GOP PLANS TO GUT SOCIAL SECURITY
by Dale Coberly
GOP PLANS TO GUT SOCIAL SECURITY
The Republicans have opened a new assault on Social Security. At present all I know about it is what I read in a Talking Points Memo by Tierney Sneed Key House GOPer Introduces Bill With Major Cuts To Social Security .
The trouble with Sneed’s article is that she does not appear to know what she is talking about. She just wrote down what some “experts” told her with no idea what the words mean.
For example, she says,
“A 65 year-old at the top of the scale, a $118,500 average earner, would see his benefits cut by 25% when he retired, compared to the current law, and that reduction would grow to 55 percent compared to current law by the time the retiree was 85 years old.”
Well, which is he, “at the top of the scale” or an “average earner”?
The point is probably trivial but I point it out so you will be on your guard if you read her article.
Additionally she quotes Paul Van de Water, who is someone who actually knows that Social Security can be fixed entirely and forever by simply raising the payrolll tax one tenth of one percent per year until the balance between wage growth and growth in the cost of retirement is restored. But somehow she doesn’t bother to mention this, or maybe Van De Water forgot to mention it because he favors a “tax the rich” solution… without understanding that that will turn Social Security into welfare as we knew it, and lead to its ultimate destruction by those rich who would then be paying for it.
Social Security has succeeded because Roosevelt insisted it be paid for by the workers who would get the benefits, “so no damn politician can take it away from them.”
But the damn politicians keep lying and journalists keep repeating the lies without spending ten minutes thinking about them.
The basic “facts” about the Republican proposal, introduced by Texas Congressman Sam Johnson appear to be :
gradually raise the retirement age from 67 to 69.
This amounts to a benefit cut of about 10%, but that’s not the worst of it. Raising the retirement age is simply a death sentence for people whose health is not up to working another two years, or won’t live to collect benefits for more than a few years after they retire.
change the cost of living adjustment to reduce real benefits as the retiree gets older.
This is called a “technical adjustment.” They can pretend that the CPI is too generous and know that most people won’t understand the scam.
the size of initial benefits will be cut for most workers by catastrophic amounts.
This turns Social Security into a straight welfare plan. Most people will be paying for benefits they will never get. The very poorest are promised a larger benefit for awhile… until the bogus cost of living adjustment, and increased retirement age do their work. Moreover it is not clear what happens to “the rich” who lose their “side income” as they get older. And of course there is always the fun of going to the welfare office every month to prove that you don’t have any hidden assets.
Meanwhile, the CRFB (Committee for a Responsible Federal Budget). an organization dedicated to the destruction of Social Security by misrepresenting the facts, is playing cute games like “use our calculator to find out how old you will be when SS runs out of funds.”
But SS will never run out of funds as long as the workers are allowed to pay… in advance…for their own benefits. With no change at all in SS, SS will pay 80% of “scheduled benefits,” but this is 80% of scheduled benefits which meanwhile have grown 25% in real value. So the GOP “plan to save SS” is out and out theft.
CRFB has another cute game: “use our calculator to design your own plan to save social security.” But when I used their calculator it did not allow “increase the payroll contribution by one tenth percent (for each the worker and the employer) per year for twenty years.
There are other ways to accomplish the same end, but this seemed to be the simplest way to fit the CRFB “calculator.” Someone with more time and a newer browser might want to try seeing what they get. But look at small per year increases in payroll contribution. For example, I think a 0.4% increase (combined), about two dollars per week for each the worker and the employer, should solve the problem in ten years, but I haven’t done the numbers on that myself.
Meanwhile, something that calls itself “the Bipartisan Policy Center, says “Ultimately, we are going to need something that’s a little more balanced between benefits saving and revenue changes in order to get a proposal that could pass Congress and get approved by the president,” said Shai Akabas, director fiscal policy at the Bipartisan Policy Center.”
It’s hard to see how much cuts (“benefit savings”) make sense to balance a dollar a week increase in the payroll tax (revenue changes), but that’s the kind of thinking that “Bipartisan” gets you. “Hey folks, we can save you a dollar a week just by gutting Social Security so it becomes meaningless as insurance so workers can retire at a reasonable age.”
I am getting too discouraged. As long as no one is working to tell the people how this will work for them, we are just going to stand around like sheep and watch them cut our throats.
Coberly – You need to do some research. The numbers on this proposal come from Stephen Goss – the chief actuary for SS. Mr. Goss is not a hack or a liar. All of his calculations are in the letter that is linked in the article.
As of today, SS benefits are scheduled to be cut – across the board – by about 2030. That is a disaster. It would be very unfair to those who desperately need their full benefits. The proposal under discussion would have the bottom tier of SS recipients get an increase of 9% while those who continue to make significant income after retirement would see their benefits decline. What is your problem with that outcome??
You are in left field screaming that the only way to adjust SS is to increase taxes. You are again proposing that the “solution” is to raise SS taxes every year for at least 20 years. That is not a solution at all.
A combination approach is the only realistic way to address the future shortfalls. A tax increase only approach is dead-on-arrival. Admit it.
Dale has many times posted his argument and evidence that modest tax increases stretching over 20 years is a solution to the modest SS benefit reduction that would otherwise occur in the 2030s. Please provide the evidence that modest tax increases stretching over 20 years is “not a solution at all.” Take all the time you need.
Joel – For me it is simple. A single solution approach is not politically viable. It’s also not fair.
Who would advocate a plan that raises regressive taxes, (that hurt small business owners and two income families the hardest) for 25 consecutive years? Bernie? Warren? Schumer? Pelosi? The Democratic party? I say no.
I also don’t think Trump would do it, and I’m sure the Republicans would not support it.
There has to be compromise. There are dozens of ways to address SS. If you (and Coberly) said, “Phased in tax increases should be part of a broad range of option for SS” I would (maybe) agree with you. I think that taxes have to come up, although I consider this to be the least desirable result. (There are no tax increases in the proposal Goss opined on)
I just do no accept that all of the burden should fall on middle class taxpayers. I say raise the cap. I say change the benefit formula (more bend), I say means test benefits. I also think that the FRA should go up.
Coberly has a one trick pony. I don’t think anyone will come to his circus.
Never trust articles that don’t cite their sources. Here is the actuary’s letter to Rep. Johnson:
https://www.ssa.gov/oact/solvency/SJohnson_20161208.pdf
krasting and warren are notoriously wrong about Social Security.
read the Actuary’s letter, and then think about it for ten minutes.
Uh, I’m the one that linked to the “Actuarh’s” letter.
The text of the bill is not available on thomas.gov yet, but should be shortly: https://www.congress.gov/bill/114th-congress/house-bill/6489/all-info?r=1
Warren – The article does have the link. It is in Bold face at para. 12. Does this mean you trust the article now?
i am proposing a dollar a week increase in the tax each year while wages grow about ten dollars per week.
this is to avoid cuts of 20% or much more in benefits.
the “tax” will be paid by the workers who get the benefits. they will get their money back with interest and an insurance “boost” if needed, when they retire.
Krasting in his wisdom calls this a non starter. Why sure a combination approach, say only a fifty cents per week increase, could save you that other fifty cents per week and cost you only about a ten percent (or much more) cut in benefits … from a benefit level that is already very close to the poverty line.
Krasting has no numerical judgement, as well as no moral judgement. Say the word “tax” and he’s against it… no matter what.
The article i cited and linked contains a citation and link to Goss’s letter.
