A trial balloon has been floated for Trump’s “middle class” tax cut plan.
The idea is to eliminate SS taxes on employees on the first $60,000 of income. This would save those people up to $3,700 PA. This a big deal for those in this income group.
Social Security’s finances would not be impacted. Any reduction in PR Tax income would be offset, dollar for dollar, with direct payments from Treasury. This is identical to Obama’s payroll tax holiday in 2009/10.
Let me repeat – Middle income earners would get a big tax break, AND there would be no consequence to SS.
Hiltzik, at the LA Times, thinks this is a terrible idea, and Nancy Altman jumps on Tom’s bandwagon.
Are Progressives really going to appose the biggest middle class tax-cut in history? If so, they are going to face some blow-back in the voting booths. Elizabeth Warren has not said a word on this. She’s up for reelection in 2018. Is she going to deny her base $500 a month?
And if Repubs kill healthcare? That additional $300/month would disappear. It is a shell game. The upper 1% stands to gain far more than $3700 by eliminating:
– Medicare Part A Tax increase of 0.9% over $200k/$250k,
– 2.9% Net Investment Income Tax.
If you are a millionaire or more, the average tax savings from the elimination of these two taxes is ~$57,000. Weigh that amount against the $3,700 offer for no SS Payroll premium for the < $60,000 in income.
Furthermore with the elimination of those two taxes, you play Medicare in a position of decreased funding requiring a tax increase on those very same people. Medicare is more than just healthcare for the elderly and includes Part A&B for the disabled. Also consider the Repubs desire to eliminate the Cost Sharing Reduction for people on the PPACA which subsidizes deductible and out of pocket expenses (when selecting a Silver Plan). For a family with one earner in the 200-250%, this is worth ~$3,400.
It is a trade-off shell game by Trump, Republicans, and the rich in income. You can have a $3,700 tax break; however, you will lose funding for Medicare which will impact more than just the elderly and CSR for which pays out of pocket expenses for those between 100-250% FPL. Yes, I would oppose it as it is a scam and Repubs are trying to buy people off with pittance to lower the rich in income taxes or <1% of the household federal income tax payers. Not only are they attacking funding for the PPACA, they are attacking funding for Medicare. Overall it will affect SS or a component of it. I am sure Coberly and Bruce can answer the part on SS.
Furthermore, you make SS an entitlement rather than a taxpayer self-funding program which is difficult for political interests such as yourself and Washington to attack.
Great alert Bkrasting. In the past I have criticized thinking of the SS TF as some kind of goose that is expected to go on laying golden eggs forever. I have protested that we (the whatever generation) paid higher FICA and lower income tax to pile up bonds for our retirement and now we expect those bonds to honored (and depleted) as we use up our nest egg.
I have said that the next gen has the option to “save social security” by raising its FICA taxes and lowering its income tax and piling up TF bonds if it feels like it.
What does all that have to do with Trump’s stealth “sink social security” plan?
We can do a stealth repeat-the-Rube-Goldberg social security, piling up of TF bonds — for generations to come — by a sort of financial end run: simply remove the cap of FICA collections. In an era when many top incomes (CEOs, ball players) are 10X what the should be by former income share counts — taking the cap off FICA will continue to pile up TF bonds for a way into the foreseeable future.
Essentially that wouldn’t be diverting SS funding to on budget items like the present system. A closer look sees this diverting money that would not have been taxed at all from upper incomes into TF bonds.
Thereby saving the goose that is expected to go on laying golden eggs forever — at least for a very long time. Er, uh, those below today’s cap can lower their income taxes because the diverted SS money will go to pay for (guess what) on budget items. (Important not to let the rich get any income tax break to cover new their FICA obligations.)
My comment on an Economist’s View post: Tax Reforms and Top Incomes
giving me a slightly different angle from which to (re)work my same old bromides:
Tax top incomes less and we are forced to tax mid incomes more — and vice versa. Mind you, mid incomes are where demand economic pump is primed. Nobody staffs stores and factories in the hope they will “create their own demand.”
Tax top 1% incomes enough to recover HALF of the 20% of overall income they take now — compared to the 10% of overall they took only a couple of gens back — and we can lower mid 54% incomes’ taxes enough to pay higher consumer prices on the products and services of lowest 45% incomes TO DOUBLE THEIR INCOMES.
Works like this:
shave 10% of overall income (via confiscatory taxes) from top 1% to mid 54% (adding 14% to mid incomes);
rebuild union density so bottom incomes can charge high enough prices for their products and services (25% higher prices at McDonald’s w/33% labor costs; 7% higher prices to DOUBLE labor costs at super efficient Walmart) TO RECOVER 10% OF INCOME SHARE TO BOTTOM INCOMES lost over the gens (adding 100% to their income).
Actually I see (but that’s just me) labor unions bringing McDonald’s up to $15 an hour (sometimes seems more people behind the counter than in front — most sales through drive thru of course) — Target to $20 (10-15% labor costs?) — Walmart $25 an hour (7% labor) — WITH OR WITHOUT tax cuts on the mid.
I think labor unions could do that — without priming the middle class pump — if they want the lower incomes to show up for work.
But taxing the (undeserving) rich to replenish the (very deserving) middle class can make restoring the income share of the (no longer) poor easy and painless.
I am sorry Denis thinks that way. I expected nothing else from Krasting.
SS is not a tax. It is an insurance “policy” paid for by the workers themselves. The Trust Fund has not a god damn thing to do with the financing of SS. It is merely a place where currently excess funds are stashed for expected future needs.
It is of critical importance the SS remanins, and the people see that it remains, a way of insuring, with their own money, that they will be able to retire when they need to that depends on their own contribution and NOT the taxes on the rich that Roosevelt was so careful to avoid, and that the current “left” is so sure is the answer to everything.
Take away FICA and you have destroyed SS… probably forever, because you will never get it back. Letting “social security” payments run on for a few years supported by some other tax will just set it up for the certain day when the government says “we have the will but not the wallet” and cuts SS benefits, first for the “rich”, then for the “not poor” then for the “not poor enough”, and then is replaces by a “means test”…. not the simple “how much did you pay in… and therefore how much are you paid back” but the go to the government proctologist and get examined for hidden assets every three months game that in fact “the rich” will know how to play better than the poor.
This is incredibly stupid. I expect it from Krasting who is and has always been a stooge of the far right. I have learned to suspect the “far left” is simply the “good cop” for the bad cop right. But I am extremely sorry that Denis falls for it… apparently because he doesn’t understand SS at all, in spite of my efforts here, and sees the world simply in terms of the rich robbing the poor vs the poor robbing the rich… er, “demanding the rich pay their fair share.”
the rich already pay their fair share for SS…. and i don’t say that because i love the rich.SS was designed by Roosevelt to protect the poor from the rich. if you want to tax the rich, fine, but don’t call it social security. and if you want to “help” the poor more than SS does, some other, welfare, program is fine with me, just don’t call it Social Security… you will destroy Social Security, but you won’t help the poor.
I guess all of those numbers are relevant, but they are not all the relevant numbers(not to mention that funding SS though the general fund would lead to the end of SS).
You need to show your work.
How did you arrive at “up to $3700”?
How did you you arrive at “$500 a month” for Warren’s base?
You need to break out the amounts by income group.
Even with those numbers, this plan would kill social security as it makes it much, much easier to kill.
krastings numbers are roughly the ss “tax” paid by 60k workers.
except it’s not a tax. they get the money back plus the employer match (really their money) plus inflation plus “growth in the economy” plus an insurance boost if that is not enough to meed basic needs..when they retire. also it pays for death and disabiility insurance. the working man can not get a better deal on “the market” and “the rich” are not paying for it.
the “extra” money comes from pay aa you go financing. something that the right pretends not to understand.
And finally, you say, “funding SS though
the general fund would lead to the end of SS”
RUBBISH! A Democrat House, a Democratic Senate and a Democratic President all voted to do this in 2009/10. Hundreds of Billions were saved by workers. GUESS WHAT?? IT WORKED!!
This proved to be a very effective stimulus for the broader economy. It helped many people through some very tough years.
It had absolutely no consequence to SS at all. It did not turn SS into welfare, and it did not “end SS”.
If you are going to play games, then don’t waste my time. A 2% cut on a part time basis is in no way, shape or form the same as this plan.
And I notice you did not address the income levels, instead using a car dealer’s “up to $3700 in savings!” schtick. ANd no mention of the $500 a month.
BTW, how many of the people you included in that 124 million do not pay into SS?
“The idea is to eliminate SS taxes on employees on the first $60,000 of income. This would save those people up to $3,700 PA. This a big deal for those in this income group.”
Well, off the top of my head I can think of an awful lot of people who would not think this is that big of a deal. Strangely enough, all of those people would actually get $3700.
probably not a good idea to play games with krasting. his 500 did’nt match his 3700, but details like that don’t matter much at this point.
what matters is that it’s not a tax. it is a mandatory RETIREMENT savings and insurance payment, which you get back with more interest than most people can get on the market. or will get or would get, despite those who only look at the advertisements.
Trumps “tax cut” crap is nothing more than near term consumption based shit. I sure would oppose it and the debt it creates for literally nothing. Structured debt must contain value.
the 2% payroll tax holiday was a gimmick to weaken SS. it did NOT work, because no one even noticed it.
raising FICA 2% over the next 20 years would not be noticed either except by those who hate to see working people have a secure retirement even though they, the workers, pay for it themselves.
over those twenty years wages will rise more than 20%. that means workers would be putting about one dollar out of every ten dollar pay increase toward their retirement, which will be longer because they are going to live longer.
They can’t let the dopamine society cease. They just want to get high. Then they whine about the trade deficits and offshoring created by immense capital flows into the US consumer finance markets.
America has the ambition and long term planning of a house fly right now.
Bkrasting,
Why do you suppose FDR funded SS with its own separate tax in the first place. Do you think there might have been some reason for SS to have its own separate funding stream — maybe? Please answer this — really.
I’ve been all for ending FICA tax below the real minimum needs line for a long time. You’ve made think through to the part about having to remove the income cap off and maybe raise the rate (post rebuilding union density of course).
Please tell me why FDR’s reasoning doesn’t fit today.
-SS started in 1935. Everything has changed since then.
-There was no DI in 1935. Today disability is 20% of SS payouts.
-Roosevelt never contemplated the wealth disparity that exists today. SS can be a factor that levels the playing ground.
-Average life has increased by 20 years over the past 80.
-Roosevelt did not know what a “Baby Boomer” was. He died before the first boomer was born. Today, SS is faced with a big burden with the boomers. 10,000 boomers get on SS every day.
-The SS payroll tax was 2% in 1935. Today it is 12.4%
-In 1950 there were 8 workers for each retiree. Today the ratio has fallen to 2.5 to 1.
I’ve tried to answer your question, now answer mine:
-Please tell me why FDR’s reasoning does fit today-
What hasn’t changed since FDR designed Social Security is the need for it not to be “the dole.” American politics is still exactly what it was: the rich trying to maximize their wealth without regard to the welfare of the people. and that means they can’t even stand to let the people pay for their own retirements if they think they can make a nickle out of selling them stocks and bonds and insurance policies. but the fact is the poor never could afford stocks and bonds or even insurance until FDR put in that 1% each “tax.”
