smartest/safest invest is in the SI government bonds that SSTF holds. Where would you/how would you invest the money that SS has saved??
Your #s 5 and 6 are just not workable. SS assumes that some will die young, some old. It is like fire insurance, if you don’t have a fire (or die young) you don’t get the benefits.
You make the mistake that somehow it is “your” money in SS. That is not the case at all.
To me these issues of solvency and ownership are becoming some of the hot button issues with SS as time marches on. If it is not my money(though I contributed to for 40+ years) it just magically becomes the governments money that I have to play their casino game to get back if I’m lucky. Then I should be allowed to privatize my money and put it into my own gov. bond somewhere safer from having give it to every Tom, Dick and Harry that never paid into it or are not even citizens. Why do we all in SS have to play their casino game with our money? The jig is up and people are getting tired of the gov. crap of constant misappropriation then lets just print more fiat money at the treasury to cover all our stupid asses. Are you not tired of this broken Ponzi scheme that cannot possibly be sustainable?
Oh please. If people do not get 40 quarters in contributions to SS, you do not qualify for it. There is no casino game or Ponzi scheme to SS. They invest in special Treasuries which are safer than a Federal Bond. If the US defaults on these, more than you will be in trouble. The world economy will be in trouble. Where do you get this nonsense? Michigan State Senator, “I am sick to my stomach” Joe Hune? SS is safer than anything in Michigan you might be close to today.
“You make the mistake that somehow it is ‘your’ money in SS. That is not the case at all.”
It is a common lie that many supporters of Social Security use: “You paid into the system; it’s YOUR money.”
That is, indeed, not the case at all. The truth is that your parents and grandparents stole your money from you for their own use, with the implied promise that you would be able to do the same to your children and grandchildren in turn.
Fine, you can have all of your money back anytime you want. Though there will be a deduction for the cost of the disability insurance you had for 40+ years.
If you take a look at the cost of private disability insurance, and then figure out what the SS disability insurance would cost you on the private market(Hint: your SS payments ain’t paying for it), you should not expect a check, but a bill.
Yellen, the Fed Chair, testified today. She made it very clear that it was her intention to raise % rates in December.
So when this happens, and six months later we see economic speed bumps at work, don’t blame conservatives, deficit hawks, republicans or talking heads. The choice to raise rates is all Yellen’s doing.
I’m very surprised that Yellen is leading this charge. All her life she has been a monetary Dove. Go figure this one…
Run – Neocons? There have many folks who have advocated raising rates long ago. And yes, a lot of those were conservative economic thinkers.
BUT – those folks have had 0.00% consequence on Fed policy the past 7 years. Those conservative thinkers have nothing to do with Yellen’s thinking today. The timing of the rate rise is entirely on Yellen’s shoulders.
Critter – Yellen is a lifer Democrat, but I don’t think her political affiliation has anything to do with her decision to raise rates. I can’t think of any Democrats who have been pushing for a rate increase, so no, you can’t blame either party for the choice that is about to be made.
You are deflecting. We are talking about thinking and the thinking of conservatives/neocons is precisely that, raise the rates. And no the timing for an increase is not precisely on Yellen’s shoulders. There has been pressure to raise rates by other and more conservative members of the board. I believe the Board votes on any action, yes?
Just to show how completely stupid our congress is….This from congressman Brad Sherman (D-CA). He thinks that Yellen should wait till the spring to raise rates – BECAUSE THAT IS WHAT GOD WANTS – egad…..
“God’s plan is not for things to rise in the autumn, as a matter of fact, that’s why we call it fall, nor is it God’s plan for things to rise in the winter, through the snow,” Sherman, a Democrat from California, told Yellen at a hearing of the House Financial Services Committee. “God’s plan is that things rise in the spring. And so if you want to be good with the Almighty, you might want to delay until May.”
Maybe Eddie Lampert should check with God. Ed’s been pushing for a rate rise for years…
God’s plan is just as good a reason as conservatives not wanting the unemployed to have unemployment insurance or medicaid. Your sarcasm is getting a tad personal “Brucey.”
Both of the news reports I saw would tend to suggest that the reports authors thought Sherman was kidding. However, I watched video, going back to the 3 hour version to get context, and if he was kidding he enjoys a dry delivery.
Warren this is moronic. There are no numbers that actually support this claim: ” The truth is that your parents and grandparents stole your money from you for their own use, with the implied promise that you would be able to do the same to your children and grandchildren in turn.”
It is true that the guys at AEI started pushing the idea of “Backwards Transfer” some years back and claimed that a large part of “Unfunded Liability” was due to over generosity to those parents and grandparents but it turned out that all of that depended on not understanding or flat out misrepresenting what the Trustees mean by “past participants” “current participants” and “future participants”. One you use the right definitions for the actual cohorts involved and examine revenues and expenditures for each actual year you see that the whole argument falls to the ground.