That does not appear to be enough for Warren, who does not tell us what there is in Goss’s letter that contradicts what I or Sneed said.
Warren has wasted a lot of my time on Angry Bear chasing down rabbits he starts that turn out to be either wrong or insignificant. If you have time to chase this down, be my guest.
Meanwhile the Republicans are proposing to gut Social Security. That should motivate you to do your own research and find out what the real facts are and what they mean.
I suggest you start with the real Trustees Report, not the summary, and not what CATO or CRFB tell you. They are skilled in the art of fooling people to their own destruction.
Warren: “actuarh’s letter”
leave it to you to make something out of a meaningless typo. This is what is wrong with your brain: the inability to tell the significant from the insignificant.
the 20% cut (and 10% “half cut” in my replies to Krasting are the MINIMUM cuts you would see if NOTHING IS DONE. The GOP proposed cuts are MUCH bigger than that.
Krasting thinks asking the workers to pay an extra dollar per week each year while their income is going up ten dollars per week each year, in order to guarantee a pension that will be about $20,000 dollars per year for an average of 20 years, is “unfair.”
Instead he proposes a compromise, to save you half (i suppose) of that dollar per week, and plan to live on 10,000 dollars per year when you are old… and they have cut your cost of living increase, and kept you from retiring at all until you are 69, if you live that long.
i have to rely on people’s ability to think clearly about this. i am not optimistic. especially since they will never hear about it.
“one trick pony”:
your car isn’t running good. the mechanic says you need to adjust the carburetor… just a half turn with the screwdriver.
Krasting, the guy loafing at the garage, says, “No. you have to compromiiise! Let some air out of the tires, and you can save money if you don’t change the oil or buy antifreeze, and, oh, yeah, make that guy over there with the Lexus pay for it.”
“The trouble with Sneed’s article is that she does not appear to know what she is talking about. She just wrote down what some “experts” told her with no idea what the words mean.
For example, she says,
“A 65 year-old at the top of the scale, a $118,500 average earner, would see his benefits cut by 25% when he retired . compared to the current law, and that reduction would grow to 55 percent compared to current law by the time the retiree was 85 years old.”
Well, which is he, “at the top of the scale” or an “average earner”?”
It may be that Sneed doesn’t know what she’s talking about, but your comprehension of her statement is, uh, lacking. “…at the top or the scale…” refers to the top of the BENEFIT scale. “… a $118,500 average earner,…” refers to his average recorded lifetime earnings, NOT to $118,500 as an average amount to earn. Her statement makes perfect sense.
Whether it is fact true is another, more complicated matter which you do not address.
I think you need to learn to read English. The phrase “a $118,500 average earner” set in commas, serves to define the phrase “a 65 year-old at the top of the scale”. Someone at the top of the scale is someone who earns an average of $118,500.
Jane:
The sentences in the quote are poorly written and would lead to a misunderstanding by the casual reader who more than likely does not understand what the top of the scale is or that $118,500 may be that scale. Coberly does know more about Social Security than 99% of the readers here and have been recognized by Economists such as Baker, etc. for his knowledge along with Bruce Webb.
Adams
The SS tax, and cap, is based on actual taxable earnings in the given year. It does not look at ‘average” earnings. Since benefits are paid according to income and SS tax history, the “average” earning is not what is looked at. Any income above the cap is not counted, or taxed.
It is hard for me to see how this has any material significance, but I pointed it out because it suggested to me that Sneed was just “reporting” what she heard and did not understand it.
If you think it is significant, whether true or not, give us your reasoning.
I have real work to do. So I won’t be replying to comments for awhile.
If anyone has any honest questions I will try to get back to them later.
I have my own weird tack on SS retirement.
I see the Trust Fund as having been accumulated over the decades by my generation — by paying higher FICA tax to purchase fed bonds with. TF running out now supposed to be the big to do? Wasn’t it supposed to run out? Aren’t we supposed to use what we saved?
I like to say: have an SS retirement shortfall today? Do it all over again: hike FICA, lower income tax and accumulate bonds. Mmm.
But, just now — five minutes ago — I had a brainstorm. If Repubs want to cut benefits so FICA shortfall doesn’t have to made up by income tax cashing bonds (covering about 25% of outgo just before our bonds run out, then, Repubs want to steal our savings that we forgave immediate gratification to accumulate all those long years.
Always suspected income tax payers who are hit for as much as 39% would balk at cashing the bonds when the time came — but on the basis of the usual world run for the haves idea. Never thought of it in terms of outright theft — before five minutes ago.
PS. Really shouldn’t use up all bonds. Right now there are about four years of full replacement in the TF. Legal solvency is defined as one year — needed to cover temporary shortfall while Congress moves to fill in — happened couple of times.
“I see the Trust Fund as having been accumulated over the decades by my generation — by paying higher FICA tax to purchase fed bonds with.”
Let’s take that at face value. From whom did you purchase the bonds? Did that not merely reduce the income tax you had to pay for government services? So, you got to put money into government services you were getting, AND you got credit in this “trust fund” that you are going to force future taxpayers to redeem. Brilliant!
Don’t be distracted by the projected depletion of the trust fund. That is the shiny object that the magician distracts you with when he palms the coin in his other hand. The reason that the Republicans are going after SS with redoubled intensity is that we’re reaching (have reached) the point where the trust fund bonds are being redeemed by the SS administration from general revenue. And THAT is what the wealthy object to. They’re fine with having SS charge payroll taxes in excess of its current needs, because those payroll taxes are capped and the wealthy pay a much smaller proportion of their income into them. But the general revenue to repay the trust fund bonds that SS issued to the Treasury comes from income, capital gain, and corporate taxes. And THAT is what the wealthy are whining about.
Jane E
not sure who you think needs to learn to read English.
Someone at the top of the scale earns 118, 500 dollars, not “an average of $118,500”
but here is a way to try to explain the point you and Adams are missing:
suppose you are a starving artist, and for 40 years you report (adjusted..learn what that means) earnings of less than say $5000.
after 35 years (not 40) you suddenly get famous and sell all your paintings for a total of 4 million dollars. As far as Social Security is concerned your taxable (adjusted) income for that year is $118,500.
And if you never earn another time, your lifetime taxable adjusted earnings totals $288,500. That’s what you paid taxes on, and your “initial benefit” will be based on “average” earnings of $8,242 dollars per year. But your “average earnings” including that above the cap in that one glorious year are $119,143.
Thats why people who know what they are talking about don’t confuse “$118,500 average earner” with “earner at the top of the scale.”
Jim A
you may be right, but i think the real answer is just that they hate Social Security so much (they don’t know why. they were just told it was “socialism”.) that their brains have become too fucked up to know what they are thinking or why.
Warren
usually you are just silly. here you show you don’t know a damn thing about money.
yes, you bought a bond, and you and other people who pay income taxes got to pay a little less in income taxes. now that the bonds are coming due, you and the other people who paid less taxes then will have to pay more taxes now to repay the bonds. That’s what happens when you borrow money. But still, people borrow money. Because money today is worth more than money tomorrow to them. People buy bonds because money tomorow is worth more to them than money today.
I don’t know how to explain this any more clearly to you. But if you are making money from stocks and bonds you need to thank god that the rest of the people in the market know what they are dong. You are just along for the ride.
furthermore, in general the people who pay SS tax are not the same as the people who pay income tax. The people who pay income tax thought at the time that borrowing the money from SS made sense to them even though they would have to pay it back in the future.