The tax has grown to 6.2% each because that is the actual cost of (saving for) retirement. the original 1% was enough when there were roughly 40 workers paying for each retiree… because SS is paid for by the workers themselves and at the beginning you had 40 workers paying before ANYone had retired, and gradually the number of people who had paid their SS insurance increased until there were roughly three workes per retiree… this is about the natural rate that comes when people are working for 40 years and retired for a life expectancy after retirement of of about 13 years. since that time the life expectancy after retirement has grown to about 15 years and will continue to grow to about 20 years at which time it will take a tax of about 8% to pay a pension of about 40% of average lifetime earnings… all this adjusted for inflation and growth of the economy and growth of the population.
Krasting cannot possibly understand this. I have some hope for Denis and most readers of AB who actually take the time to think about it.
there is no need to raise the cap beyond normal keeping up with wage growth. raising the cap beyond that turns SS into welfare as we knew it. increasing wage growth with better unionization would actually remove the need to raise the tax under the cap, because rising wages would pay for the longer life expectancy in the absense of the slower growth in wages currently projected.
today DI is about 20% of payouts. it is also 20% of the FICA… the actual rate for old age and survivors insurance is about 5%. it will need to grow to about 7% to keep up with longer life expectancy and expected slow down in wage growth.
there was plenty of wealth disparity in the 1920’s. Roosevelt knew all about it. I can’t see where wealth disparity is an argument for cutting SS. Nor is it an argument for raising the tax. The tax needs to be at a level that is reasonable insurance for the people paying it. Raising the cap would turn it into welfare… paid for by the rich. who would not rest until they destroyed it. the workers can easily afford to pay for their own retirement insurance IF they have the protections that SS gives them against inflation, market losses, and a lifetime of low wages.
FDR did not live to see the baby boom, but by 1948 the SS actuaries understood exactly what the baby boom was going to cost in 65 years time. and in 1983… under Reagan.. they actually paid for it by raising the tax. they should have raised the tax gradually and raised it a little higher, but the politicians get hysterical about “taxes” and can’t think ahead.
i have answered all of Krastings questions, I don’t think he will understand that he has been answered. SS is essentially the same today as it was in 1936. a few numbers have changed to keep up with the changes Krasting refers to without understanding… but SS is still a way for workers to save for and insure their savings for their own retirement. they pay for it themselves, even if some people are too stupid to see that “pay as you go” is the workers paying for their own retirement exactly the way you pay for it by putting the money in the bank or buying bonds or buying stocks… except the risk has been taken out of it by the miracle of pay as you go… without taxing the rich.
FDR’s reasoning still fits today because the problems facing workers who hope to retire are still the same as they were then, and the politics of the rich vs the poor are still the same as they were then.
It’s a damn fool argument to say that because the date on the calendar has changed, that everything is different. It is a damn fool thing to say that 10,000 boomers retiring every day changes everything. America has 300 million people making 50 thousand dollars a year (very rough approximation, but a good place to start before you start yelling we are all going to die because 10,000 people retire every day.)
but you can’t understand this in two sound bites. you need to learn how it actually works and then think about it. and keep thinking until you stop fooling yourself or letting yourself be fooled by the lies you have been told.
once again you are word bound. it is in the nature of retirement insurance that it would include “retirement savings and retirement plan.
the important word is insurance because SS is the only real insurance available, but it is paid for by “savings” and it is, of course, a plan.
i have been reading a book by a financial advisor who has no particular fondness for SS, but it is clear from his numbers that SS simply as retirement savings is not as much worse than playing the market as you might suppose, and the insurance makes it a far, far better thing they do than they have ever done.
even people who might have “had enough” with their own savings and investments end up a hell of a lot better off with their SS added in.
and old people starving in the streets simply do not stimulate the economy.
and krasting who is so astounded and amazed and we are all going to die about 10,000 people retiring every day that he failed to notice that about 10,000 people come new into the job market every day.
funny how that works.
It is paid for by TAXES, not savings. Primarily, Social Security is a pay-as-you-go system, with FICA taxes covering payments. The Trust Fund is nothing but an accounting buffer. If we pay excess FICA taxes, the cash goes to the General Fund in return for bonds, and the General Fund has to sell fewer bonds on the open market. If we pay insufficient FICA taxes, then more bonds are sold on the open market to raise cash to redeem SSTF bonds to cover the program deficit.
There is no savings whatsoever in the Social Security system.
Bkrasting,
It is a known political fact that Republicans, local, state and federal are forever looking for a gimmick to kill SS. Look at the (Satanic!) threat of the Donald to end Obamacare subsidies which would kill that. So, the major reason not to put SS on income tax is because it takes a huge structural wall out of the way of the SS killers. Numero uno reason.
Until recent years per capita output doubled twice as fast as population. Example: since 1968 population only increased 50% while per capita income (GDP, whatever) increased 100% …
… not even counting the free gifts of technology — like integrated circuits (you’re old enough to remember when chips were called ICs, aren’t you :-]).
Even slower productivity growth will at least a little better than keep up with population growth. Allow FICA to double over the next 12.4 years and we still end up ahead in absolute terms.
if you put a thousand dollars in a SAVINGS account this year. and take it out forty years from now and collect the 3% interest or so that has accrued on it… is it not savings because in the meanwhile the bank gave it to people who used it for their own purposes and the bank “had to” pay you back out of the SAVINGS that some other people put in the bank the year you took yours plus interest out?
Yes the Trust Fund is only a buffer.. a little more, though, than just an “accounting” buffer. it is real money paid in by the workers in excess of the current need to pay benefits. it is real money lent to the government which borrows a lot of money from other than SS as well. it is real money that is paid to the government for government services (these are taxes), and it is real money that the government pays BACK to Social Security including interest… which is a normal cost of borrowing real money.
But this is by no means an important part of SS. real people pay real money to the Social Security fund (a legally separate entity form the general government). this money is “saved” in the same way your bank deposit is saved… that is it is spent by the “bank” for current business, in the case of SS current business is paying back (plus interest) the people who “deposited” their real money with SS in previous years. if this looks like a ponzi scheme to you it is because you are too dumb to see the difference… a ponzi scheme has no assets and is a fraud and eventually can’t pay back the depositers.
SS has assets: the never ending supply of people who need to SAVE money for retirement in a place save from inflation and market losses, and who need to insure themselves (each other) against the fairly large possibility of never making enough to save enough for a basic retirement. the insurance is the product. the “interest” comes from the growth in the economy… each generation is richer than the last, so even paying the same tax RATE they pay more money (interest) to the people who who SAVED their money (via SS) in the previous generation.
there is nothing unusual about any of this. it analogizes exactly with any other savings and investment and insurance plan except that it is much safer and is mandatory…. because we the people don’t want to have to pay taxes for welfare to support you in your old age when your investments let you down, or you forgot to SAVE for your own old age.
your inability to understand this is because you stop thinking once you have recited “there is no god but pfree enterprise and Ayn Rand is his profit… er prophet.”
“If we pay insufficient FICA taxes, then more bonds are sold on the open
market to raise cash to redeem SSTF bonds to cover the program deficit.”
this is dead wrong. if FICA taxes fall short and the trust fund runs out, NO bonds are sold on the open market to redeem the program deficit.
SS cannot borrow. The program cannot run a deficit. If it does not have enough money to pay “promised benefits” the benefits simply don’t get paid. unless the FICA “tax” (insurance premium, savings rate, call it what you want: it is what it does.)
Bonds might be sold on the open market by the government to get the cash to redeem the Bonds it sold to SS (that is to repay the money it borrowed FROM SS)… but that is what you expect when you borrow money.
the confusion here is that when FICA taxes are not sufficient to pay benefits, it cashes it’s bonds which were bought by SS with the workers FICA tax in earlier years when there was a surplus exactly for that purpose.
Warren is confusing the normal use of the Trust Fund “buffer” with a “program deficit.” They are not the same thing at all.
But there is a PROJECTED deficit which will require a tiny FICA “tax” raise to prevent. Every other proposal to meet the need for the workers retirement involves somehow prohibiting them from saving enough. That is dumb. That is damnable. Let the workers pay for their own retirement (insurance) and the will do just fine.
The cost is one dollar per week per worker per year.
If we wait about another year, the cost will remain the same, but the program will be technically in “actuarial deficit” that is projected to have the Trust Fund fall below one full year’s reserve in the next ten years. Hardly “broke,” but on its way to not being able to pay “promised (sufficient) benefits.
After about the next five years, it would take more than one dollar per week per year to avoid an actual shortfall. This is still not a huge problem, but it could by demagogued into one. Even if we wait until actual shortfall and have to raise the tax two full percent all at once, it will not be a huge problem. NOBODY would materially miss 2% out of his paychec, especially if it is going to used to pay for his retirement.
But we can be sure the Krastings and Warrens, and sad to say the “Social Security Works” crowd won’t let the people do that… that is won’t let the people pay for their own retirement via Social Security which is the only way they have to protect their SAVINGS from inflation and market losses and to insure themselves against a lifetime of wages too low to save enough to retire.
It’s not hard. No higher math required. Just simple arithmetic and a little common sense based on the experience of eighty years, or the century of horrible example before that.
“The 2% payroll tax holiday
was a gimmick to weaken SS.”
Really? Let me get this straight. In 2010 Nancy Pelosi, Harry Reid and Barack Obama passed the legislation for the tax holiday because they wanted to weaken SS?
—————————–
Me: “If we pay insufficient FICA taxes, then more bonds are sold on the open market to raise cash to redeem SSTF bonds to cover the program deficit.”
Coberly: “[This] is dead wrong. if FICA taxes fall short and the trust fund runs out, NO bonds are sold on the open market to redeem the program deficit.”
—————————–
You are contradicting something I did not say. You even quote me as saying that there are SSTF bonds to redeem, so obviously the Trust Funds had not run out.
I simply stated how the program works.
Let’s look at some numbers. Assume, Social Security aside, the Treasury spends $4T and collects $3T. It must borrow $1T. Now, if Social Security pays out $500B and collects $600B in FICA taxes, then the General Fund sells $100B in bonds to the SSTF, and $900B on the open market.
If, however, Social Security pays out $700B while only collecting $600B in FICA taxes, then the SSTF sells $100B in bonds back to the Treasury to make the payments. Now, the Treasury has to sell $1.1T in bonds on the open market.
yes i do. i have been talking to democrats for ten years. they are either idiots or they are out to kill SS themselves. or they just like to have something they can run and fund-raise on.
the key word here is program deficit. SS cannot run a deficit.
what you are talking about is simply the fact that Treasury borrows money from SS among other places, and eventually has to pay it back.
SS is never in deficit… it is spending down its savings in order not to have to raise the payroll “tax”. (yet). this is pretty normal funding, something every business does.
I am speaking only of a deficit (or a surplus), as being the difference between what is paid out in a year and the FICA taxes taken in. Nothing more.