I am not gong to go through all the numbers again, you can search under various combinations of “Angry Bear” “backwards transfer” and maybe “bruce webb social security” to pull it up. But a lot of it was the result of people fatally understanding the word “participants” to be “beneficiaries”. When in fact they only overlap in part.
Every generation of Social Security BENEFICIARY has received a check with a better real basket of goods equivalent than the one before and this will continue to be true. EVEN AFTER TRUST FUND DEPLETION.
That is the conventional wisdom on this is back asswards. As is all to typical.
“The bigger discrepancies common decades ago can be traced in part to the fact that some of these individuals’ working lives came before Social Security taxes were collected beginning in 1937.”
“Some types of families did much better than average. A couple with only one spouse working (and receiving the same average wage) would have paid in $361,000 if they turned 65 in 2010, but can expect to get back $854,000 — more than double what they paid in. In 1980, this same 65-year-old couple would have received five times more than what they paid in, while in 1960, such a couple would have ended up with 14 times what they put in.”
I do not think you get it. The Barkleys, Dean Bakers, and Andre Bigs of the world talk with Bruce and Dale Coberly on Social Security and potential solutions to strengthen it going into the future and what and when things need to be done. Politifact in knowledge is like “The Weekly Reader” in comparison to Bruce’s knowledge. You and they already lost this discussion.
Warren try this. In 1983 the Social Security Trust Funds essentially went to zero. No money in the bank to help pay future benefits already accrued by current beneficiaries. But the flip side of this is that all past benefits HAD been paid for. By definition. Which raises the question of how many beneficiaries in 1983 had spent any appreciable time in the workforce before FICA started being collected in 1937. A newly retired beneficiary in 1983 would have been born in 1918 and entered the workforce sometime after turning 18 in 1936. So no free ride for them, they had been paying in their entire work lives. What about the retiree of 1960? He (because it mostly would have been ‘he’s’) would have been born in 1895 and entered the workforce sometime after turning 18 in 1913. And so spent 24 years NOT paying in against 24 years not. And so having a little bit of a free ride in Politifacts terms. But would also be 88 in 1983 and so well past then median mortality for is cohort and representing an ever shrinking part of the beneficiary population. And would certainly be out of that population by 1993, a time when only half of Gen-X would even be in the workforce.
So it is arithmetic nonsense that any real part of benefits earned by people who spent time in the workforce before 1937 were actually passed forward to Gen-X and Millennials.
As to your second paragraph and its claims, Arne treated it well enough below.
It is not enough to work from talking points or even logical first principles. In order to understand Social Security financials you need to look at it on a granular level using year by year numbers and cohort mortality. And understand that definitions of words matters. A lot. Because to repeat: a huge part of the argumentation underlying “Backwards Transfers” was the result of taking numbers for “current participants” and taking them to apply to “current beneficiaries”. When in fact “current participants” in Social Security includes people who would not even be eligible for full retirement for 42 years. Blaming THEIR grandparents for the fact that their own benefits after 2057 haven’t been paid for is lunacy. Or ignorance. Or flat out lying by people who actually know the numbers. Say people with initials A(ndrew) B(iggs).
As an engineer, you understand that the model only needs to be good enough to answer the question being asked. To an individual SS looks like put money in, get money out based on how much went in. When you look deeper, you find it is more complicated.
If you want to know whether it can go on forever, you need more details. You will find that while we cannot pay scheduled benefits forever, we can pay benefits that allow each generation to buy more with their benefits than the previous generation could. The details also let you know that SS does not need a reform – it simply needs adjustments. As engineers with a common goal, we could find agreeable adjustments.
The purpose of SS is to allow workers to ensure that retired workers will be provided for. It has been the case all through history, but if you can’t agree that that is a valid goal, then reaching an agreement about how complex the model is will not allow us to reach an agreement on what its parameters should be.
“In 1983 the Social Security Trust Funds essentially went to zero. No money in the bank to help pay future benefits already accrued by current beneficiaries.”
There is no bank. There never was.
My statement is this — that Social Security is essentially parents and grandparents stealing from their children and grandchildren, with the promise that they will be able to steal from their children and grandchildren in the future.
Let’s make the (unfounded) presumption that the first generation recipients actually put in enough to finance (with reasonable interest) their retirement benefits. The money went into the “Trust Fund” to accumulate that interest.
So what happened to the money? It was SPENT — by the same generation that was supposed to be saving it for their own retirement. It was spent on current government programs, which reduced their need to pay more in income taxes. So, essentially, they shifted some of what they would have paid in income taxes over to FICA taxes, laundered it through a Trust Fund, and spent it just as they would have if it had been paid as income taxes. Then they required their children and grandchildren to pay that money back.