It is not clear that Congress understood this.
Denis
your tack is not so weird.
if we begin paying that dollar per week per year increase by 2018 (there is yet time, brother) the Trust Fund will NEVER have to be paid back. The principle… the bonds we bought… will just lie there accumulating interest. much of that interest will just add to the nominal amount required for the required one full year’s reserve… i.e. never be cashed.
the rest of the interest would in fact be paid out and supplement the FICA tax up to about 1% of payroll.
of course the far left will tell you the rich are not paying their fair share, and the rich will be working desperately to stop paying the interest (never mind the principle) on the money they borrowed. without, of course, actually paying the money back.
JimA – You have a misunderstanding. You seem to believe that SS IOUs are being redeemed with on-budget “General Revenue” money. Not the case.
The SS IOUs are no different that any other form of Treasury debt. When old debt comes due, it is paid for with new borrowings.
100% of the SS Notes and Bonds will be paid in full (with interest) over the next 13-15 years. This will not add a dime to the budget or the deficit.
So the motivation that you think the Republicans have is really not there.
I rather suspect Sneed used poor wording about the top of scale earner because calculating the Primary Insurance about (PIA) and Average Indexed Monthly Earnings (AIME) is complicated. All of the comments here also try to simplify things to “help” remove Sneed’s confusion.
I suggest reading for yourself.
https://www.ssa.gov/oact/cola/Benefits.html
Probably multiple times.
I am not sure in which provision it is accomplished, but figures 3 and 4 of Goss’ letter show expenditures equal to costs. While the NW plan has had triggers to ensure balance beyond 75 years, this seems to be new thinking for “reformers”.
I suspect it is buried in the benefit formula reductions. Anyone see where?
Krasting
as I said, I don’t think the people who hate Social Security even know why they hate it. it’s because after telling so many lies so many years they have come to “believe” them… it’s in their synapses.
while no taxes will be spent to redeem the SS bonds, the haters will claim that the borrowing used to redeem the bonds will “increase the deficit.” they get that trick by not counting the SS bonds as debt and did not account borrowing from SS as deficit. it’s the old “on budget off budget” magic show… talk fast while waving your arms a lot and people will think they understand.
it takes selective blindness and self deception to manage this trick, but that is something humans are very good at.
Arne
you are a braver man than I am. I looked at the Goss letter and knew it would take more time than I have to “understand” it.
I would bet, however, that “expenditures equal costs” is just more or less an artifact of jiggling the figures to get them to come out “right” in the end and not due to any careful, much less reasonable “balancing.”
of course, if cutting your pension by 11% is a balanced way to save yourself a dollar a week (per year while your income grows ten dollars a week) well…. i’m sure they can sell that to Congress.
most people figure that saving a little more in order to have a more comfortable retirement is “good financial planning,” unless of course the government guarantees your savings and provides insurance in case you can’t save enough to live on when you are old.
that’s called “socialism,” because in a “free society” the predators have first dibs on your money. and its good for our manly virtue if we take our losses without crying. and simply die in the streets, as we deserve for not being prudent or successful enough.
Bkrasting or somebody,
Will somebody explain to me: “When old debt comes due, it is paid for with new borrowings.”
The purchasing power must come from (be diverted from) somewhere else. Can’t just magically pay out retirement from nothing. If so let’s pay all our SS (and everything else) that way. I assume there is something to what you said — but I would sincerely appreciate if you would clear up this funding mystery. 🙂
Denis
there is no mystery. Krasting, and Congress, just like to confuse themselves… and you.
The money,real money, is paid out to beneficiaries. Most of it comes into SS the same month from FICA contributions that month. Sometimes more comes in than needed; sometimes less. The Trust Fund was established to smooth over those fluctuations. The tax level (FICA) was set to smooth over longer term fluctuations like the baby boomer retirement.
The boomers would have had to pay “less” money than other generations because there were so many more of them than the preceding generation that the per capita costs would have been lower. But even Congress could see that when the boomers retired they would cause the following generation to have to pay MORE than other generations… because there were so many more boomers than the following generation. So they decided that they could raise the tax so the boomers paid a “fair share” of the costs of their own retirement. Since the extra money would not be needed right away it was lent to the government in the form of “buying government bonds.” This means “lending money to the government. This meant the government did not have to tax the then present generation as much for the same level of services as it would otherwise.
Now that the boomers are reaching retirement age, it is time to pay back the bonds. This can be done by taxing (income tax) the people (or heirs) of the people who borrowed the money (and got the government they wanted, possibly including some “infrastructure”. with long term benefits for the economy. Or the government could repay the money to SS by borrowing other money from other borrowers… people who had more money than they wanted to spend and thought a safe place to save it would be in government bonds.
This is long, and i hope neither too obvious nor “not yet clear.” But there is always real money at the bottom of borrowing. If you can keep rolling over the debt eventually inflation essentially erases it. But of course meanwhile you have to pay the interest… and that comes from real taxes… or more borrowing.
It’s really not a big mystery.
Again, if the people pretending SS is a burden to the economy are not complaining about the cash to pay off the debt owed TO SS, they are complaining about the “increase in the debt” cause by counting money borrowed from the “market” as real debt, while pretending that money borrowed from SS was not real debt. And just to keep things confusing, money borrowed from SS never showed up as “deficit” in the yearly budgets. But money paid back to SS will show up as “deficit” so they can claim that paying back the money increases the deficit, and forget that borrowing decreased it. And if it’s confusing that borrowing decreased the deficit while increasing the debt, and will increase the deficit while decreasing the debt… well, it’s only the magic of “accounting,” which sometimes is hones, and sometimes is designed to conceal the truth. Count on your fingers. If you are a normal human being you will figure it out. If you are Krasting, or Congress, or a College professor you may have difficulty.
By raising the payroll tax just enough to meet current (and near current) expenses (benefits) you never touch the Trust Fund, so Congress never has to repay the money it borrowed from SS. On the other hand, the interest keeps going up (compounding). I hold that down by using part of the interest to pay for benefits. It’s either that, or repay the debt owed to SS, or watch the Trust Fund (debt owed to SS) grow to frightening proportions… at which point it will be a meaningless paper number, but you can bet the bad guys will use it to claim the sky is falling and we’re all going to die.
Denis – Go to the following Treasury web site. Scroll down, study it. You will see that Treasury is selling new Bills, Notes and Bonds every week. Most weeks the Treasury has at least two sales.
Why is Treasury selling all this new debt?
1) To pay for the annual deficit.
2) To pay off old maturing Bills, Notes, Bonds AND Trust Fund IOUs.
Old debt is never really “paid off”. It is just rolled over and over.
https://www.treasury.gov/resource-center/data-chart-center/quarterly-refunding/Documents/auctions.pdf
That help?
Coberly,
“Since the extra money would not be needed right away it was lent to the government in the form of “buying government bonds.”
And when it’s time to pay back they cut benefits instead — stealing our money — where I came into this movie. Ho, ho, ho. :-O
“Old debt is never really “paid off”. It is just rolled over and over. ”
Yep. And it hasn’t proven a problem. If the deficit scolds are concerned, let them raise taxes.
Joel
it would be easier to understand if everybody didn’t lie about it all the time. i don’t know much, but i think raising the debt affects the price of bonds, and paying off the debt affects the rate of taxes.