Actually, that is NOT what most businesses do. Most businesses SELL bonds, and have long-term debt. That is the exact opposite of what Social Security is doing.
it is possible i did not understand what you were trying to say, but i remain reasonably sure that what you were trying to say is not true about Social Security…. that is, I think the more you try to explain what you meant the more sure I will be that you are/were wrong.
But right now I can’t see any good that could come from the exercise.
And while businesses sell bonds, they also buy bonds to park short term excess cash.
I don’t know about “conspired”, but I have watched Obama for ten years and the Democrats for twenty and I have yet to see one of them who understands Social Security, and when I try to talk to them about it they put their hands over their ears and hum loudly.
IF that’s what it takes to earn a tin hat, I’ll wear it as a badge of honor.
“[While] businesses sell bonds, they also buy bonds to park short term excess cash.”
Which is not what they do with “RETIREMENT savings” (i.e. the pension plans), and the Social Security system does not sell bonds at all. As you point out, “SS cannot borrow.” Businesses can, and do.
Is it really so hard to understand that if the collected FICA taxes are greater than the benefits paid, they use the surplus to buy bonds, and if the FICA taxes collected are less than the benefits paid, they redeem bonds to cover the deficit?
Is your problem the word “deficit”? “The program cannot run a deficit,” you said. Yes, it can. And it has. Even the SSA calls it a deficit:
“After 2019, interest income and redemption of trust fund asset reserves from the General Fund of the Treasury will provide the resources needed to offset Social Security’s annual deficits until 2034….” https://www.ssa.gov/oact/trsum/
“After 2019, interest income and redemption of trust fund asset reserves from the General Fund of the Treasury will provide the resources needed to offset Social Security’s annual deficits until 2034….”
You are being silly. Selling off their bonds is like going to the bank and withdrawing funds, in this case the GF.
“cash flow deficit” is not the same as “program deficit.”
and the problem with words is that people of bad faith use cash flow deficit to mean program deficit. the one is normal business. the other is a problem.
in the case of SS a program deficit cannot occur. but there is also an “actuarial deficit” which means that present taxes will not be enough to pay future “promised” benefits. the fix for that is to raise the tax.
the required raise would not be large.. about one tenth percent per year, up to a total of two percent over twenty years. and the raise would not be money lost to a government black hole. it would be money given back to the people who paid it, with interest, to pay for their needs in retirement.
i believe you lose sight of this fundamental fact in all of your word games.
i don not believe most people can understand what “two percent over twenty years” means in terms of real life experience. i do not believe they even understand what “two percent” means.
they immediately imagine a 2% immediate increase in the tax with their income (and expenses) remaining what they are today. and they cannot even understand that they would not even miss that 2% if no one screamed “we are all going to die” at them.
Since in the same sentence that I said “program deficit” I mentioned redeeming bonds held in the SSTF to cover that “program deficit,” I assumed that I was clear enough. My apologies.
there is no need for apologies. but since i made a big deal out of the difference between cash flow deficit and program deficit, it seems to me you are still making the same mistake.
even as a mistake it would not be such a big deal if it were not for those who say that SS is broke and talk as if SS is the cause of the FEDERAL BUDGET DEFICIT and the NATIONAL DEBT.
SS has no effect on the federal budget or national debt beyond being a lender of money TO the “government.”
I will try to remember the use the term “annual deficit or surplus” in the future.
As for Social Security’s (non-existent) contribution to the National Debt, you’re setting up a strawman argument. I have never made such an assertion. As you point out, as far as the National Debt is concerned, debt held by the SSTF and debt held by the public are essentially the same — both are subject to the statutory debt ceiling.
Now I will throw up a strawman of my own. (And I have already heard you disavow this notion, so I do not attribute it to you.) Some people (not you, some politicians who should know better) have claimed that if we do not increase the debt ceiling, Social Security won’t be able to pay benefits.
don’t feel that you have to try too hard. my interest is not pedantry. i really don’t care about the words. i just want people to think about Social Security DOES.
i doubt very many people know what “debt held by the public” and “debt held by SSTF” even mean.
all i am trying to do is counter the widespread idea that somehow SS is responsible for “the” debt.
and the straw man you allude to is part of that. i am not sure if it is being said by people who want to raise the debt ceiling (which is probably necessary) or by people who just want everyone to keep thinking “Social Security” and “debt” in the same breath as though SS is IN debt, or SS causes “the” debt.
there is, as there often is in the lies of the more talented liars, a kernal of truth in the allegation. SS is currently being paid BACK what it lent TO “the government.” Since the government won’t raise taxes to pay the money back, or cut other spending to free up money to pay BACK what it borrowed FROM Social Security, it will “have to” borrow money from someone else to pay back the money it borrowed from SS. since this is borrowing to pay off an equal amount of debt, it should have zero effect on “the debt.” But because, as far as I know, the government accounting system does not count “owed to SS” as part of the debt, their books will show the money borrowed from the public to pay back the money borrowed from SS as an “increase in the debt.
this is bogus, deceptive reasoning and dishonest accounting, but it is what our essentially criminal congress has come up with.
that said, our criminal congress is what we have to deal with, and the only way to make them honest (about this) is for the people to understand what is going on and insist that they want to keep their Social Security and they are willing to pay for it… about a dollar a week, one one full percent now and another one full percent in about ten years… it doesn’t matter … the money needed is not going to change… it’s the difference between the payroll tax taken in and the benefits that have to be paid if SS is going to be meaningful retirement insurance.
there is so much double talk and plain lies going on that it is extremely difficult to carry on a conversation, let alone actually explain how the system works.
the one tenth on one percent per year is the elegant solution. one percent now and one percent in ten years would work. so would one percent in ten years and one percent more in twenty years, but it would be clumsy, slightly less fair, and open to vicious demagoguery.
i know, or think i know, that you would be just as glad to see SS abolished. I hope that you will eventually see that the reality is that your ideal of free enterprise and every man responsible for himself is not going to work short of the Second Coming (of Jesus, not John Galt).
A while back in this tread you directed a few comments at me. A late response:
EM: A 2% cut on a part time basis
is in no way, shape or form the same
as this plan.
BK: The 2011 2% cut provided an annual stimulus of $120B. If passed, the holiday discussed here would add about $160B to worker’s pockets. Six years difference – I say the two are close in terms of consequence. Clearly the “no way shape or form” is not correct.
EM: you did not address the income levels,
instead using a car dealer’s “up to $3700
in savings!
BK: The money quote is from LA Times and SS Works. Google this story and you will see that the $3,700 comes up often. You’re just stretching to say something nasty.
EM: ANd no mention of the $500 a month
BK: False. I said that EW has a base of two income families bringing the total benefit to $500 a month. Mass has 69% of families with two incomes. The median family income is right around $100k. Most of the two income families are in the cities, most of the families are part of EW’s base.
EM: BTW, how many of the people you included in that 124 million do not pay into SS?
BK: Look at the report from SSA. It says that the data comes from W2s and 1099s. So how many of the 124m pay into SS? All of them. Yes, some make little money and pay little to SS but all 124m pay something,
You just keep getting worse. Waste of time talking to you.
The amount of money is unimportant. What is important is the duration of the action.
Just one point cause I am tired of fighting this kind of bs.
Know anyone that files a W-2 without paying any payroll taxes? In my family right now, there are around 25 of them. Large family, but anyone writing about SS should understand that pretty easily.
EM – “The money in unimportant”. A $160b tax benefit to the bottom half is unimportant? Please….
No, I don’t know anyone who has earned income and gets a w2 that does not have payroll taxes withheld. I checked with the IRS there some ways your family members could be exempt:
Qualifying Religious Exemption. This means you are in a religion that prohibits you from paying any taxes. Your religion would have to be followed by you an your family since 1950.
Nonresident Alien. Foreign students and educational professionals in the U.S. on a temporary basis don’t have to pay Social Security taxes.
Temporary Student Exemption. This is tricky, you must be a full time student AND you can only work for the college that you go to.
Foreign Government Employees. Employees of foreign governments are generally exempt from paying Social Security taxes on income paid to them as a result of their official responsibilities.
So em your family in a cult, or has loads of illegal aliens, students that work and go to the same school and others who work exclusively for a foreign government. Guess what? I don’t believe you.
Rather than making SS take the hit, and make the general taxpayer make up the difference, how about mandating a 2% wage increase for everyone? You get the same stimulus, and a positive effect on SS. Of course businesses will complain, but they will benefit from the stimulus too. After all, it is demand that drives business, not profits. Profits follow.
it is denying people the right to save their own money for their own retirement in an account that protects their savings from inflation and market losses and insures them against death, disability, and the quite high chance of never making enough money to be able to save enough for a basic retirement.
nor is the 160 B a “stimulus”. The money that is “taxed” for FICA goes right back into the economy in the form of benefits that the elderly use to pay for their basic needs.
the “stimulus” if any comes from the money borrowed to “pay back” SS or taxes from others. you could get that stimulus without ever touching the payroll “tax.” And that would leave people with a very clear and direct claim on their retirement benefits because they “paid for it themselves.”
Essentially the same can be said for the previous FICA “tax holiday”… the stimulus, if any, came from the money borrowed to pay back the Trust Fund, and the whole “holiday” was a gimmic to exactly weaken the link between “i paid for it myself” and retirement benefits, as well as to give the enemies a chance to deny… falsely, that “SS does not contribute to the deficit.”
you, of course, are always a sucker for political lies. How is that “bombshell” coming along.. the one where you told us that new Hillary Emails had been discovered in addition to those the FBI had already dismissed as having nothing new or important to say.
you are a perfect fool for the dissemination of false information… lies.
it’s a lot easier to tell the people lies than it is to tell them the truth.
and “social security works” is, i am afraid, another disseminator of lies. hard to believe that people calling themselves “defenders of social seurity” would have to resort to lies… but they are not defenders of social security. they are part of the long plan to destroy social security by turning it into welfare. and then turning it into welfare as we knew it. and like all sophisticate Big Lies they work by pretending to take the “opposite” position of the main group of Big Liars.
There is one simple fact: Social Security is the ONLY way ordinary working people have to INSURE that they will have enough money to retire. My addition to this simple fact is to point out that the cost of keeping their Social Security insurance for themselves and their children is to raise their own payroll tax.. that is the money they save protected by Social Security… about one dollar per week per year.
Raising it about 2% all at once, or in some variation that results in paying the same amount for the same benefits, will also work, but it’s easiest to do it one tenth of one percent (one dollar per week) at a time.
Anyone tempted to believe Krasting needs to go back and read what he says and see if there is anything in it that would protect their ability to retire when they need to. It’s all shouting and hand waving and completely irrelevant to the real problem. The kind of scam that leads people to bet their savings on a horse race.
You are most definitely correct that people need to be educated on the workings of Social Security. It must, above all, be made clear that it is NOT a retirement SAVINGS program, but a retirement and disability INSURANCE program (and, to a lesser extent, a life insurance program). So, it is both an insurance against an early death (the survivors’ benefits) and against a late death (guaranteed income for life).