Even more moronic. If there was no bank where did the cash come from when Social Security went cash flow negative in 1971? Over that next twelve years every single penny of the “Phony IOUs” in the Trust Fund was paid back with interest as the Special Treasuries were redeemed. And the same has been happening since 2005 with the Disability Insurance Trust Fund. At the same time that Bush was mocking that filing cabinet full of bonds his Administration started quietly honoring every single one of them FOR CASH.
When anyone buys a bond, whether that is the Chinese Central Bank or the CalPers Retirement Fund or any bond fund you like they give the money to the issuer, who might be a government or a corporation and the issuer SPENDS IT. That is the whole point of ISSUING BONDS. Of course the money that Social Security sent to the rest of government in return for Special Treasury Bonds was SPENT. Only someone who has swallowed bullshit anti-Social Security ideology hole would think of that as some kind of fraud.
Warren save your snarkish “brilliant”. Because you are the dim bulb here. And trying to rehash arguments that were discredited years ago at Angry Bear. You are just making yourself look like a newbie ignoramus here. Maybe you should pick a different topic to comment on.
Maybe Social Security is easier to understand if one realizes that it is an elaborate insurance plan including both retirement and disability benefits as they become necessary. Remember that the SS money that comes out of the pay check is labeled FICA, for Federal Insurance Contribution Act. It is like any other form of insurance with its own specific structure, just like all other insurance plans. You pay the premiums and if you live long enough you will be entitled to a benefit. At the end of the year I don’t get any refunds for my other insurance just because I was lucky enough not to need the potential benefit that was attached to my premiums.
“If there was no bank where did the cash come from when Social Security went cash flow negative in 1971? Over that next twelve years every single penny of the ‘Phony IOUs’ in the Trust Fund was paid back with interest as the Special Treasuries were redeemed.”
From the income taxes paid by the recipients’ children and grandchildren, of course. Where do YOU think the money came from?
But these bonds are different from corporate bonds. With corporate bonds, those responsible for paying them make that choice freely. Even if those bonds are paid back by later owners of the company, those later owners choose to become owners, knowing the debt owed by that company.
That is not so with Social Security bonds. Those who issued those bonds did so to their own advantage — they could use that money instead of paying income tax, and have their children and grandchildren pay it back to them with interest later. And their children and grandchildren would have no choice in the matter.
Ilsm, depends on how you look at it. Defense spending has increased, but has gone from between eight and ten percent of GDP during the 1960’s to between four and eight percent in the last decade.
Warren just stop! There was no Medicare or Medicaid or Federal Welfare before 1965. You are deliberately confusing cost inflation with program addition. And during the 60’s we were waging a Cold War with the Soviets that threatened to go really hot (like turning the earth into molten lava) at any moment even as we were fighting a massively expensive war in Vietnam whose relative costs and death tolls among Americans made either of Gulf Wars I and II seem like a fart in a hurricane.
The argument for spending money on ICBMs in the 50’s and 60s as against F-35s in the 2010s in literally in-commensurable, the USSR under Stalin and Khrushchev and China under Mao are not remotely like Russia under Putin or China under Xi. Even as those latter two guys are ratcheting things up compared to a decade ago. You are doing worse than cherry picking here, you are comparing oranges to poisoned apples.
But at least defense spending is debatable. Using baselines that start before program inceptions to judge the cost of the Great Society just generates garbage numbers. Unless you are willing to argue that Medicare and Medicaid were simple mistakes that should be reversed tout court. Yes Medicare in 1966 cost more than Medicare in 1964. Because there was no fucking Medicare in 1964. Maybe next you will start arguing worker/retiree ratios from 1950 as against today. While ignoring (because ignorant) that more people were receiving retirement benefits under Social Security Title 1 (which numbers are NEVER included) at more dollars spent in 1950 than were being spent under Social Security Title 2 (what we know as Social Security today).
Warren I think you mean well and want to be taken seriously, but trotting out every lazy ass talking point promoted by AEI and Heritage rather than engaging in actual numbers from actual data sources is not going to serve you well here. We all have seen the rightest propaganda, you are not going to surprise us with links of this type from dishonest brokers. At least our friend Bruce Krasting makes the effort to use actual official data sources. And trust me my suggestion that you need to be “more like Krasting” sets a pretty low bar to jump.
Defense spending only positive is value of research. The negatives, thousands of lost American lives, made enemies around the world, disable countries around the world, created terrorist in ME, and added to the national debt.
SS is by law (old age retirement and disability insurance) paid for by the people who will receive SS.
Medicare is welfare for private Insurance companies.
Medicaid is welfare to protect the public from those who are sick and can not afford medical care.
Warren there is no comparison at all between the social programs and Defense programs.
Calm down, Bruce. I was merely pointing out that, rather than “opportunity lost” to the war mongers, we did, in fact, significantly expand the welfare state.
EMichael, you may want to check the length of time your private disability pays. Many policies that people buy with their for there home only pays for six months.
“[If] you are paying into SS you are receiving your disability insurance.”
If one is receiving your disability insurance, he is not paying into the system.