People with a lot of money hate, hate, hate to lose a dime in either their taxes or their investments, even if it means workers work for subsistence wages or less, or old people starve in the streets.
This is not because they are cruel. It’s just that they’ve taught themselves not to think about it. Even when it gets back to them (you can’t make money in a country where the people are starving). You’d have thought the New Deal would have taught them something they got richer even as their taxes and the wages they paid went up), but they can’t learn.
What are we going to do the day the Chinese decide not to roll our bonds over?
Like if we get a crazy president who goes out of his way to make trouble with the most populists country in the world — eventually to be the biggest economy in the world — just so he can have (another) noisy news day. Could happen; never know.
Denis
I don’t know how it would affect the economy. Probably be bad. But it’s effect on Social Security woud be practically nil. If it happened today, it would mean we would need to raise the payroll tax about 2% (each) immediately. Not a real burden. Most people would not notice it.
It would also mean, if it happens later, that the payroll tax would need to be raised another 1% (combined) in order to meet benefit needs without the help of interest from the Trust Fund. Again, not a huge burden.
As long as you remember what you are paying for: the ability… the certainty…. of being able to live in reasonable comfort after you are too old to work.
As for the economy, my first guess would be that if the Chinese were not willing to lend us money we’d have to raise interest rates to borrow from our own rich people, who currently are trying to make bigger money by gambling on zero sum games on the stock market.
Coberly,
“raise the payroll tax about 2%”
Especially since per capita income increases 10-15% every decade.
It’s just that the people who pay the tax don’t anywhere keep up with the growth.
Denis
according to the Trustees Report average real growth of wages of those under the cap is expected to be about 1.1% per year or about 10 – 12 percent per year. How this breaks down among those earning over 50k and those earning less I don’t know.
But even with no growth in real wages at all, if the cost of retirement increases that much, it is perfectly reasonable, indeed necessary, to plan to increase the amount you save to pay those costs. You will have to save a little more on something less important. Having been dirt poor myself, I don’t think it would be hard. Or even noticeable once you got used to “that’s the way things are.”
Jim A
I think another… maybe the “sane”… reason they hate Social Security is that they think of it as a tax. They hate government and they hate taxes and they don’t think they need Social Security’s insurance. They think they are smart and lucky. And “lucky” for them counts as a moral virtue, part of their mana. They can’t imagine they could end up poor. Or they can’t imagine what it would feel like. They can sort of imagine a black and white out of focus picture of themselves wearing old clothes and eating plain food, but they can’t feel real pain, grinding poverty, bad health..
Anyway, bad luck is for losers and they are not losers.
And their odds are not bad. About 50% of them will do well enough without Social Security to tell themselves they didn’t need it. But the other 50% will not. And they, and we, can’t tell those who will from those who won’t. And Social Security at least means those who won’t will have paid for their own “welfare”… their own basic retirement. Without Social Security, the rest of us will have to pay for their bad luck as pure welfare… without them having contributed a dime.
They are users but they call everyone else users. Unless of course they get lucky. But even there, they won’t do as much better than Social Security as they suppose. They imagine they could invest their Social Security money and double it every ten years or so. But they wouldn’t invest it. They would buy a new car. By the time they are earning “over the cap” their total SS tax is about 12 thousand a year… less than a new car. Less than they spend on a lot of other stuff they just piss away. But they never think of that. They only think “the government took away my money and gave it to some loser.
Arguably “sane”, if they win their bet. But stupid. And not tolerable in a country where even they depend on the contributions (work) and civic-mindedness of others.
Ayn Rand economics, not to say morality, doesn’t work.
But the thing is Big Winners are made that way. They are sociopaths. And their need to gamble and grab can’t be cured.
And it is useful to the rest of us if they gamble on new products and ideas.
I have nothing against their making money and keeping most of it. But it is not safe to let them make the rules.
That would be exactly like letting the prize bull on your farm make the rules for how the farm is run.
“yes, you bought a bond, and you and other people who pay income taxes got to pay a little less in income taxes. now that the bonds are coming due, you and the other people who paid less taxes then will have to pay more taxes now to repay the bonds.”
Ah, but there is the rub, oh Shiftless One (as Faulkner was the Periodless One), it is not those who bought and sold the bonds who must redeem them. The vast majority of Social Security recipients do not pay income taxes, so they will not have to pay to redeem the bonds. Their children and grandchildren will.
“Especially since per capita income increases 10-15% every decade.”
Except that we do not tax all income. The bulk of that increase is at the top of the income scale, which is not touched by FICA taxes.
I do not disagree with Coberly’s plan. It is sound. But assuming that people will get pay raises greater than the increased tax does not comport with the reality that below-median earners have faced in the last three decades.
” Their children and grandchildren will.”
Presumably, these are the same children and grandchildren who will be benefiting from all the goods and services purchased with that borrowed money and the animal spirits released by the tax cuts that could have paid for them instead of borrowing. Because tax cuts pay for themselves, right?
Feh.
Warrem
please quit. you don’t know what you are talking about. and it is cruel to me to have to keep answering you.
the “united states” sold the bonds. used the money for purposes important to “the united states”, and will redeem the bonds just the way it redeems all the bonds everyone buys, including you and the government of china. trying to parse out who “really pays” is a fools mission.
the people who bought the bonds… future recipients of social security benefits used the bonds as a vehicle to save a little more for their retirement, just the way almost everyone who buys a bond uses them (to save for future expenditures).
there is no mystery here. no crime. no swindle. except in your diseased mind.
sorry that you drive me to talking that way. but nonsense is infectious and you are like a disease germ in any effort to understand how SS works.
if you don’t like the way the money borrowed from SS was spent, that’s a different issue. take it up with your congressman.
warren
by the way. how you doing with that link to Goss’ letter? find anything incriminating, or were you just being a pest?
Warren
thank you for finding my “plan” to be sound.
i should be grateful. but i am very tired and very irritable. SS is going to be stolen from the people… and the people’s children, who pay for it themselves, doing them great harm.
all of your comments seem to me to be wrong headed and trivial. if i had more time, and if you weren’t distracting from the main facts, i suppose i should want to try to explain things to you better. but as it is i wish you would just find something better to do with your and my time.
“were you just being a pest?”
No — it is just that my old eyes did not notice the change in font color suggesting a link in the article you cited. (That a bill number was not provided also stirred my suspicion.) I am used to underlines, as in your post. It is a common tactic of those trying to mislead us to leave off bill numbers and such.
‘[Trying] to parse out who “really pays” is a fools mission.’
That is the whole point of the SSTF — to obscure who really pays.
With the SSTF, when there is a surplus, that surplus goes into the General Fund (in exchange for untradable bonds). When there is a deficit, the deficit comes out of the General Fund (redeeming some untradable bonds).
If there were no Trust Fund, and surpluses went into the General Fund and deficits came out of the General Fund, what would be the difference? None. The SSTF is an accounting tool. The law says that when that account drops to zero, no more money can be pulled from the GF to pay benefits and benefits will be cut. The reality is that no-one thinks Congress will let that happen.
Warren
i wouldn’t try to mislead you. you do such a good job of misleading yourself.
The trust fund accounting is straight forward. it’s just the liars who try to make it sound like SS is somehow costing the taxpayers money other than the workers who are paying for their own benefits.
have you managed to understand yet that if the congress did not borrow money from social security, it would borrow it from somewhere else. there is no increase in the debt because of SS.
and most sane people understand that when you borrow money from someone that someone is not increasing your debt. you are.