Coberly – I’m truly shocked. You just took a crap on Nancy Altman. Your ex friend and supporter Nancy Altman. You flat out call her a liar:
“social security works” is, i am afraid,
another disseminator of lies”
“hard to believe that people calling
themselves “defenders of social seurity”
would have to resort to lies”
OMG! You said that about Altman? It gets worse. You say:
“They are part of the long plan to destroy social security by turning it into welfare.”
WHAT? Nancy Altman is part of a secret plan to destroy SS? You’re nuts. The lady has dedicated her life to SS.
And finally:
“and like all sophisticate Big Lies
they work by pretending to take the
“opposite” position of the main group
of Big Liars.”
Yikes! According to you Nancy Altman is faking it. She appears to be a defender but her secret motive is to destroy SS.
May I remind you that your friend Bruce Webb wrote a glowing report on Altman’s book? Altman went out of her way to help you. She gave you a ‘hat tip” on the NW plan. You turn around and stab her in the back!
Webb summed up his thoughts on Altman’s book with these nice thoughts:
“you really could do no better
than buying (or borrowing) and
reading this book.”
And you call her a liar? I’ll send NA your thoughts.
this is like you. complete nasty hysteria based on overreading something to make it fit with your nasty hysterical world view.
I said nothing about Nancy Altman. I said “Social Security Works” is disseminating lies. And as far as I know the liar in chief there is named Eric Lawson. And he calls me far worse names than “liar.”
Altman wrote a book that I much agreed with, up to the last few pages where she suddenly went from knowing the difference between welfare and worker paid insurance, to proposing using the estate tax to fund needed increases in social security. since then she and others have given support to “scrap the cap” which would turn social security into welfare as we knew it. and the “Social Security Works” people have published hysterical distortions of the social security “debate” that i think amount to lies of the same type as the hysterical distortions published by Cato and other “non partisan” expert liars, who can count on people like you to repeat where they won’t be held accountable for the exact truth of what they have said.
saying that an organization associated with someone you like, or who may have supported you when they thought you agreed with them, is not the same as “crapping” on that person. Nancy and Bruce know where I disagree with them and where I agree with them. I do not condemn them as people. Social Security Works went from being a group of people I disagreed with in part, to a group of people represented by a very nasty person (Lawson), to a group of people who support their political program by distorting facts and concealing facts.
sorry, “crapping on” someone is not a part of my way of thinking about people and life.
you may be disappointed to learn that i agree with you here, i think.
the words are not important unless they are being used to obscure the facts.
i cannot imagine what your objection is to calling SS a savings program. People put their money in a safe place… the safest place available to them… and expect to get it back with interest when they need it. That is “savings.”
Whatever you want to call it, it IS what it DOES.
you are free to save or invest the rest of your money in any way you choose. but the first few dollars is “taxed” (forced savings) so that the rest of us don’t have to worry about supporting you if your savings and investments let you down at the worst possible time.
this is no doubt an infringement on your pfreedom, but it is a very benign infringement, like the speed limit or red light that tries to keep you from killing yourself with your “freee to be meee” libido.
failed sentence in my reply to Krasting re Altman:
maybe said better:
saying that an organization that is associated with someone you like has fallen into telling lies is not the same as calling that someone you like a liar.
but when there is strong disagreement even among friends it is hard to say “that’s not true” without it sounding like “that is a lie.”
and as long as i am here again i’ll say again that “scrap the cap” is the best way to destroy social security, perhaps short of Krastings “end FICA tax and let the government pay for Social Security, currently on the table.
it makes sure that even “the rich” not currently motivated to destroy Social Security will fight to protect themselves from being taxed to ‘save’ it. And should it pass, it will make sure the people who have hated Social Security from the beginning will be able to destroy it by “we can’t afford it” one benefit cut at a time.
“[I] cannot imagine what your objection is to calling SS a savings program. People put their money in a safe place… the safest place available to them… and expect to get it back with interest when they need it.”
My primary objection is that they do not own it. If one dies early, his heirs get nothing from all that was taken from him during his life.
Furthermore, most of the money is NOT “put in a safe place,” but is paid out to current beneficiaries.
Social Security is an insurance program. That’s why FICA taxes are called FICA taxes: “Federal INSURANCE Contributions Act”
They are not Federal SAVINGS Contributions Act taxes.
Coberly – Altman is President of Social Security Works. She runs the show. Lawson is just a director.
Like I said, you took a dump on Altman. You called her a liar. It amazes me that you could be so rude to those who are your allies. Go ask Altman for support for your busted NW plan. I don’t think she would give you the time of day after your silly and inaccurate words.
I did not call Altman a liar. I said Social Security Works has been telling lies.
Altman has been calling for some version of “make the rich pay” for about as long as I have been trying to tell people that they can… they must… pay for Social Security themselves…. about an extra dollar per week each year.
Altman stopped talking to me when she realized I was not going to stop telling her she was making a mistake that would help the haters of Social Security destroy it.. That was about eight years ago. I did not know she was president of Social Security Works. I do not know if she authorizes the lies. Her name would never have come up if you weren’t trying to make me out as some kind of Judas.
My entire dealings with Social Security Works have been with Alex Lawson who is not a nice person.
Your whole purpose on Angry Bear has been to try to discredit me and sow dissension and mostly cause a distraction from the only point I have to make:
Social Security is insurance paid for by the workers themselves for their own retirement. It is important that they continue to pay for it themselves. The cost to keep it solvent forever amounts to a “tax” (insured savings) increase of one tenth of one percent per year… about a dollar per week at todays pay levels.
when you put your money into a savings bank, the only thing that makes it safe is the government FDIC insurance,
and the money is not kept there for you. it is lent out to others. when you need your money back, it comes directly from others who are in turn putting their money into the savings bank (or repaying the loan of your money.)
If one dies early with dependents, SS pays them back “your money” and often a great deal more than you could have left them as an inheritance. But there is nothing stopping you from buying private insurance of making private investments, or saving more in a bank.
It’s not as if SS has taken away all of your money. Since you are making two or three times what your grandparents lived on, i am sure you could find another ten percent to invest if you think that is what is going to make you rich. SS only wants you to pay FICA insurance in case your investments don’t work.
Ask your heirs if they would rather take a chance on you leaving them a million dollars or on their having to take care of you in your old age.
And don’t get paralyzed by words. SS is insurance. It is insured savings. Look at what it does. I can’t think of any definition of “savings” that is materially different from what SS does…. except that SS adds that insurance.
No matter what you call it, Social Security has been one of the most successful government programs ever devised. It drives government haters crazy. That’s a secondary benefit at no extra charge. I call that a win-win.
Your bank account is insured savings, and we do pay for that insurance, too. It is not free. But with a savings account, one has a legal claim on that money. That account has one’s name on it. Not so with Social Security. One does not have any legal claim on one’s FICA taxes or benefits. (Fleming v. Nestor, 1960)
your understanding of law and the constitution are primitive.
when i reached 62 i asked for my pension from social security. they looked my contributions up in a file with my name on it and sent me the money with no fuss. they’ve been doing for quite a few years now. and they have done the same for two hundred million other people.
the congress can deny the right of an alien communist his social security in the height of the communist hysteria, but i don’t think they can get away with denying the rights of ten thousand people every day…. unless of course the liars who have fooled you can fool enough people that they let it happen.
that’s the chances you take in a democracy. but your right to your social security money is far, far more secure than your right to your vanguard money. you can look it up.
“The DIF is funded mainly through quarterly assessments on insured banks, but also receives interest income on its securities. The DIF is reduced by loss provisions associated with failed banks and by FDIC operating expenses.” https://www.fdic.gov/deposit/insurance/
BK:
I guess you could make that argument; but then, you would be ignoring every bailout of every form of FDIC on deposits going back into history where the Trewasuy or the Fed pealed off millions and billions because the FDIC did not have funding to back them up. Indeed, most investment houses and loan companies like Goldman Sachs and GMAC were made banks so as to be backed up with federal funds. Technically Coberly is correct.
I’ll pile on: “The FDIC receives no Congressional appropriations – it is funded by premiums that banks and thrift institutions pay for deposit insurance coverage and from earnings on investments in U.S. Treasury securities.” https://www.fdic.gov/about/learn/symbol/
“[Congress] can deny the right of an alien communist his social security in the height of the communist hysteria, but i don’t think they can get away with denying the rights of ten thousand people every day….”
And yet by implementing a tax on benefits, Congress did just that. By increasing the retirement age, Congress did just that.
“I guess you could make that argument; but then, you would be ignoring every bailout of every form of FDIC on deposits going back into history where the Trewasuy or the Fed pealed off millions and billions because the FDIC did not have funding to back them up.”
It is interesting to me that Warren can interpret the complex way FDIC is funded…ultimately a mandatory insurance plan paid for by a “premium” or “tax” imposed and enforced by the government…in a way that leads to the opposite conclusion that he reaches when considering Social Security… a mandatory insurance plan paid for by a premium or tax imposed and enforced by the government.
Warren
increasing the retirement age. imposing a tax on benefits in no way keep people from collecting the benefits they paid for. They do affect the amount of benefits above what they paid for that they might have expected… almost in the same way that companies do things with “their” money that affect the returns you can get from your stocks… which have no guarantee whatsoever.
we can get lost in the complexities and semantics of all this… and i think that is your purpose here… but the basic fact remains:
People need Social Security to insure that they will be able to retire when they can no longer work. They pay for that insurance themselves… by means of putting a part of their income into Social Security where it earns an effective interest better than they could get from any “safe” investment while also being insured against losses due to inflation, market losses, and their own failure to thrive.
And to guarantee that Social Security will be there for themselves and their children it will be necessary for them to increase their own contribution by 2% over the next twenty years… about one dollar per week per year being the easiest and most elegant way of doing that.
I have opposed increasing the retirement age and tried to point out that there is no “need” to increase it if people just pay an extra one dollar per week each year. By gradually increasing the “tax” instead of imposing it all at once, the people paying the tax will be those who are going to be living longer. It is intellectually dishonest of those who want either to cut benefits directly, increase the retirement age, or kill social security entirely to complain that increasing the retiement age robs them of benefits they paid for. It has done no such thing, but it is a cruel and stupid way to “save” social security… imposing a mortal burden on the very old in order to save a dime for the young and relatively wealthy. it is merely ironic that those young and relatively wealthy will one day be old and poor and desperate to retire, or destitute because no one will give them a job at their age..
the arguments of Warren, and Krasting, are fundamentally dishonest “cherry picking” of points that seem to support their position when taken out of context ignoring the “rest of the story.” only the sad fact of the limitations of human intelligence… to consider all the facts in context at the same time… excuses them, somewhat, from the charge of being liars if not damned liars.
it doesn’t excuse them of the charge of being tedious time wasters, or in Krastings case of being an extremely dirty and loud drunk who can’t be evicted from the parlor because the host has an exaggerated idea of “free speech.”