But I understand your point, that one is paying for disability insurance. Yes, and no. One is paying premiums, which are used to pay the current beneficiaries. Excess premiums, if any, go to current government spending. As with the Old Age insurance, those who are paying benefits have no choice in the matter, and the first group into the system got the insurance without really paying for it, since they just used that money to pay for current government expenditures which would otherwise have to be paid out of income taxes.
Sorry for being direct, but dealing with someone who has his world etched in stone that refuses to think at the same time he refuses to work at all to improve his knowledge is a counterproductive to me.
Clinton and Sanders have both advocated eliminating the cap on wages subject to SS taxes. Dean Baker, Nancy Altman etc, have also spoken up for changes to the cap.
Unless the House goes Dem in 2016 I see little chance for this – unless there is a meaningful compromise as part of a deal.
How about this to ‘balance the scales’ – increase the number of years one must work to get SS benefits.
The current minimum is 10 years (or 40 quarters). Raise the eligibility by 6 months every year for 10 years. The end result would be that one would have to be employed for 15 years (60 quarters).
Any thoughts on this compromise?
BK,
Any such compromise will exclude ever more needy Americans from coverage — which our rich economy has no need to do at all. Imagine if we could just ax off the under 15 people now?
My theory (prediction, whatever) is that when FICA outgo exceeds income — and it is time to cash those TF bonds (those checks made out to ourselves) — cashing them with income tax — the cap for income tax paid SS will be (er, would be; never happen) reversed: the bottom 50% of incomes being effectively below the “reverse cap” and the top 10% taking the biggest hit (40% not 6%).
At this point in our practical all good things (only) go to the top politics that ain’t happening. The cap will go up.
The scariest Medicare “reform” essay you will ever read:
A physician’s open letter to Medicare patients
Rebekah Bernard, MD | Physician | November 1, 2015
http://www.kevinmd.com/blog/2015/11/a-physicians-open-letter-to-medicare-patients.html
“The second option, for those who choose to stay in solo or small practices, is for the physician to enter into a Merit-Based Incentive Payment System (MIPS), in which payment will be determined by where the doctor ranks on a physician scorecard. The kicker is that the pot of money remains constant – so even if every doctor makes an ‘A’ grade, half of them will be paid less money, just by nature of this “budget-neutral” payment system.
“And of course, this system begs the question: what happens to the doctors who care for sicker or less compliant patients? Will doctors have to cherry-pick, dismissing patients simply because they choose not to take a statin drug for cholesterol? What doctor will want to be paid less to care for patients in higher risk areas, such as centers of lower socioeconomic status, where patients may be inherently sicker?
“And is there a conflict of interest when doctors are paid more to do less? There is the potential not only for patients to suffer if doctors cut back on tests and treatments, but also for the physician to face malpractice lawsuits – the new Medicare law offers inadequate liability protection for doctors who are being required to keep medical expenses down simply to get paid for their work.”
We do not need to be making SS modifications that make it harder to get benefits for the people who need the benefits the most. That is crazy thinking!
Bruce K,
Given that SS is by workers, it sort of sounds sensible, but two responses.
1) The Primary Insurance Amount already averages over 35 years, so I doubt you are saving as much as you think.
2) If you are saying that providing SS to people who don’t have much of a work history is welfare and that SS is not welfare, then you are obviating a need that is not now well covered. Increasing welfare to seniors sounds like a non-starter in with a Republican Congress.
Why the limitation on benefits based on work life duration? A worker that spends nine years working and contributing to the system through FICA contributions to the Trust Fund is entitled to draw a benefit based on those contributions. The same would be true if BK’s suggestion became the rule. Work and contribute for fourteen years and still receive no benefit based upon those contributions? How does that sound fair and balanced?
Jack,
If you work 30 years at low wage you will have the same PIA as if you work 15 years at twice that wage. Working 30 years at the low wage approximately doubles your PIA, but since benefits are progressive, it does not double your benefit.
I can live with that, but I know some people think it is not fair.
If the reason you have fewer SS years is because you worked somewhere where you did not pay SS taxes, that would seem unfair to me. However, there is a windfall regulation that modifies benefits for that case.
SS is a complicated compromise. It works, but there is something there to dislike for anyone who looks hard enough.
” It works, but there is something there to dislike for anyone who looks hard enough.”
Sounds like the definition of a good compromise to me.
“Work and contribute for fourteen years and still receive no benefit based upon those contributions? How does that sound fair and balanced?”
That’s essentially how things are now. If a person starts work at age 18 and retires at 67, he works and pays FICA taxes for 49 years, but only 35 of those years count. Fourteen years of “contributions” do him no good at all.
What is missing is SS is not welfare, its a worker paid insurance program. Ask the question of when does a insurance product take effect.