Warren, I can’t go round and round with you about this. I have wasted time with people who know more than you, and i have seen no evidence that anyone can think straight when what they want to believe is crooked.
the only thing i can do here is try to alert people to the fact that they can… if they pressure their congress… keep the Social Security they will need by simply raising their own payroll tax about a dollar per week per year.
all the rest you read is just someone trying to obscure the facts by raising meaningless objections…. and then talking about them endlessly as if they made any difference to the reality that they need to save for retirement one way or another, and Social Security offers a way to protect that savings from inflation, market losses, and personal bad luck. It is the best deal workers can ever hope to get, if they can keep it.
The question is, why raise the FICA taxes before the money is needed to pay benefits?
Warren
“the question” has been answered here many times. but just for you, one more time
we raised FICA before the money was needed to pay current benefits in order to keep a fair relation between the money paid in by the boomers to the money collected in benefits by the boomers.
and if you are asking about why the NW plan raises the tax “before it is needed”
it’s to avoid sudden large increases that might cause people some difficulty. a one tenth of one percent increase per year would not be noticed. a two percent increase all at once would not be a real hardship, but it would be noticed.
moreover, the increased tax “before it is needed” will in fact be paid back to the person who paid the increased tax when it is needed as benefits for that person.
the NW plan schedules the increases “whenever the Trustees project short term actuarial insolvency” meaning that they predict that within ten years the Trust Fund will fall below the one full year’s required reserve. This turns out to be exactly long enough in advance to avoid the projected shortfall entirely. (not by accident:: some thought went into this which is hard to explain to people who don’t have thoughts.)
or to put it another way: it’s to avoid the jerks.
this is not especially directed at Warren. i know people who have written whole books about Social Security who have never thought about it for ten minutes.
The article mentions Roosevelt creating it but fails to mention how deeply flawed and broken it was, and as most ‘worker funded’ schemes are, relying heavily on demographic birth booms to fund it. If the author had an inkling of really wanting to tell the entire story, he’d mention how President Reagan saved it.
President Carter was afraid to touch it. President Ford and LBJ didn’t have the cognitive abilities to understand it. Nixon probably wanted to undermine it. But Reagan, as much as the left hates him, shouldn’t mention Social Security without admitting that his courage and actions saved it.
Clinton didn’t have the courage to employ the fixes the author talked about, even though he enjoyed a Democrat Senate and Congress for some time. Nor did Obama, who just like Carter, probably lacks the cognitive ability to understand the problem. He also sat on his hands while enjoying a Democrat controlled House and Senate, instead passing the failed healthcare ‘fix’ that is anything but.
And the same drivel they are using today, they were using then. “Reagan will destroy Social Security!” they exclaimed. How wrong they were. Shame on the author and shame on anyone who doesn’t mention that Reagan saved it. Reagan SAVED SOCIAL SECURITY!
Sebastion:
Pink Cadillac Reagan could not save a good role in a movie as an actor much less save Social Security. He never had the wherewithal or intellect to do so. If you want to credit someone, I would pick Senators Dole and Moynihan. I am going to let Dale Coberly take you to task on the rest of it.
Welcome to AB.
Sebastian,
“relying heavily on demographic birth booms”
Per capita income (economic output, GDP, whatever) doubles twice as fast as population — which population in this country eternally expands because we forgot to build a wall. 🙂 500 million by 2050.
Sebastian
Reagan saved SS the same way he won the cold war. I’d be happy to give him credit if you like and understand the fix they came up with.
But you give yourself away by saying things like “how deeply flawed it was..” SS has worked for 80 years through wars and depressions to provide retirees and widows and orphans and disabled workers with their basic needs…. according to insurance that they paid for themselves, without need of tax money from anyone but those workers themselves. What is “deeply flawed” about that?
I have no interest in “telling the entire story.” There are books that do that. Some good. Some bad.
My interest is in telling people they can keep Social Security forever, solvent and sufficient to meet their needs, simply by paying for it themselves, as their parents and grandparents and great grandparents did.
The cost is likely to go up a bit as we are living longer. And the wages to pay for it with are projected to not go up quite as fast. This will require that we will need to pay a little more as a percent of wages. But not all that much more. And we can reach the new level with about one dollar per week per year while wages are projected to go up about ten dollars per week per year. Hard for me to see what’s wrong with that. But I have seen a lot of squirrely ideas from people with an axe to grind who don’t know what they are talking about, but like to sound tough.
I won’t bother refuting your “argument.” But I will mention that a President need not understand SS himself; he needs to be honest and hire some people smart enough and, yes, listen to ideas that are not coming from the “non partisan experts.”
Denis
Sebastian is actually wrong about “relying on” birth booms to fund SS.
It is true that growth in the economy enables SS “taxes” to be lower than they would need to be without said growth. But without that growth you Bond and Stock markets wouldn’t provide you with any “funding” either.
It is also true that a part of economic growth is due to population growth, but even without population growth… or even economic growth… SS, as designed… would still provide a way for people to save their own money, safely, for their own retirement.
The cost would be a little higher, but the financing would be straightforward.
I doubt if Sebastian has any idea what a non worker funded retirement plan would look like. A time may come when workers make so little they won’t be able to afford to save for retirement. If that time comes the workers will either just have to work until they die, or start killing a lot of rich people until the fruits of economic growth are share more fairly.
I won’t bet on the rich voluntarily paying for our retirement. But I won’t bet on the poor not killing the rich if it comes to that.
Meanwhile, we can pay for it ourselves without even noticing the cost. Seems like a good idea to me.
“we raised FICA before the money was needed to pay current benefits in order to keep a fair relation between the money paid in by the boomers to the money collected in benefits by the boomers.”
Except they are not paying in, really. They pay more in FICA taxes, and equally less is required of them in income taxes or other debt vehicles.
“it’s to avoid sudden large increases that might cause people some difficulty. a one tenth of one percent increase per year would not be noticed. a two percent increase all at once would not be a real hardship, but it would be noticed.”
That is a better reason. Boil the frog slowly.
“without that growth you Bond and Stock markets wouldn’t provide you with any ‘funding’ either.”
That assertion is not borne out by history. During the low-growth era of the 1700’s and 1800’s, Picketty shows in “Capital in the Twenty First Century” (Table 2.1), economic growth from 1700 to 1820 averaged 0.5% per year. But bonds (including government bonds) returned 5% per year with practically no inflation at all. From 1820 to 1913, annual growth only averaged 1.5%. Bonds still returned much more.
Warren
your instinct for the trivial, miss the point, and plain wrong continues unabated.
The boomers paid in an “extra” tax to Social Security. Real money out of their own pockets. Whatever benefit they got from the government borrowing that money and spending it on the public good is arguable at best. You have forgotten that in general the income tax is paid by different people than those who pay the payroll tax. In General. In any case the money goes to different accounts by differernt paths with different ownership and different benefits. If you can’t understand this you can’t understand anything about money. Nothing.
Probably you are just being a jerk on purpose to get me to pay attention to you.
And it’s not a question of boiling the frog. There is a hell of a difference between a dollar today and twenty dollars today, not only in psychological terms, but in practical money terms. you might have heard of something called “The time value of money.” If nothing else by the end of the twenty years a completely different set of people will be paying the twenty dollars, and they will be about two hundred dollars (a week) richer than those were at the start of the gradual rise in the tax. Again, if you can’t understand this you have a serious mental problem that might explain why you waste your time annoying people on blogs instead of doing something more worthwhile to yourself if no one else.