“It is interesting to me that Warren can interpret the complex way FDIC is funded…ultimately a mandatory insurance plan paid for by a ‘premium’ or ‘tax’ imposed and enforced by the government…in a way that leads to the opposite conclusion that he reaches when considering Social Security… a mandatory insurance plan paid for by a premium or tax imposed and enforced by the government.”
Yes, Social Security is a mandatory INSURANCE plan, we have established that. It is NOT a SAVINGS plan.
“[Increasing] the retirement age… in no way [keeps] people from collecting the benefits they paid for.”
It sure does if you die before reaching the increased retirement age.
But I agree with [almost] all of your “basic facts”: “People need Social Security to insure that they will be able to retire when they can no longer work. They pay for that insurance themselves… by means of putting a part of their income into Social Security where it earns an effective interest better than they could get from any ‘safe’ investment while also being insured against losses due to inflation, market losses, and their own failure to thrive.”
Nonetheless, Social Security is insurance, not savings.
i am glad you agree with me about the basic facts.
as for losing your savings if you die before you can retire, or before collecting all of your savings back in the form of retirement benefts… well that is the nature of insurance. if you die without having the fire you lose all that money you paid in as premiums.
if this is what upsets you about my using the word savings in connection with SS I would be perfectly willing to let you continue to be upset without becoming upset myself.
but seriously, don’t you think it’s a rather “special” argument when for most people SS acts (almost) exactly as a “savings” account, only better. Remember all the people who collect much more than they “saved” because they die or get disabled long before they have had a chance to save much, and those who live much longer than their savings could have paid for.
it sounds to me that by yelling about SS not being “savings” you are just trying to weaken the case for SS.
The case for SS lies in what it does, not in what it is called. Some people don’t like what it does, or the way it does it, but they have yet to come up with anything that works as well in the real world, flawed as it is, but the one we have to live with.
You can call it “savings”. You can call it “insurance”. You can call it “Shirley”. Whatever you call it does not change the fact that SS is one of the most successful government programs we have, has helped keep millions of Seniors out of poverty, and is entirely paid for by the people who contribute to it.
“[As] for losing your savings if you die before you can retire, or before collecting all of your savings back in the form of retirement benefts… well that is the nature of insurance.”
Yes, that is the nature of insurance, not of savings. So don’t call Social Security “savings.”
“[It] sounds to me that by yelling about SS not being ‘savings’ you are just trying to weaken the case for SS.”
It seems to me that by pushing the false notion that Social Security is “savings,” you think that the case for Social Security is so weak that it needs that fabrication.
if you put your money into an ordinary savings account you will lose half of it to inflation by the time you retire.
almost the same is true of safe bonds.
if you invest in the market or your own busines you might do very well or you might lose everything,
if you want to reserve “savings” as a term of art, feel free. but i don’t see where i hurt you or misrepresent Social Security if from time to time I call it “savings.” i usually follow that with “insurance.” and make the point that the key to its importance to most people is the insurance.
here is a difference for you to think about: i have looked pretty carefully at Social Security and listened to the objections, and lies, of the Big Liars for over ten years now. My claim to fame (that is a sad joke) is that I discovered that the cost of “saving” Social Security…. from the 15 Trillion Dollar Unfunded Deficit! ™ amounts to one tenth of one percent of payroll per year, or about one dollar per week in today’s terms.
your objection to my occasional use of the word “savings” amounts to a pedantic insistence that “savings” can only mean what you say it means. most people are a little more relaxed about the use of words, and the more intelligent of them will make the slight effort it takes to understand what the speaker means… what the reality he is pointing at is.
my use of “savings” is no more misleading that my failure to use capital letters where your sixth grade teacher insisted they had to be used. grow up a little. you’ll be happier.
My objection is simply that your use of the word “savings” to describe Social Security is wrong and misleading. Your persistence indicates that that is your intention.
It’s pretty grim. The average one-earner couple retiring now is looking at a long-term rate of 4.5%. Singles and two-earner couples will see about half that. Things are worse for future generations. Especially when taxes are raised, or benefits reduced, to match FICA taxes to benefits. Someone like my son is looking at an IRRR of less than 2%.
Yes, that is better than a savings account. But anyone who puts their money into a savings account for retirement is probably on the low-income side of things, and will do much better with Social Security. But that is exactly the point — to protect people from their own stupidity.
Sure, Jerry, that’s the whole idea. They want you to feel like you provided for your own retirement, when you provided for your father’s and grandfather’s, and your children and grandchildren are providing for yours.
Again, that’s how insurance works. (Except insurance companies are required to have reserves. Social Security is not.)
Social Security is more like buying annuities from a life insurance company. It might fell like savings, but it’s not. (And it sure doesn’t feel like savings to your heirs. When you’re gone, it’s gone.)
I recommend you start a savings account for your children. When you’re gone, you’re gone.
SS is not designed to be your kids’ inheritance. It is designed to guarantee you will be able to retire when you need to. Your kids will appreciate not having to support you. They never had a guarantee you would have any savings left to leave them without SS.
i am not sure what it is that you say is my “intention.” I try to be as honest as I can, given that words don’t mean the same to everyone and that complicated things are hard to explain in a blog comment or even main post.
There seems to be something about your way of thinking that grabs hold of an idea and can’t let go even to learn more about the complexities of that idea. I am going to speculate shamefully (i really have no idea) that this “grabbing hold” is related to your “grabbing” hold of any money you think is “yours”. Freud had a way of describing that type of personality, which i only mention so that you will know that it has been described so it is a common enough phenomenon, but not everyone shares it. Life is better without it…. if you can let go of it.
I’m treading on thin ice here. I want to treat you decently and kindly. but my own personality disorder makes me think that means trying to explain to you what you are doing wrong. I don’t make many friends that way.
anyway, thank you for coming as far as you have in understanding what SS is, even if you don’t like it.
and no one is trying to fool you about what SS “is,” except for Cato and similar white ring non partisan think tank expert liars.
SS is your money paid in and your money paid back. To think you are paying for your grandmother and your grandkids will pay for you is just to fail completely to understand what “money” is.
when you put your money in a bank, someone else spends it. and when you take your money out of the bank, some else put it in the bank so it is there for you to take it out. that’s the way all money and investment and savings work… except for stuffing it in a mattress or burying it in the back year where moth doth corrupt and man steal and inflation diminish to nothing.
Jerry, the word “savings” implies ownership. You own whatever amount of money you have put into your savings account. You own the stocks, bonds, and mutual funds shares in your retirement accounts. You do not own your FICA tax payments.
I don’t know about “the law” but Social Security operates with a “one year’s full costs” reserve and considers itself in “actuarial insolvency” when that reserve is expected to fall below 100% (of one year’s costs within ten years.
this is close enough to “it must have a reserve of one year’s costs” for your “stop making stuff up” to meet my definition of hysterical misrepresentation.”
nor can i see how this “supports” the case for Social Security in any meaningful way. The Trust Fund could disappear tomorrow and SS would continue to pay benefits directly out of current taxes, and could pay full “promised” benefits with a small increase i the FICA tax… about one half percent immediately to make up for the lost interest from the Trust Fund and then about two tenths of a percent per year to keep up with the increasing costs of baby boomer retirement until it reached the full 2% that will be needed to pay for the longer life expectancy of those currently paying the tax.
in fact the “immediate and permanent” increase of about 3% that SS says would be needed to close the 75 year actuarial gap would do the job quite nicely for the next 75 years, after which another 1% would probably be needed, and that would be enough for the forseeable future (the infinite horizon.
please note, the 2% and one tenth % that i mention apply to the tax the worker pays out of his paycheck. the 3% and future 1% that SS refers to would be the combined worker and employer taxes. so the worker would only see about a one and a half percent increase in his tax…. mandatory savings…
you can try to distort the truth and misdirect the people by pouncing on half truths, distortions, and forced special definitions, but the facts remain.
you have no standing whatsoever as an honest “debater” and are only the kind of person who would go into a crowded theater and shour “fire” so he could pick the pockets of the people crushed during their attempt to save themselves.
i can only hope that at least on this forum my answers to your hysterical lies can point people in the direction of finding out the truth for themselves. otherwise i would not bother to reply to you.
thanks for your help.
I am afraid Warren is a lost cause. He will continue to insist upon his own definition of the word “savings” and accuse those who use it in the natural way are trying to “fool” people.
he insists that “savings” requires that you “own” what you have “saved.”
i’m not sure that is a useful distinction. the need for Social Security “savings” is exactly because workers cannot count on keeping their private savings from being lost to inflation and market failure, bank failure, or just thieves in the night.
no doubt you “own” the money you save in a jar buried in the back yard, but when you go to dig it up and it isn’t there, or inflation has cut it’s value by 90%, what good does “owning” it do you?
you may own your stocks, but there is no legal requirement that you ever get “your money” back from those stocks.
with bonds here is a stronger legal claim, but again no guarantee you can get your money back.
with a bank account, absent the Federal guarantee, your ownership of your savings will not get your money back if the bank fails.
so what does “own” mean, other than “guaranteed by the government”. and SS “savings” are guaranteed by the government as well as anything is guaranteed in this life, and better than most “legal ownership.”
but even that will not survive continuing to elect people who are determined to destroy Social Security.
Coberly – You go on for 1000 words and say nothing.
The SS Trustees have set the year 2034 as the year that the TF will run out. There is no provision in current law that forces SS to do anything before that date. There is nothing on the books that mandates any reserve at all. Run said it was the law. No it is not.
BUT – I think it should be the law. I don’t believe that SS can operate without at least a year in reserve. SS run a cash deficit 7 out of 12 months today. In 10 years the deficits will be in 10 of 12 months.
I have stated my position on this at AB many times. It is the only area of SS that Bruce Webb and I agree on. Stephen Goss has written papers on this topic. This is a must do change in the law.
Can we agree that there should be a new law that mandates that SS have a TF that is equal to 100% of the next 12 months of benefit payments?
there isn’t a chance in hell i would agree with you about anything. you have a diseased mind. but here is more “nothing:
SS has a policy (i don’t know about the law, but i suspect it is written somewhere as “law”) that requires it to treat any time the Trust Fund is projected to falll short of 100% of benefits as “actuarial insufficiency” and to report to congress so that congress can do something about it.
better than that, i have a plan that will guarantee that Social Security never falls into “actuarial insufficiency”. it proposes to raise the payroll tax one tenth of one percent whenever the trustees project that the Trust Fund will fall short of 100% of a fullyears benefits within ten years.
And I have shown that according to every Trustees Report for the last ten years that plan would prevent “actuarial insolvency” forever.
now, of course, you can scream that i have not prevented actuarial insolvency because on the very minute that the Trustees project that shortfall in ten years it is technically “actuarially” insolvent. But if the law has mandated that as of that minute the tax is raised one tenth of one percent, then “actuarial insolvency” disappears.”
as for your remarks: 2034 is more than ten years from now. there is no provision in the law that requires SS to do anything… in fact SS cannot do anything, the congress must do it.
and what this whole fight is about is requiring the congress to do it. and not do something incredibly harmful to people like cutting benefits or raising the retirement age, or politically stupid like raising the”cap” or otherwise requiring “the rich” to pay for Social Security beyond what represents to them a reasonable cost of the insurance they are getting based on their wage income.