The problem is that we have everybody and their brother trying to game the system. Just look at all the pages in the tax code? Why? First we should allow only US citizens to get SS. Second we should allow only people who have paid into it to be able to draw from it. Third we should not allow any government borrowing from it. Fourth we should average all the years worked to find your withdraw amount. Fifth we should allow anybody who has paid into it to be allowed to withdraw their money from it ,not just one spouse or the other. Sixth we should not forfeit paid in money to SS when someone dies. They should get all their paid in money back to their family. SS is not welfare or the governments money. It is suppose to be a government retirement savings plan for the contributors, not a piggy bank for all types of extraneous government uses. Last thing is if one should want to pull all his money out of SS they should be allowed to do so. They should be allowed to privatize their own money… Lets not run SS like a casino was not the intent of the SS program…IMHO.
“It is suppose to be a government retirement savings plan”
No. No it was not.
William Ryan – On your #3. SS has currently 2.8 Trillion in its TF. All of this is invested in US Government debt. So the government is borrowing this money from SS until it it is need to pay benefits. You say that the Money SS has should not be lent to the government. OK, but what would you do with the money? It has to be held someplace, and it must be invested in something. The smartest/safest invest is in the SI government bonds that SSTF holds. Where would you/how would you invest the money that SS has saved??
Your #s 5 and 6 are just not workable. SS assumes that some will die young, some old. It is like fire insurance, if you don’t have a fire (or die young) you don’t get the benefits.
You make the mistake that somehow it is “your” money in SS. That is not the case at all.
To me these issues of solvency and ownership are becoming some of the hot button issues with SS as time marches on. If it is not my money(though I contributed to for 40+ years) it just magically becomes the governments money that I have to play their casino game to get back if I’m lucky. Then I should be allowed to privatize my money and put it into my own gov. bond somewhere safer from having give it to every Tom, Dick and Harry that never paid into it or are not even citizens. Why do we all in SS have to play their casino game with our money? The jig is up and people are getting tired of the gov. crap of constant misappropriation then lets just print more fiat money at the treasury to cover all our stupid asses. Are you not tired of this broken Ponzi scheme that cannot possibly be sustainable?
Oh please. If people do not get 40 quarters in contributions to SS, you do not qualify for it. There is no casino game or Ponzi scheme to SS. They invest in special Treasuries which are safer than a Federal Bond. If the US defaults on these, more than you will be in trouble. The world economy will be in trouble. Where do you get this nonsense? Michigan State Senator, “I am sick to my stomach” Joe Hune? SS is safer than anything in Michigan you might be close to today.
“You make the mistake that somehow it is ‘your’ money in SS. That is not the case at all.”
It is a common lie that many supporters of Social Security use: “You paid into the system; it’s YOUR money.”
That is, indeed, not the case at all. The truth is that your parents and grandparents stole your money from you for their own use, with the implied promise that you would be able to do the same to your children and grandchildren in turn.
William,
Fine, you can have all of your money back anytime you want. Though there will be a deduction for the cost of the disability insurance you had for 40+ years.
If you take a look at the cost of private disability insurance, and then figure out what the SS disability insurance would cost you on the private market(Hint: your SS payments ain’t paying for it), you should not expect a check, but a bill.
It’s an open thread – so I change the topic.
Yellen, the Fed Chair, testified today. She made it very clear that it was her intention to raise % rates in December.
So when this happens, and six months later we see economic speed bumps at work, don’t blame conservatives, deficit hawks, republicans or talking heads. The choice to raise rates is all Yellen’s doing.
I’m very surprised that Yellen is leading this charge. All her life she has been a monetary Dove. Go figure this one…
http://www.reuters.com/article/2015/11/04/us-usa-fed-yellen-idUSKCN0ST22V20151104#Lt6uS04sw1uktrrq.97
BK:
You do not believe neocons have not been leading a charge on increased Fed Rates?
“… don’t blame conservatives, deficit hawks, republicans or talking heads.”
In other words, blame Democrats.
Run – Neocons? There have many folks who have advocated raising rates long ago. And yes, a lot of those were conservative economic thinkers.
BUT – those folks have had 0.00% consequence on Fed policy the past 7 years. Those conservative thinkers have nothing to do with Yellen’s thinking today. The timing of the rate rise is entirely on Yellen’s shoulders.
Critter – Yellen is a lifer Democrat, but I don’t think her political affiliation has anything to do with her decision to raise rates. I can’t think of any Democrats who have been pushing for a rate increase, so no, you can’t blame either party for the choice that is about to be made.
BK:
You are deflecting. We are talking about thinking and the thinking of conservatives/neocons is precisely that, raise the rates. And no the timing for an increase is not precisely on Yellen’s shoulders. There has been pressure to raise rates by other and more conservative members of the board. I believe the Board votes on any action, yes?
BK,
If the economy improves, you can bet that all sides will claim credit.
Just to show how completely stupid our congress is….This from congressman Brad Sherman (D-CA). He thinks that Yellen should wait till the spring to raise rates – BECAUSE THAT IS WHAT GOD WANTS – egad…..