You try replicating the 18th century experience today and maybe you will see why it’s stupid to pretend you can compare one to other. It’s one thing when capital is scarce and a few people are investing at 5% resulting in not much growth to the overall economy. It’s another when you are trying to support an entire population with growth in stocks when there is no growth in the economy.
Warren I really hate it when i talk mean to you. If I knew you as a person and realize you really were a bit slow, i would not insult you. But i’d avoid pretending to talk to you about serious subjects.
Please, get something better to do.
So what else is new under the sun? The Republicans have improved their control over the legislative activities of our government so Social Security is again the focus of attention. Nothing said by the naysayers is anymore true now than it was at any time in the past. Not even the names have changed to protect the guilty. Is anyone surprised that its Krasting and Warren that are assuring us that the SS sky is falling? The projections of the false prophets don’t change, but life goes on. Not even the introduction to the subject is true. Social Security is in no genuine way contributing to the general budget deficit. One need not be an actuary to understand that funds borrowed are funds due to be paid back. And that’s what the Trust Fund is, borrowed funds. FICA surplus goes to the general fund. No Virginia, Uncle Sam hasn’t stolen our money.
There are, however, some dishonest polecats who now want those borrowed funds to be forgiven debt. That’s money borrowed from the workers. Interest is paid on that legitimate debt. And when fresh FICA doesn’t cover the yearly benefits total then the Trust Fund Treasury notes become due for payment from the general fund. That’s no different from me taking some old E bonds I recently found under my mattress and bringing them to the bank for redemption. Oh, and we can’t call China, the Bank of England nor the central bank in Japan that we’re not going to honor our debt from all the Treasuries that were sold to them. Same for the Treasuries held by JP Morgan Chase or Goldman Sachs. You see U.S. government Treasuries have a special place in the hearts of investors. They are inviolable. Even the Treasuries held by the Social Security Trust Fund. That’s why our government can borrow what it needs or just likes.
Now about those potential shortages. There are a variety of ways by which the SS Administration can continue to pay benefits as our government has assured to all its working citizens. First and foremost, rather than writing these continuous tomes on AB we can all write a simple short note to each of our elected Congressional representatives. Keep it brief. Dear Dirt Bag, Vote against me on Social Security and I will surely vote for anyone that challenges your next reelection. Don’t write back. I’m not listening to any BS about it. Vote against SS benefits in any way and I’m not in your camp. Have a good day, Concerned Citizen.
Another way is to put more people to work at higher wages. That automatically raises the FICA revenue stream. Or the cap can be increased, but that’s less effective as a legislative matter. Coberly’s NW plan has merit, too. There’s loots of ways to do the right thing, but nothing we write here will be as effective as that note or phone call to the local asshole that represents you in the House. And be a pest so he or she knows you mean business. Congressional legislation is the best example of the squeaky wheel and the effectiveness of grease.
All these intricacies pail in front of an audience of the vox populi with their 25 word minds. A Hiroshima bomb is needed. Why is no one proposing that everybody-EVERYBODY-pay into it. Or at least the million dollar earners should pay 1.5 %. If brad Pitt makes 20 million for a film 200-250 thousand goes into the fund & he is capped off at the same rate as the 6.25%. & my pet peeve: Grover nyquist & Cato & all the rest get the 503 non profit write off while they come up with these ideas. He wants to shrink the gov to a bathtub & the last thing he’ll shrink is his exemption
George Mc
why do you think Brad Pitt should pay for your retirement?
unfortunately you are the reason “rich” people vote for Republicans. Every time they turn around someone is saying “let’s make the rich pay for everything.”
i’m all for making the rich pay for their fair share of the country’s needs… including welfare. But Social Security works because it is not welfare.
the rich think they pay for a great deal more than their fair share.
so why do you want to make them kill social security when you can pay for it yourself for just an extra dollar a week?
warren
here is a parable for you
suppose A and B live in an apartment building. A is rich and lives in the penthouse. B is poor and lives in the basement. A pays ten dollars a month. B pays one dollar a month.
B also pays one dollar a month to his church so his church will feed him when he is too old to work.
The church is run by an honest pastor who doesn’t want a lot of money laying around. So he sets the rate people like B pay him every month to closely balance the amount of money he needs to feed those people already old. That has been about a dollar a month from each of his parishioners for a long time, but lately the pastor has noticed that there were a lot of people born right after the war and then not so many born twenty years after the war. He recognizes that in order to pay for the food of those born right after the war, because there are so many of them, those born twenty years later are going to have to pay two dollars a month.
He thinks this will not be fair, so he asks the people in A’s generation (the baby boomers) to pay an extra fifty cents a month. They agree.
But now the church has more money coming in than it needs to pay for the food of those already old. So he asks around and he finds that the owner of the apartment building that A and B live in would like to borrow some money to make needed repairs. So the church and the owner make a deal. The church will lend that extra money to the owner, and the owner will repay it in twenty years when the boomers get old and the church has to take care of them.
Deal done. The landlord fixes up the apartment building without having to raise the rents. Twenty years later the landlord repays the borrowed money so the church has its money back in time to feed the “boomers” who are now old.
Meanwhile the building has been fixed up so the landlord can charge a little more rent… enough to repay the money he borrowed.
Now if I have got this story right, here is where Warren comes in and says, “wait, wait, B got the advantage of the fixed up apartment, paid for with the extra money he gave to the church, so it’s not fair he should get his money back in the form of the church paying for his food when he gets old. It’s really A, or the children of A, who are paying for B’s food, by paying the higher rent for the fixed up apartment.
Now, I think Warren’s thinking is insane. I’ll let you come to your own conclusions… or tell me where I messed up the parable.
but remember, B paid the extra money and eventually got his food paid for. A got a fixed up apartment and eventually had to pay a higher rent for it. Who is getting cheated here?
twenty years later the landlord repays the money he borrowd
I’ll pay a lot more if it will help. My point of everyone paying is that it would go on for as long as forever is. What I would like to do is to take this off the table. The mere utterance of changing social security should be deemed damnatio memoriae. & the best way is that everyone is involved.
George
everyone IS involved. Brat Pitt pays about 12 thousand a year in SS tax. when he retires he will get his money back with about 1% real interest.. a little more than 30k/yr benefit.
you probably pay about 3000 a year. when you retire you will get your money back with about 5% real interest… about 20k/yr benefit.
a person near minimum wage pays about $1200 per year, when he retires he will get his money back with about 10% real interest… about 12k/yr.
where you go wrong is assuming SS is welfare and that everyone should pay the same percent of their income into it. but SS was designed on purpose NOT to be welfare, but insurance paid for by the workers.
high end workers pay in enough to reasonable cover the cost of their INSURANCE. THEY
(CONTINUED) THEY pay in more, and they take out a little more. But they take out a lot less “interest.” That interest is instead used to pay more “interest” to those who paid in less, because they had less income.
It’s a very fair and successful way of managing retirement insurance. The problem is that the bad guys who hate SS have been lying to themselves about it for 80 years and to you for about 30 years so neither of you knows what you are talking about.
Your plan of taxing the rich is just welfare, and we know what happens to that in America today.
The rich own it and they cut it and then throw it away, and throw away the people who “depend” on it.
For 80 years workers have been proud to say “i paid for it myself.” You want to take that pride away, and the only real argument they have against the rich taking the money away.