SS can in fact operate perfectly well with no reserve at all beyond what it takes to manage the day to day fluctuations in income vs costs.
your having “stated your opinion” on this or anything else is as significant as “a pig grunted.”
if you chose to “agree with” this… call my plan to pass a law that raises the payroll tax one tenth of one percent whenever the trust fund is projected to fall below 100% of benefits”… as meeting your call for a Trust Fund that has 100% of the next twelve months of expenses, i can only point out that my plan exceeds your “law” s reqruirement by ten years.
i don’t give a damn whether you agree with me or not. but it would amaze me if you even understood that i have been calling for what you say you want for the last ten years.
and a cash flow deficit is NOT the same as a deficit in SS finances. That is what the Trust Fund was created for… as long as the trust fund makes up the cash flow deficit, there is no deficit in SS finances.
The current law (? long established policy) that calls for action by congress when TF is projected less than 100% in ten years” far exceeds Krastings call for “TF at least 100% of the next 12 months.”
note that falling below 100% is not the same as TF exhaustion. TF will take another 5 years to run out after falling below 100% of a full year’s reserve.
I don’t think Krasting is smart enough to understand this.
I have not seen the 2017 Trustees Report yet. But I expect that either this year or next year it WILL report actuarial insolvency.
After that point the one tenth of one percent increase in the payroll tax will no longer prevent actuarial insolvency. But a slightly higher percent would… say a dollar and a half instead of a dollar a week. or even a half percent the first year, followed by the tenth percents per year after that. or even the 3% (combined) that the Trustees say would prevent insolvency for 75 years… but, alas, leave the people 75 years from now faced with another “significant” tax raise of one percent combined.
Iit happens that even after 2018 a one tenth percent tax increase would prevent actual insolvency (but not actuarial insolvency), but that would give us more screaming of “we are all going to die” than i think congress could resist without doing something stupid… like a compromise, like adding oneyear onto the retirement age, cutting benefits, raising the cap, and raising the payroll tax “only” one percent. because you see all of those are “equivalent” in the mind of a politician, though they have incredibly different harmful effects on real people.
but congress no longer listens to real people or cares about them. only what their funders care about and what can “deliver the votes” from people who have been fed hysteria and deprived of a chance to understand the real choices.
It has come to my attention (and perhaps Mr. Coberly will object on this count, too) that my use of the word TAX to describe FICA contributions is inacurate, and possibly misleading.
Keeping with the notion of INSURANCE, specifically that FICA is the “Federal Insurance Contributions Act,” they should be called “premiums” (or perhaps “premia,” to keep the Latin plural).
relax. you can call it a tax if you want to. but i can point out it’s not “really” a tax since you get the money back, in your name, with interest.
and you can insist it’s not “savings” if you want… but i will continue to call it savings at times when i want to emphasize that it’s the safest way workers have to save part of their earning so they will have enough to retire. in fact, as we both agree, it is insurance.
but i have had people, also word bound, insist that it can’t be insurance because with insurance you pay a small premium against a small possibility of a large loss. they just can’t handle the idea of a large premium against the almost certain probability of a crushing loss.
nor would i care to try to separate out the part of the “tax” that is “premium” from the part that is “savings with interest.”
SS is what it does. the words don’t matter. they are just a starting place to try to explain to people what it does. so they won’t be fooled by the people who insist it is just old senile uncle sam fumbling with worthless iou’s from one pocket to the other.
Coberly,
I have come to the conclusion that Warren is essentially in agreement with you about what Social Security does. All he can do is argue about words. It is kind of like arguing about what Trump says, not what he does.
Of course it is. Tell your congressman. And all your friends.
But the premium has to go up in order for it to be insurance that will be worth having: enough to live on when can’t work any more.
The good news is the premium only has to go up about a dollar a week.
“Technically” it has to go up one tenth of one percent per year for about the next ten years. About a half a tenth of one percent per year for the ten years after that, and about a tenth of a tenth of a percent per year after that. And that should be enough. Total increase would be about 2% while your income will go up over 100%, leaving you with twice as much money in you pocket AFTER paying the increased premium while you are still young, and about twice as much real income in retirement as today’s workers have.
In a better world, everyone could invest their own money and it would reliably, unfailingly, return to them enough to live on when they no longer can or want to work, while growing the economy.
But we don’t live in that better world. Even those of you who will do well with your investments need Social Security so there will be someone to buy the goods and services you invested in. Old people with no income don’t buy much. Neither do young people terrified of becoming old and poor… as they would be if they saw that was what was happening around them.
But a word of caution: if you say that SS is “not savings” you will confuse most people who don’t have your advanced knowledge of the precise meaning of words… they will think they won’t get their money back. Better to say to them that SS is insurance that protects their savings from inflation and market losses, and insures them against loss of income, or a lifetime of low income.. too low to save enough to be able to retire, or support their families in case they die or become disabled.
For everyone who “loses his savings in SS” by dying too young to collect everything he saved… about ten million will never have enough “savings” (or investments) to leave to their children anyway.
And without Social Security about a hundred million of them would have to be supported by their children when they get too old to work.
SS is the best bet they have. A prudent hedge they can count on while using the rest of their money to save or invest in any way they please.
Yes, Jerry, Coberly and I do agree on what Social Security does.
I argue about words because words are important. They convey information. If we use incorrect terms, we mislead those to whom we are trying to impart information. Sometimes people mislead by intention, and sometimes not.
Those who do not want to mislead people about the Federal INSURANCE Contributions Act will not call the contributions “savings.”
I’m glad we have reached the point where we can argue about semantics and not Social Security.
Words mean different things to different people, or even to the same person at different times.
It is important to understand that words “point to” something. they do not “mean” something. They certainly are not that “something.”
Words can be used to mislead, but you need to look closer to see if the person intends to mislead, is just making a mistake by using a word to “mean” something that most people would not use that word to mean, or is using the word to point at a true thing that in some important way takes on at least part of the common “meaning” of the word.
Usually when people intend to deceive they don’t do it by choosing one “wrong” word. They do it by directing attention away from the reality by constructing a whole context in which the words they use “seem” to mean one thing while hiding the truth.
I would have thought that by the emphasis I have placed on calling Social Security “insurance,” you would understand that when i refer to Social Security protecting your savings I am not trying to deceive you or anybody else.
MOst people would understand that they need to “save” for their own retirement. saving means not spending some money that you have (or have earned), and implies putting it in a safe place, and particularly doing something with it that protects its value from inflation.
The idea that it can’t be “savings” because there are circumstances in which you or your heirs might not get it back is probably incorrect. At least it is a “special” definiiion that most people would not immediately think of.
But most importantly, you need to recognize that I can’t be trying to fool you or anybody else by my use of the word to help explain what SS does. It is insurance, yes and most important. But it is insurance of your savings. The best you can buy.
I am sorry that there is some chance your savings in SS will not be there for you or your heirs if you die too young to collect it. But since you can lose your “savings” far more easily without SS insurance, I think you might consider letting go of your special and obscure and no doubt “technically correct” (according to you) definition… at least the part where you accuse people who use the word to mean what most people understand by it of trying to fool you or them.
Anyway, the above reply to Warren is offered as a courtesy to help, if possible, Warren save himself from a too rigid idea of what words are, and the essentially paranoid certainty that people who use a word slightly differently from the way he thinks it should be used are trying to fool him or others.
I don’t know if Warren can fee himself from this intellectual and psychological trap, but I am going to try to stop spending my time on it.
Otherwise, thanks to Warren for trying. I think we have accomplished a great deal if he understands what SS “does.” And if he also understands that in the world we have… not the one he, and perhaps I, would like to have, in the world we have SS is the best way most people have to insure that they will be able to retire at a reasonable age.
i would urge anyone who is sure they could do better on their own to go ahead and do that with the money they have after paying the payroll tax. It is a bit dishonest to blame SS for not being able to leave anything to your heirs, when you are spending the other 90% of your income on more expensive cars instead of saving (investing) it for their inheritance.
It by using words just slightly incorrectly, that people twist the language to fit their agenda. The word that has positive connotations, such as SAVINGS and RIGHTS, are used where they do not quite fit to make the listener think that the idea to which they are attached (but which don’t quite fit), is a Good Idea.
The meaning of words is changed by two groups of people — those who do not know what they are doing, and those who know EXACTLY what they are doing.
A trial balloon has been floated for Trump’s “middle class” tax cut plan.
The idea is to eliminate SS taxes on employees on the first $60,000 of income. This would save those people up to $3,700 PA. This a big deal for those in this income group.
Social Security’s finances would not be impacted. Any reduction in PR Tax income would be offset, dollar for dollar, with direct payments from Treasury. This is identical to Obama’s payroll tax holiday in 2009/10.
Let me repeat – Middle income earners would get a big tax break, AND there would be no consequence to SS.
Hiltzik, at the LA Times, thinks this is a terrible idea, and Nancy Altman jumps on Tom’s bandwagon.
Are Progressives really going to appose the biggest middle class tax-cut in history? If so, they are going to face some blow-back in the voting booths. Elizabeth Warren has not said a word on this. She’s up for reelection in 2018. Is she going to deny her base $500 a month?
http://www.latimes.com/business/hiltzik/la-fi-hiltzik-social-security-tax-20170410-story.html
http://www.huffingtonpost.com/entry/trumps-trojan-horse-attack-on-social-security_us_58ed05e9e4b081da6ad00817
BK:
And if Repubs kill healthcare? That additional $300/month would disappear. It is a shell game. The upper 1% stands to gain far more than $3700 by eliminating:
– Medicare Part A Tax increase of 0.9% over $200k/$250k,
– 2.9% Net Investment Income Tax.
If you are a millionaire or more, the average tax savings from the elimination of these two taxes is ~$57,000. Weigh that amount against the $3,700 offer for no SS Payroll premium for the < $60,000 in income. Furthermore with the elimination of those two taxes, you play Medicare in a position of decreased funding requiring a tax increase on those very same people. Medicare is more than just healthcare for the elderly and includes Part A&B for the disabled. Also consider the Repubs desire to eliminate the Cost Sharing Reduction for people on the PPACA which subsidizes deductible and out of pocket expenses (when selecting a Silver Plan). For a family with one earner in the 200-250%, this is worth ~$3,400.
It is a trade-off shell game by Trump, Republicans, and the rich in income. You can have a $3,700 tax break; however, you will lose funding for Medicare which will impact more than just the elderly and CSR for which pays out of pocket expenses for those between 100-250% FPL. Yes, I would oppose it as it is a scam and Repubs are trying to buy people off with pittance to lower the rich in income taxes or <1% of the household federal income tax payers. Not only are they attacking funding for the PPACA, they are attacking funding for Medicare. Overall it will affect SS or a component of it. I am sure Coberly and Bruce can answer the part on SS.
Furthermore, you make SS an entitlement rather than a taxpayer self-funding program which is difficult for political interests such as yourself and Washington to attack.
So Krasting is Sean Spicer.
Who knew?