“God’s plan is not for things to rise in the autumn, as a matter of fact, that’s why we call it fall, nor is it God’s plan for things to rise in the winter, through the snow,” Sherman, a Democrat from California, told Yellen at a hearing of the House Financial Services Committee. “God’s plan is that things rise in the spring. And so if you want to be good with the Almighty, you might want to delay until May.”
Maybe Eddie Lampert should check with God. Ed’s been pushing for a rate rise for years…
http://www.bloomberg.com/news/articles/2015-11-04/god-wants-yellen-to-delay-rate-hike-until-spring-lawmaker-says
BK:
God’s plan is just as good a reason as conservatives not wanting the unemployed to have unemployment insurance or medicaid. Your sarcasm is getting a tad personal “Brucey.”
Bruce K,
Both of the news reports I saw would tend to suggest that the reports authors thought Sherman was kidding. However, I watched video, going back to the 3 hour version to get context, and if he was kidding he enjoys a dry delivery.
Warren this is moronic. There are no numbers that actually support this claim: ” The truth is that your parents and grandparents stole your money from you for their own use, with the implied promise that you would be able to do the same to your children and grandchildren in turn.”
It is true that the guys at AEI started pushing the idea of “Backwards Transfer” some years back and claimed that a large part of “Unfunded Liability” was due to over generosity to those parents and grandparents but it turned out that all of that depended on not understanding or flat out misrepresenting what the Trustees mean by “past participants” “current participants” and “future participants”. One you use the right definitions for the actual cohorts involved and examine revenues and expenditures for each actual year you see that the whole argument falls to the ground.
I am not gong to go through all the numbers again, you can search under various combinations of “Angry Bear” “backwards transfer” and maybe “bruce webb social security” to pull it up. But a lot of it was the result of people fatally understanding the word “participants” to be “beneficiaries”. When in fact they only overlap in part.
Every generation of Social Security BENEFICIARY has received a check with a better real basket of goods equivalent than the one before and this will continue to be true. EVEN AFTER TRUST FUND DEPLETION.
That is the conventional wisdom on this is back asswards. As is all to typical.
Try this article, Bruce:
http://www.politifact.com/truth-o-meter/article/2013/feb/01/medicare-and-social-security-what-you-paid-what-yo/
Here are a couple of the highlights:
“The bigger discrepancies common decades ago can be traced in part to the fact that some of these individuals’ working lives came before Social Security taxes were collected beginning in 1937.”
“Some types of families did much better than average. A couple with only one spouse working (and receiving the same average wage) would have paid in $361,000 if they turned 65 in 2010, but can expect to get back $854,000 — more than double what they paid in. In 1980, this same 65-year-old couple would have received five times more than what they paid in, while in 1960, such a couple would have ended up with 14 times what they put in.”
Warren:
I do not think you get it. The Barkleys, Dean Bakers, and Andre Bigs of the world talk with Bruce and Dale Coberly on Social Security and potential solutions to strengthen it going into the future and what and when things need to be done. Politifact in knowledge is like “The Weekly Reader” in comparison to Bruce’s knowledge. You and they already lost this discussion.
Warren try this. In 1983 the Social Security Trust Funds essentially went to zero. No money in the bank to help pay future benefits already accrued by current beneficiaries. But the flip side of this is that all past benefits HAD been paid for. By definition. Which raises the question of how many beneficiaries in 1983 had spent any appreciable time in the workforce before FICA started being collected in 1937. A newly retired beneficiary in 1983 would have been born in 1918 and entered the workforce sometime after turning 18 in 1936. So no free ride for them, they had been paying in their entire work lives. What about the retiree of 1960? He (because it mostly would have been ‘he’s’) would have been born in 1895 and entered the workforce sometime after turning 18 in 1913. And so spent 24 years NOT paying in against 24 years not. And so having a little bit of a free ride in Politifacts terms. But would also be 88 in 1983 and so well past then median mortality for is cohort and representing an ever shrinking part of the beneficiary population. And would certainly be out of that population by 1993, a time when only half of Gen-X would even be in the workforce.
So it is arithmetic nonsense that any real part of benefits earned by people who spent time in the workforce before 1937 were actually passed forward to Gen-X and Millennials.
As to your second paragraph and its claims, Arne treated it well enough below.
It is not enough to work from talking points or even logical first principles. In order to understand Social Security financials you need to look at it on a granular level using year by year numbers and cohort mortality. And understand that definitions of words matters. A lot. Because to repeat: a huge part of the argumentation underlying “Backwards Transfers” was the result of taking numbers for “current participants” and taking them to apply to “current beneficiaries”. When in fact “current participants” in Social Security includes people who would not even be eligible for full retirement for 42 years. Blaming THEIR grandparents for the fact that their own benefits after 2057 haven’t been paid for is lunacy. Or ignorance. Or flat out lying by people who actually know the numbers. Say people with initials A(ndrew) B(iggs).