It is desperately important that you… and everyone… understand that SS is insurance, paid for by the workers themselves, and can continue, solvent, forever as long as they keep paying for it themselves. The cost is not high compared to what you get: twenty years or more of having your basic needs paid for, and 80 years or more of peace of mind. Priceless.
The cost will be about an extra dollar per week each year for a few years by which time you will be earning an extra two hundred dollars a week (and paying about an extra 20 dollars per week for a retirement that will last longer and pay a higher real benefit than today’s.
It takes my breath away that people who call themselves progressives can work themselves up to spitting, swearing anger at being asked to pay an extra dollar a week for their rights to an eventual twenty thousand dollars a year for twenty years.
No, they say, we won’t be happy until every ‘rich” man stands at the end of the grocery check-out line and pays for our groceries. After all, they have more money than we do.
Maybe if progressives got a little more realistic and a little less greedy we could actually make the world a little more fair and a little less cruel.
“SS has worked for 80 years through wars and depressions…”
To even imply that what we call social security today is anything like what was signed into law in 1935 reveals how little you must know about today’s program. The tax in the beginning was 1% of earnings to both the worker and employer. It’s 6.2% to both today, yet it’s still in financial trouble. Being oblivious to the drastic changes that were made to SS because it was so highly flawed is being ignorant to history.
“Sebastian is actually wrong about “relying on” birth booms to fund SS.”
The program enacted by FDR was every bit reliant on demographic booms for its funding. Upon a worker or retiree’s death, under the original program, his estate was paid back 3.5% of his wages minus what he received in benefits. This refund provision, especially given the contribution rate at the time, meant its solvency was almost entirely dependent upon the pool of contributing workers growing. If you fail to understand this concept, you cannot comprehend the serious trouble SS has been in and yet again faces.
Funny how the same people who want to criticize Reagan and Trump for taking on the issue were so silent when their gods, their Carters, their Clintons, their Obamas, their LBJs, lacked the courage and the intelligence to do something about it themselves. You dolts won’t mention it since doubt about your devotion to such cowards would have to be faced. Sycophants!
Sebastion:
1. SS is not in financial trouble today. It may be in financial trouble going forward and it way not be in financial trouble going forward. In any case there is a provision which states Congress must maintain the financial stability of Social Security going forward.
2. SS TF is good till 2033. With a shift in the numbers of people working upwards and continued wage growth, the issue of 2033 could move back outward. It was never planned for the TF to be so big. With having to pay it back, Repubs are in a panic on how to do so without increasing taxes. The alternative is to cut SS or cut entitlement programs.
3. I do not care about a 3.5% refund if an employee was not eligible or died. You did state this and then failed to explain it was repealed in 1939 (4 years after SS was created) and why it was repealed. It appears there was a fundamental shift in what SS was going to do going forward. Of course increases in population would play a factor as long as there was a corresponding growth in payroll wages. Guess what did not happen?
4.Reagan spent more time worrying about pink Cadillacs then he did about SS. Now that the surpluses gathered to ease the baby boomer retirement have been used up, yourself and Repubs do not want to pay it back. No marketable Treasuries for it from the beginning when Reagan signed the bill. The credit goes to Congress and not Reagan if anyone is to get credit. It did provide a big piggy bank in which to raid. Reagan never had real courage. He was an actor in war and in office. And as far as the racist, xenophobic, misogynist, lying, etc. Trump, do I need to say more?
Sebastian
i am afraid it is you who are ignorant. not just of history.
the original tax was set at 1% because that was more than enough to pay for the few retirees who by then had contributed to the program. it was always understood that the insurance rate (tax) would have to go up as more and more contributors to SS retired. in order for any insurance program to work it has to take in enough to pay for the claims. the changing cost over time does not change the fundamental nature of the program/
this is arrant stupidity to claim that SS is ‘not the same” because the tax rate has gone up over time. The tax rate continues to be what is reasonable in order to pay for the cost of retirement. You were expecting perhaps that SS would suspend economic reality?
as for the “payback” provision. i believe that was a provision to pay back those who had not been paying in long enough to qualify to receive a pension by the time they retired. they were, however, still qualified to receive welfare if they needed it. it is beyond stupidity into probable dishonesty (assuming you are not really that stupid) to say the program has “changed” because the measures taken to manage the “startup” were different from what would be needed once the program was fully under way.
the trouble with being nasty to people who know more than you is that it tells them something about the quality of your intelligence and character that you would probably prefer people didn’t know.
“i believe that was a provision to pay back those who had not been paying in long enough to qualify to receive a pension …”
No. Just no. In a debate on policy and history, you DON’T bring your beliefs into it. The payback was an integral part of the original program. If a person did not qualify for SS or died before taking benefits, they were paid back 3.5% in a lump sum. If a person did qualify and received benefits, their estate was paid back the remainder of 3.5% of wages minus what benefits they were paid, upon their death. This is a fact. Look it up and stop with the faith and belief. It has no part of it.
” it is beyond stupidity into probable dishonesty (assuming you are not really that stupid) to say the program has “changed” because the measures taken to manage the “startup” were different from what would be needed once the program was fully under way.”
The program has changed. Ask any expert on either side of the political aisle if the social security program has changed. You can put your hands over your eyes and plugs into your ears to try to be oblivious and deny this fact, but you do yourself no favors. You reveal the character of who you truly are.
I’ll continue to be nasty to liars and sycophants. The truth and society has no patience nor time for them! And I take no lectures from you, who lies and pontificates about their beliefs when this requires a discussion of facts. So continue with your whiny rants regarding those with the courage to have program for the elderly and the retired. You can cherish your idiot leaders who lacked the courage to touch it. It’s obvious your ignorance has no value in the debate and will be given no merit by anyone with any influence on either side of the political aisle.
Actually Sebastion:
“I’ll continue to be nasty to liars and sycophants.”
No you will not be.
Sebastian
it may take me a few days to look this up. i do not pretend to be an expert on the early history of Social Security, so when I say “i believe…” it is an honest admission of uncertainty, not a statement of religious faith.
But I am not at all uncertain about the cost of continuing Social Security solvency by raising the payroll tax one tenth of one percent per year for a few years.
Nor am I uncertain that the basic form of Social Security has not changed since SS was enacted, though there were early provisions for transition from welfare to SS.
On the other hand, you come in here talking like a mental patient, and a nasty one at that, show no respect for basic logic, or even for that which i have said, which you misrepresent to fit your religious vieqa.
Your idea of “the program has changed” is about like saying that if I paint my car it’s not the same car.
I hope your relatives are keeping you locked up for your own safety.
“vieqa” should have been “views” fingers slipped.
Sebastian will no doubt view this as sycophancy and whiny ranting.
“On the other hand, you come in here talking like a mental patient, and a nasty one at that, show no respect for basic logic, or even for that which i have said, which you misrepresent to fit your religious vieqa.”
Wow. So many incorrect notions in your head that must wrestle for space with historical facts. No wonder you’re incorrect and shaking your fist at the sky about people taking action to help the elderly. If only Obama would have done something, huh? Geez.
“Your idea of “the program has changed” is about like saying that if I paint my car it’s not the same car.”
I guess all those articles that discuss how much Social Security has been greatly altered have it so wrong. Even the acting commissioner of social security has said, “…while the program fundamentals have remained the same over 5 decades, much has changed.” Guess she’s wrong too.