Great alert Bkrasting. In the past I have criticized thinking of the SS TF as some kind of goose that is expected to go on laying golden eggs forever. I have protested that we (the whatever generation) paid higher FICA and lower income tax to pile up bonds for our retirement and now we expect those bonds to honored (and depleted) as we use up our nest egg.
I have said that the next gen has the option to “save social security” by raising its FICA taxes and lowering its income tax and piling up TF bonds if it feels like it.
What does all that have to do with Trump’s stealth “sink social security” plan?
We can do a stealth repeat-the-Rube-Goldberg social security, piling up of TF bonds — for generations to come — by a sort of financial end run: simply remove the cap of FICA collections. In an era when many top incomes (CEOs, ball players) are 10X what the should be by former income share counts — taking the cap off FICA will continue to pile up TF bonds for a way into the foreseeable future.
Essentially that wouldn’t be diverting SS funding to on budget items like the present system. A closer look sees this diverting money that would not have been taxed at all from upper incomes into TF bonds.
Thereby saving the goose that is expected to go on laying golden eggs forever — at least for a very long time. Er, uh, those below today’s cap can lower their income taxes because the diverted SS money will go to pay for (guess what) on budget items. (Important not to let the rich get any income tax break to cover new their FICA obligations.)
My comment on an Economist’s View post: Tax Reforms and Top Incomes
giving me a slightly different angle from which to (re)work my same old bromides:
Tax top incomes less and we are forced to tax mid incomes more — and vice versa. Mind you, mid incomes are where demand economic pump is primed. Nobody staffs stores and factories in the hope they will “create their own demand.”
Tax top 1% incomes enough to recover HALF of the 20% of overall income they take now — compared to the 10% of overall they took only a couple of gens back — and we can lower mid 54% incomes’ taxes enough to pay higher consumer prices on the products and services of lowest 45% incomes TO DOUBLE THEIR INCOMES.
Works like this:
shave 10% of overall income (via confiscatory taxes) from top 1% to mid 54% (adding 14% to mid incomes);
rebuild union density so bottom incomes can charge high enough prices for their products and services (25% higher prices at McDonald’s w/33% labor costs; 7% higher prices to DOUBLE labor costs at super efficient Walmart) TO RECOVER 10% OF INCOME SHARE TO BOTTOM INCOMES lost over the gens (adding 100% to their income).
Actually I see (but that’s just me) labor unions bringing McDonald’s up to $15 an hour (sometimes seems more people behind the counter than in front — most sales through drive thru of course) — Target to $20 (10-15% labor costs?) — Walmart $25 an hour (7% labor) — WITH OR WITHOUT tax cuts on the mid.
I think labor unions could do that — without priming the middle class pump — if they want the lower incomes to show up for work.
But taxing the (undeserving) rich to replenish the (very deserving) middle class can make restoring the income share of the (no longer) poor easy and painless.
“Middle classes of the world unite!”
Denis – Krasting
I am sorry Denis thinks that way. I expected nothing else from Krasting.
SS is not a tax. It is an insurance “policy” paid for by the workers themselves. The Trust Fund has not a god damn thing to do with the financing of SS. It is merely a place where currently excess funds are stashed for expected future needs.
It is of critical importance the SS remanins, and the people see that it remains, a way of insuring, with their own money, that they will be able to retire when they need to that depends on their own contribution and NOT the taxes on the rich that Roosevelt was so careful to avoid, and that the current “left” is so sure is the answer to everything.
Take away FICA and you have destroyed SS… probably forever, because you will never get it back. Letting “social security” payments run on for a few years supported by some other tax will just set it up for the certain day when the government says “we have the will but not the wallet” and cuts SS benefits, first for the “rich”, then for the “not poor” then for the “not poor enough”, and then is replaces by a “means test”…. not the simple “how much did you pay in… and therefore how much are you paid back” but the go to the government proctologist and get examined for hidden assets every three months game that in fact “the rich” will know how to play better than the poor.
This is incredibly stupid. I expect it from Krasting who is and has always been a stooge of the far right. I have learned to suspect the “far left” is simply the “good cop” for the bad cop right. But I am extremely sorry that Denis falls for it… apparently because he doesn’t understand SS at all, in spite of my efforts here, and sees the world simply in terms of the rich robbing the poor vs the poor robbing the rich… er, “demanding the rich pay their fair share.”
the rich already pay their fair share for SS…. and i don’t say that because i love the rich.SS was designed by Roosevelt to protect the poor from the rich. if you want to tax the rich, fine, but don’t call it social security. and if you want to “help” the poor more than SS does, some other, welfare, program is fine with me, just don’t call it Social Security… you will destroy Social Security, but you won’t help the poor.
Social Security has the relevant numbers:
In 2015 124,000,000 workers (74% of all workers!!) made less than $60,000.
Finally a policy that is not ‘trickle down’. Finally a tax break for those who truly need it. The top 1%, 10%, 20% don’t win in this.
Senators and Congressmen who vote against this will feel the voters wrath.
Umm, Krasting?
I guess all of those numbers are relevant, but they are not all the relevant numbers(not to mention that funding SS though the general fund would lead to the end of SS).
You need to show your work.
How did you arrive at “up to $3700”?
How did you you arrive at “$500 a month” for Warren’s base?
You need to break out the amounts by income group.
Even with those numbers, this plan would kill social security as it makes it much, much easier to kill.
EM
krastings numbers are roughly the ss “tax” paid by 60k workers.
except it’s not a tax. they get the money back plus the employer match (really their money) plus inflation plus “growth in the economy” plus an insurance boost if that is not enough to meed basic needs..when they retire. also it pays for death and disabiility insurance. the working man can not get a better deal on “the market” and “the rich” are not paying for it.
the “extra” money comes from pay aa you go financing. something that the right pretends not to understand.
em –
– $60,000 * 6.2% = $3,720
– EW has very big two income family support
– The numbers from SS on wage breakdowns:
https://www.ssa.gov/cgi-bin/netcomp.cgi?year=2015
And finally, you say, “funding SS though
the general fund would lead to the end of SS”
RUBBISH! A Democrat House, a Democratic Senate and a Democratic President all voted to do this in 2009/10. Hundreds of Billions were saved by workers. GUESS WHAT?? IT WORKED!!
This proved to be a very effective stimulus for the broader economy. It helped many people through some very tough years.
It had absolutely no consequence to SS at all. It did not turn SS into welfare, and it did not “end SS”.
If you are going to play games, then don’t waste my time. A 2% cut on a part time basis is in no way, shape or form the same as this plan.
And I notice you did not address the income levels, instead using a car dealer’s “up to $3700 in savings!” schtick. ANd no mention of the $500 a month.
BTW, how many of the people you included in that 124 million do not pay into SS?
BTW,
I love this part
“The idea is to eliminate SS taxes on employees on the first $60,000 of income. This would save those people up to $3,700 PA. This a big deal for those in this income group.”
Well, off the top of my head I can think of an awful lot of people who would not think this is that big of a deal. Strangely enough, all of those people would actually get $3700.
EM
probably not a good idea to play games with krasting. his 500 did’nt match his 3700, but details like that don’t matter much at this point.
what matters is that it’s not a tax. it is a mandatory RETIREMENT savings and insurance payment, which you get back with more interest than most people can get on the market. or will get or would get, despite those who only look at the advertisements.
Trumps “tax cut” crap is nothing more than near term consumption based shit. I sure would oppose it and the debt it creates for literally nothing. Structured debt must contain value.
Cob,
I agree. I will take FDR’s and his brain trusts’ idea on SS as insurance. Just hate the devious nature of these kind of thoughts.
the 2% payroll tax holiday was a gimmick to weaken SS. it did NOT work, because no one even noticed it.
raising FICA 2% over the next 20 years would not be noticed either except by those who hate to see working people have a secure retirement even though they, the workers, pay for it themselves.
over those twenty years wages will rise more than 20%. that means workers would be putting about one dollar out of every ten dollar pay increase toward their retirement, which will be longer because they are going to live longer.
They can’t let the dopamine society cease. They just want to get high. Then they whine about the trade deficits and offshoring created by immense capital flows into the US consumer finance markets.
America has the ambition and long term planning of a house fly right now.
Bkrasting,
Why do you suppose FDR funded SS with its own separate tax in the first place. Do you think there might have been some reason for SS to have its own separate funding stream — maybe? Please answer this — really.
I’ve been all for ending FICA tax below the real minimum needs line for a long time. You’ve made think through to the part about having to remove the income cap off and maybe raise the rate (post rebuilding union density of course).
Please tell me why FDR’s reasoning doesn’t fit today.
DD-
-SS started in 1935. Everything has changed since then.
-There was no DI in 1935. Today disability is 20% of SS payouts.
-Roosevelt never contemplated the wealth disparity that exists today. SS can be a factor that levels the playing ground.
-Average life has increased by 20 years over the past 80.
-Roosevelt did not know what a “Baby Boomer” was. He died before the first boomer was born. Today, SS is faced with a big burden with the boomers. 10,000 boomers get on SS every day.
-The SS payroll tax was 2% in 1935. Today it is 12.4%
-In 1950 there were 8 workers for each retiree. Today the ratio has fallen to 2.5 to 1.
I’ve tried to answer your question, now answer mine:
-Please tell me why FDR’s reasoning does fit today-
Denis
you were addressing Krasting, which may be why i don’t really understand what you were saying: Krasting speaks no known human language.
nevertheless i will try to answer both of you in the next comment.
What hasn’t changed since FDR designed Social Security is the need for it not to be “the dole.” American politics is still exactly what it was: the rich trying to maximize their wealth without regard to the welfare of the people. and that means they can’t even stand to let the people pay for their own retirements if they think they can make a nickle out of selling them stocks and bonds and insurance policies. but the fact is the poor never could afford stocks and bonds or even insurance until FDR put in that 1% each “tax.”
The tax has grown to 6.2% each because that is the actual cost of (saving for) retirement. the original 1% was enough when there were roughly 40 workers paying for each retiree… because SS is paid for by the workers themselves and at the beginning you had 40 workers paying before ANYone had retired, and gradually the number of people who had paid their SS insurance increased until there were roughly three workes per retiree… this is about the natural rate that comes when people are working for 40 years and retired for a life expectancy after retirement of of about 13 years. since that time the life expectancy after retirement has grown to about 15 years and will continue to grow to about 20 years at which time it will take a tax of about 8% to pay a pension of about 40% of average lifetime earnings… all this adjusted for inflation and growth of the economy and growth of the population.
Krasting cannot possibly understand this. I have some hope for Denis and most readers of AB who actually take the time to think about it.
there is no need to raise the cap beyond normal keeping up with wage growth. raising the cap beyond that turns SS into welfare as we knew it. increasing wage growth with better unionization would actually remove the need to raise the tax under the cap, because rising wages would pay for the longer life expectancy in the absense of the slower growth in wages currently projected.
today DI is about 20% of payouts. it is also 20% of the FICA… the actual rate for old age and survivors insurance is about 5%. it will need to grow to about 7% to keep up with longer life expectancy and expected slow down in wage growth.
there was plenty of wealth disparity in the 1920’s. Roosevelt knew all about it. I can’t see where wealth disparity is an argument for cutting SS. Nor is it an argument for raising the tax. The tax needs to be at a level that is reasonable insurance for the people paying it. Raising the cap would turn it into welfare… paid for by the rich. who would not rest until they destroyed it. the workers can easily afford to pay for their own retirement insurance IF they have the protections that SS gives them against inflation, market losses, and a lifetime of low wages.