Warren,
As an engineer, you understand that the model only needs to be good enough to answer the question being asked. To an individual SS looks like put money in, get money out based on how much went in. When you look deeper, you find it is more complicated.
If you want to know whether it can go on forever, you need more details. You will find that while we cannot pay scheduled benefits forever, we can pay benefits that allow each generation to buy more with their benefits than the previous generation could. The details also let you know that SS does not need a reform – it simply needs adjustments. As engineers with a common goal, we could find agreeable adjustments.
The purpose of SS is to allow workers to ensure that retired workers will be provided for. It has been the case all through history, but if you can’t agree that that is a valid goal, then reaching an agreement about how complex the model is will not allow us to reach an agreement on what its parameters should be.
“In 1983 the Social Security Trust Funds essentially went to zero. No money in the bank to help pay future benefits already accrued by current beneficiaries.”
There is no bank. There never was.
My statement is this — that Social Security is essentially parents and grandparents stealing from their children and grandchildren, with the promise that they will be able to steal from their children and grandchildren in the future.
Let’s make the (unfounded) presumption that the first generation recipients actually put in enough to finance (with reasonable interest) their retirement benefits. The money went into the “Trust Fund” to accumulate that interest.
So what happened to the money? It was SPENT — by the same generation that was supposed to be saving it for their own retirement. It was spent on current government programs, which reduced their need to pay more in income taxes. So, essentially, they shifted some of what they would have paid in income taxes over to FICA taxes, laundered it through a Trust Fund, and spent it just as they would have if it had been paid as income taxes. Then they required their children and grandchildren to pay that money back.
Brilliant.
Even more moronic. If there was no bank where did the cash come from when Social Security went cash flow negative in 1971? Over that next twelve years every single penny of the “Phony IOUs” in the Trust Fund was paid back with interest as the Special Treasuries were redeemed. And the same has been happening since 2005 with the Disability Insurance Trust Fund. At the same time that Bush was mocking that filing cabinet full of bonds his Administration started quietly honoring every single one of them FOR CASH.
When anyone buys a bond, whether that is the Chinese Central Bank or the CalPers Retirement Fund or any bond fund you like they give the money to the issuer, who might be a government or a corporation and the issuer SPENDS IT. That is the whole point of ISSUING BONDS. Of course the money that Social Security sent to the rest of government in return for Special Treasury Bonds was SPENT. Only someone who has swallowed bullshit anti-Social Security ideology hole would think of that as some kind of fraud.
Warren save your snarkish “brilliant”. Because you are the dim bulb here. And trying to rehash arguments that were discredited years ago at Angry Bear. You are just making yourself look like a newbie ignoramus here. Maybe you should pick a different topic to comment on.
Maybe Social Security is easier to understand if one realizes that it is an elaborate insurance plan including both retirement and disability benefits as they become necessary. Remember that the SS money that comes out of the pay check is labeled FICA, for Federal Insurance Contribution Act. It is like any other form of insurance with its own specific structure, just like all other insurance plans. You pay the premiums and if you live long enough you will be entitled to a benefit. At the end of the year I don’t get any refunds for my other insurance just because I was lucky enough not to need the potential benefit that was attached to my premiums.
The US, both parties to blame, squandered $28T from 1947, splashed into the pentagon trough. That is unproductive war profiteer Keynesianism.
The opportunity lost to the militarists is why the US suffered the 70’s and now the oughties/teens……….
Any talk of cutting SS or Medicare while the pentagon trough is sloshing at cold war levels is a massive scam.
Cut welfare for war mongers!
“If there was no bank where did the cash come from when Social Security went cash flow negative in 1971? Over that next twelve years every single penny of the ‘Phony IOUs’ in the Trust Fund was paid back with interest as the Special Treasuries were redeemed.”
From the income taxes paid by the recipients’ children and grandchildren, of course. Where do YOU think the money came from?
But these bonds are different from corporate bonds. With corporate bonds, those responsible for paying them make that choice freely. Even if those bonds are paid back by later owners of the company, those later owners choose to become owners, knowing the debt owed by that company.
That is not so with Social Security bonds. Those who issued those bonds did so to their own advantage — they could use that money instead of paying income tax, and have their children and grandchildren pay it back to them with interest later. And their children and grandchildren would have no choice in the matter.
That WAS brilliant.
And, of course, it was also paid by taking out still more debt to be paid by future taxpayers.