Some of the elderly get a monthly paycheck and workers get a portion of their wages reduced. That’s about all that has remained the same. Or to use your analogy, the Model T and the Bugatti Veron must be fundamentally the same thing since they are both cars. Maybe you the think international football and American football are the fundamentally the same thing since it’s a sport with 11 vs 11?
The fact that workers and employers have seen the amount withheld increase by 720% has to be gibberish to you. We won’t even get into how the ‘money-back guarantee’ is now long gone. Means test? Retirement age? Cost of living adjustments?
When the Republicans save social security like they have in the past, by taking the actions you’re currently shaking your fist at, you’ll come back 10 years later and say it’s the same program. It’s what your ilk did in the 80s when Reagan took action. It’s what you’re doing now. This is what you are. Straws are grasped when you’re on such loose footing.
Sebastian said
“Even the acting commissioner of social security has said, “…while the program fundamentals have remained the same over 5 decades, much has changed.” Guess she’s wrong too.”
this is where we differ:
i heard “the program fundamentals have remained the same”
you heard “much has changed.”
fundamentals.
i think you have trouble with that concept.
i’m pretty sick now and will have to leave you to your own eternal truths.
“The boomers paid in an ‘extra’ tax to Social Security. Real money out of their own pockets. Whatever benefit they got from the government borrowing that money and spending it on the public good is arguable at best. You have forgotten that in general the income tax is paid by different people than those who pay the payroll tax.”
That is an excellent point, Coberly. The overpayment of FICA taxes (by which I mean FICA receipts’ exceeding expenditures) results in lower taxes for the wealthy or less public debt that the wealthy will have to pay interest on through their taxes. (Considering that the bottom 50% pay almost no income taxes at all.)
So, by keeping FICA taxes higher than expenditures (never drawing on the SSTF), the excess is essentially transferred from those paying the FICA taxes to those paying the income taxes.
Warren
the excess taxes paid by the boomers was for the purpose of building up the Trust Fund to have money to help pay the boomer benefits and keep FICA taxes lower than they would otherwise be.
If that’s what’s bothering you, I think you may want to meet Sebastian.
If you are referring to the fact that my dollar a week plan will pay fully for SS benefits without drawing down the Trust Fund…. well, it will draw the TF down to the requires one year reserve. After that the interest on the required trust fund will contribute to about a 1% reduction in the required FICA tax.
You could raise the tax, but then what would you do with the exponential growth of the Trust Fund. Or you could have Congress pay back the TF all at once and let SS invest it’s reserve in some other “safe” vehicle. But since Congress is going to have to borrow the money to pay back the TF what’s the point.
And now I am going to turn you over to Sebastian. You two have a lot to talk about.
(hint for you: i found out i did not have the right personality to talk to mental patients early in my career, so i switched to working with numbers. I like them better.)
“a person near minimum wage pays about $1200 per year, when he retires he will get his money back with about 10% real interest… about 12k/yr.”
Where are you getting that figure? The SSA has NO-ONE, EVER, seeing that high a rate of return. The highest they have is a one-earner couple born in 1920 at 9.02%.
The highest future retirees can expect is a 6.5% average return for single-earner couples with very low wages.
https://www.ssa.gov/oact/NOTES/ran5/an2004-5.html
warren
ssa uses assumptions i regard as unrealistic. anyway 9% is “about 10%”
and given the variability among persons, that is as close as you are going to get.
please leave me alone.
cobertly/ pretend yr sitting in sam johnsons chair. what are the specifics of yr plan? you mentioned 1/10th of a percent each year. whats yr cap & whats yr projected outcome?
Please try to keep up, Coberly. That was for a single-earner, very-low-wage couple born in 1920.
YOUR assertion was for FUTURE retirees, and the highest there is about 6.5%.
What SSA assumptions do you regard as “unrealistic”? If their assumptions are unrealistic, can we trust the Trustees’ Report?
Coberly – you said:
“I am not at all uncertain about the cost of
continuing Social Security solvency by
raising the payroll tax one tenth of one
percent per year for a few years.”
What do you mean by a “few years”?? I looked it up “A few”, it means three years. What does “A few” mean to you??
The most optimistic outlook is from SSA. They say the Immediate and Permanent tax increase required is 2.3%. Adjusted for the time value of money The number of years for the Coberly plan is 15 years.
If you use the CBO I&P number the Coberly plan would require a tax increase every year for 25 years.
So are you really so sure that you can accomplish in “A Few” years what others are saying will take decades? Or are you just giving us Fake News about what your plan entails??
bk:
You are investing in semantics to aggravate coberly. I think you need a fresh side to your scatology as this side of yours is dried up. Coberly has laid the groundwork previously and it has been accepted by people more important than you.
https://www.merriam-webster.com/dictionary/few
Examples of few in a sentence
He caught fewer fish than the rest of us.
There are fewer children at the school this year.
Not many people came, but the few people who did enjoyed themselves.
NONE of those imply three or less. You are not even straining at gnats here, more like like trying to logic chop a bacterium with a hand ax.
george
everything stays the same except the tax rate which increases by one tenth percent per year (about a dollar a week). cap stays the same. net result is that SS stays solvent forever.
total increase after about fifty years (increase not needed every year) is about 2% for each the worker and the employer… by that time wages have increased about 70%.. so tax will have increased about 20 dollars while wages have increased about 700 dollars for each thousand of wages today.
i will no longer reply to warren or krasting.
they don’t know what they are talking about. they keep asking the same question. all they are doing is wearing me down and making me unpleasant.
Just ran the numbers. Someone working 40 hours a week for 50 weeks a year, earning the Minimum Wage and retiring now at age 66 would get about $1,011 per month from Social Security. Assuming an annual withdrawal rate of 4% (suggested by retirement experts), that translates to about an 8% annualized return.
Assuming a spouse that never worked (not likely if hubby is working at Minimum Wage all his life, but we’ll play the game), that return goes up to 9.42%.
Run
with the NW plan increase in the payroll tax of one tenth percent per year the Trust Fund NEVER has to be paid back.
Congress is in a panic about paying it back because Congressmen are too goddam dumb to understand the numbers, or the logic of just paying for what you need.
The people are going to need their Social Security checks. They can pay for them the way they have always paid for them: themselves. They can pay for the increase in cost the way they pay for the increase in the cost of bread. Or gas.
You have people running around in a cartoon world in congress where reality never rears it’s ugly face. They operate entirely on slogans written for them by their sponsors.
And Sebastian is a mental case.
I did look it up. And just as I “believed” the 3.5% rebate was part of the transition so people who retired, or died, before they were “vested” got their SS contributions back
I’ll take warrens “9.42%” to be confirmation of my “10%”.
People who don’t understand numbers, or reality, need those two decimal places to fee sure of themselves. But warren doesn’t have the imagination to consider a case where the worker does not “average” minimum wage over 40 years. Like unemployment, sickness, going to graduate school, working in the South…
SS was intended to help out people who fell short of “average”, even “low average.” For the rest of us above average children, we get the benefit of the insurance… in case, you know… and still get our money back with interest at least enough to equal inflation and then from about 5 to 1 percent depending on how far from poverty we actually ended up.
The difference between our rate of return and “average” rate of return is what makes the money available for the higher rate of return to those who ended up poor after a lifetime of work. That’s how insurance works.
Note, warren does not appear to have used the SS payout schedule in his calculations. Doesn’t matter unless he takes himself too seriously. Oh…