Ilsm, depends on how you look at it. Defense spending has increased, but has gone from between eight and ten percent of GDP during the 1960’s to between four and eight percent in the last decade.
http://www.usgovernmentspending.com/spending_chart_1947_2020USp_XXs2li111tcn_30f_Defense_Spending_Since_WWII
Meanwhile, government spending on Welfare, Social Security, Medicare, and Medicaid has gone from about 5% of GDP in the 1960’s to 15% now.
http://www.usgovernmentspending.com/spending_chart_1960_2020USp_17s2li011mcn_40t00t12t17t
Warren just stop! There was no Medicare or Medicaid or Federal Welfare before 1965. You are deliberately confusing cost inflation with program addition. And during the 60’s we were waging a Cold War with the Soviets that threatened to go really hot (like turning the earth into molten lava) at any moment even as we were fighting a massively expensive war in Vietnam whose relative costs and death tolls among Americans made either of Gulf Wars I and II seem like a fart in a hurricane.
The argument for spending money on ICBMs in the 50’s and 60s as against F-35s in the 2010s in literally in-commensurable, the USSR under Stalin and Khrushchev and China under Mao are not remotely like Russia under Putin or China under Xi. Even as those latter two guys are ratcheting things up compared to a decade ago. You are doing worse than cherry picking here, you are comparing oranges to poisoned apples.
But at least defense spending is debatable. Using baselines that start before program inceptions to judge the cost of the Great Society just generates garbage numbers. Unless you are willing to argue that Medicare and Medicaid were simple mistakes that should be reversed tout court. Yes Medicare in 1966 cost more than Medicare in 1964. Because there was no fucking Medicare in 1964. Maybe next you will start arguing worker/retiree ratios from 1950 as against today. While ignoring (because ignorant) that more people were receiving retirement benefits under Social Security Title 1 (which numbers are NEVER included) at more dollars spent in 1950 than were being spent under Social Security Title 2 (what we know as Social Security today).
Warren I think you mean well and want to be taken seriously, but trotting out every lazy ass talking point promoted by AEI and Heritage rather than engaging in actual numbers from actual data sources is not going to serve you well here. We all have seen the rightest propaganda, you are not going to surprise us with links of this type from dishonest brokers. At least our friend Bruce Krasting makes the effort to use actual official data sources. And trust me my suggestion that you need to be “more like Krasting” sets a pretty low bar to jump.
Defense spending only positive is value of research. The negatives, thousands of lost American lives, made enemies around the world, disable countries around the world, created terrorist in ME, and added to the national debt.
SS is by law (old age retirement and disability insurance) paid for by the people who will receive SS.
Medicare is welfare for private Insurance companies.
Medicaid is welfare to protect the public from those who are sick and can not afford medical care.
Warren there is no comparison at all between the social programs and Defense programs.
Calm down, Bruce. I was merely pointing out that, rather than “opportunity lost” to the war mongers, we did, in fact, significantly expand the welfare state.
“SS is by law (old age retirement and disability insurance) paid for by the people who will receive SS.”
If they live that long.
Umm, if you are paying into SS you are receiving your disability insurance.
geez
“SS is by law (old age retirement and disability insurance) paid for by the people who will receive SS.” If they live that long.
Think house or car insurance is the same; plus private insurance often does not cover the total loss.
EMichael, you may want to check the length of time your private disability pays. Many policies that people buy with their for there home only pays for six months.
“[If] you are paying into SS you are receiving your disability insurance.”
If one is receiving your disability insurance, he is not paying into the system.
But I understand your point, that one is paying for disability insurance. Yes, and no. One is paying premiums, which are used to pay the current beneficiaries. Excess premiums, if any, go to current government spending. As with the Old Age insurance, those who are paying benefits have no choice in the matter, and the first group into the system got the insurance without really paying for it, since they just used that money to pay for current government expenditures which would otherwise have to be paid out of income taxes.
Warren,
NO.
If you are paying into SS, you have disability insurance.
Beene,
There is no private disability insurance that even approaches the benefits of SS.
“If you are paying into SS, you have disability insurance.”
Yes, but that’s NOT what you wrote the first time.
“There is no private disability insurance that even approaches the benefits of SS.”
Of course not — Social Security gutted the market. There is no market for something that the government forces everyone to buy from the government.
Warren,
What?
Silly comment.
The advantage SS has is how long it lasts, not how much it pays.
Private disability insurance is a huge market.
Almost 40% of US workers have short term disability, and a third have long term disability insurance.
You just say things, don’t you?
And how many have contracted for that themselves?
See if you can go buy an individual policy and get back to me.
Google it yourself.
The cop-out response.
No it isn’t.
You have this silly thought in your mind and want me to show you how silly it is. When I do so, you will come up with another silly thought.
Yes, you can buy private disability insurance. For a long, long time now.
Now, just tell me another silly thought instead of actually trying to learn something.
Then why do we have SSDI in the first place?
For those who cannot afford private disability insurance?
For those who may be disabled for their entire lives?
Cause the sky is blue?
If they cannot afford it, how can they afford the SSDI taxes?
geez
You are too fen stupid to waste time on.
Sorry for being direct, but dealing with someone who has his world etched in stone that refuses to think at the same time he refuses to work at all to improve his knowledge is a counterproductive to me.
I raised my kids already.