FDR did not live to see the baby boom, but by 1948 the SS actuaries understood exactly what the baby boom was going to cost in 65 years time. and in 1983… under Reagan.. they actually paid for it by raising the tax. they should have raised the tax gradually and raised it a little higher, but the politicians get hysterical about “taxes” and can’t think ahead.
i have answered all of Krastings questions, I don’t think he will understand that he has been answered. SS is essentially the same today as it was in 1936. a few numbers have changed to keep up with the changes Krasting refers to without understanding… but SS is still a way for workers to save for and insure their savings for their own retirement. they pay for it themselves, even if some people are too stupid to see that “pay as you go” is the workers paying for their own retirement exactly the way you pay for it by putting the money in the bank or buying bonds or buying stocks… except the risk has been taken out of it by the miracle of pay as you go… without taxing the rich.
FDR’s reasoning still fits today because the problems facing workers who hope to retire are still the same as they were then, and the politics of the rich vs the poor are still the same as they were then.
It’s a damn fool argument to say that because the date on the calendar has changed, that everything is different. It is a damn fool thing to say that 10,000 boomers retiring every day changes everything. America has 300 million people making 50 thousand dollars a year (very rough approximation, but a good place to start before you start yelling we are all going to die because 10,000 people retire every day.)
but you can’t understand this in two sound bites. you need to learn how it actually works and then think about it. and keep thinking until you stop fooling yourself or letting yourself be fooled by the lies you have been told.
Me: “[Please] do not peddle [Social Security] as a retirement plan or an investment”
Coberly: “I don’t”
http://angrybearblog.strategydemo.com/2017/03/question-have-you-experienced-the-same.html#comments
And now: “[Social Security] is a mandatory RETIREMENT savings and insurance payment”
Please stop peddling Social Security as retirement savings. It is NOT. Insurance, YES. Retirement savings, NO.
Warren
once again you are word bound. it is in the nature of retirement insurance that it would include “retirement savings and retirement plan.
the important word is insurance because SS is the only real insurance available, but it is paid for by “savings” and it is, of course, a plan.
i have been reading a book by a financial advisor who has no particular fondness for SS, but it is clear from his numbers that SS simply as retirement savings is not as much worse than playing the market as you might suppose, and the insurance makes it a far, far better thing they do than they have ever done.
even people who might have “had enough” with their own savings and investments end up a hell of a lot better off with their SS added in.
and old people starving in the streets simply do not stimulate the economy.
and krasting who is so astounded and amazed and we are all going to die about 10,000 people retiring every day that he failed to notice that about 10,000 people come new into the job market every day.
funny how that works.
It is paid for by TAXES, not savings. Primarily, Social Security is a pay-as-you-go system, with FICA taxes covering payments. The Trust Fund is nothing but an accounting buffer. If we pay excess FICA taxes, the cash goes to the General Fund in return for bonds, and the General Fund has to sell fewer bonds on the open market. If we pay insufficient FICA taxes, then more bonds are sold on the open market to raise cash to redeem SSTF bonds to cover the program deficit.
There is no savings whatsoever in the Social Security system.
Bkrasting,
It is a known political fact that Republicans, local, state and federal are forever looking for a gimmick to kill SS. Look at the (Satanic!) threat of the Donald to end Obamacare subsidies which would kill that. So, the major reason not to put SS on income tax is because it takes a huge structural wall out of the way of the SS killers. Numero uno reason.
Until recent years per capita output doubled twice as fast as population. Example: since 1968 population only increased 50% while per capita income (GDP, whatever) increased 100% …
… not even counting the free gifts of technology — like integrated circuits (you’re old enough to remember when chips were called ICs, aren’t you :-]).
Even slower productivity growth will at least a little better than keep up with population growth. Allow FICA to double over the next 12.4 years and we still end up ahead in absolute terms.
Denis
thank you. now i am not sure what i was not understanding you to be saying in your first comment this thread.
Warren
if you put a thousand dollars in a SAVINGS account this year. and take it out forty years from now and collect the 3% interest or so that has accrued on it… is it not savings because in the meanwhile the bank gave it to people who used it for their own purposes and the bank “had to” pay you back out of the SAVINGS that some other people put in the bank the year you took yours plus interest out?
Yes the Trust Fund is only a buffer.. a little more, though, than just an “accounting” buffer. it is real money paid in by the workers in excess of the current need to pay benefits. it is real money lent to the government which borrows a lot of money from other than SS as well. it is real money that is paid to the government for government services (these are taxes), and it is real money that the government pays BACK to Social Security including interest… which is a normal cost of borrowing real money.
But this is by no means an important part of SS. real people pay real money to the Social Security fund (a legally separate entity form the general government). this money is “saved” in the same way your bank deposit is saved… that is it is spent by the “bank” for current business, in the case of SS current business is paying back (plus interest) the people who “deposited” their real money with SS in previous years. if this looks like a ponzi scheme to you it is because you are too dumb to see the difference… a ponzi scheme has no assets and is a fraud and eventually can’t pay back the depositers.
SS has assets: the never ending supply of people who need to SAVE money for retirement in a place save from inflation and market losses, and who need to insure themselves (each other) against the fairly large possibility of never making enough to save enough for a basic retirement. the insurance is the product. the “interest” comes from the growth in the economy… each generation is richer than the last, so even paying the same tax RATE they pay more money (interest) to the people who who SAVED their money (via SS) in the previous generation.
there is nothing unusual about any of this. it analogizes exactly with any other savings and investment and insurance plan except that it is much safer and is mandatory…. because we the people don’t want to have to pay taxes for welfare to support you in your old age when your investments let you down, or you forgot to SAVE for your own old age.
your inability to understand this is because you stop thinking once you have recited “there is no god but pfree enterprise and Ayn Rand is his profit… er prophet.”
it is a case of self induced stupidity.
Warren said
“If we pay insufficient FICA taxes, then more bonds are sold on the open
market to raise cash to redeem SSTF bonds to cover the program deficit.”
this is dead wrong. if FICA taxes fall short and the trust fund runs out, NO bonds are sold on the open market to redeem the program deficit.
SS cannot borrow. The program cannot run a deficit. If it does not have enough money to pay “promised benefits” the benefits simply don’t get paid. unless the FICA “tax” (insurance premium, savings rate, call it what you want: it is what it does.)
Bonds might be sold on the open market by the government to get the cash to redeem the Bonds it sold to SS (that is to repay the money it borrowed FROM SS)… but that is what you expect when you borrow money.
the confusion here is that when FICA taxes are not sufficient to pay benefits, it cashes it’s bonds which were bought by SS with the workers FICA tax in earlier years when there was a surplus exactly for that purpose.
Warren is confusing the normal use of the Trust Fund “buffer” with a “program deficit.” They are not the same thing at all.
But there is a PROJECTED deficit which will require a tiny FICA “tax” raise to prevent. Every other proposal to meet the need for the workers retirement involves somehow prohibiting them from saving enough. That is dumb. That is damnable. Let the workers pay for their own retirement (insurance) and the will do just fine.
The cost is one dollar per week per worker per year.
If we wait about another year, the cost will remain the same, but the program will be technically in “actuarial deficit” that is projected to have the Trust Fund fall below one full year’s reserve in the next ten years. Hardly “broke,” but on its way to not being able to pay “promised (sufficient) benefits.
After about the next five years, it would take more than one dollar per week per year to avoid an actual shortfall. This is still not a huge problem, but it could by demagogued into one. Even if we wait until actual shortfall and have to raise the tax two full percent all at once, it will not be a huge problem. NOBODY would materially miss 2% out of his paychec, especially if it is going to used to pay for his retirement.
But we can be sure the Krastings and Warrens, and sad to say the “Social Security Works” crowd won’t let the people do that… that is won’t let the people pay for their own retirement via Social Security which is the only way they have to protect their SAVINGS from inflation and market losses and to insure themselves against a lifetime of wages too low to save enough to retire.
It’s not hard. No higher math required. Just simple arithmetic and a little common sense based on the experience of eighty years, or the century of horrible example before that.
Coberly – You say:
“The 2% payroll tax holiday
was a gimmick to weaken SS.”
Really? Let me get this straight. In 2010 Nancy Pelosi, Harry Reid and Barack Obama passed the legislation for the tax holiday because they wanted to weaken SS?
You don’t really believe that do you?
—————————–
Me: “If we pay insufficient FICA taxes, then more bonds are sold on the open market to raise cash to redeem SSTF bonds to cover the program deficit.”
Coberly: “[This] is dead wrong. if FICA taxes fall short and the trust fund runs out, NO bonds are sold on the open market to redeem the program deficit.”
—————————–
You are contradicting something I did not say. You even quote me as saying that there are SSTF bonds to redeem, so obviously the Trust Funds had not run out.
I simply stated how the program works.
Let’s look at some numbers. Assume, Social Security aside, the Treasury spends $4T and collects $3T. It must borrow $1T. Now, if Social Security pays out $500B and collects $600B in FICA taxes, then the General Fund sells $100B in bonds to the SSTF, and $900B on the open market.
If, however, Social Security pays out $700B while only collecting $600B in FICA taxes, then the SSTF sells $100B in bonds back to the Treasury to make the payments. Now, the Treasury has to sell $1.1T in bonds on the open market.
Warren – “Now, the Treasury has to sell $1.1T in bonds on the open market.”
True, but it still incures only 1 trillion in debt because 0.1 trillion is used to pay off existing debt.
Krasting
yes i do. i have been talking to democrats for ten years. they are either idiots or they are out to kill SS themselves. or they just like to have something they can run and fund-raise on.
Warren
that is NOT how SS works. read what i said more carefully and then do some research in original sources, not right wing think tanks.
warren
the key word here is program deficit. SS cannot run a deficit.
what you are talking about is simply the fact that Treasury borrows money from SS among other places, and eventually has to pay it back.
SS is never in deficit… it is spending down its savings in order not to have to raise the payroll “tax”. (yet). this is pretty normal funding, something every business does.
I am speaking only of a deficit (or a surplus), as being the difference between what is paid out in a year and the FICA taxes taken in. Nothing more.
Actually, that is NOT what most businesses do. Most businesses SELL bonds, and have long-term debt. That is the exact opposite of what Social Security is doing.
Coberly – You have confirmed that you believe that Obama, Pelosi and Reid conspired to weaken SS.
For that you get the TIN FOIL HAT award.
Warren
it is possible i did not understand what you were trying to say, but i remain reasonably sure that what you were trying to say is not true about Social Security…. that is, I think the more you try to explain what you meant the more sure I will be that you are/were wrong.
But right now I can’t see any good that could come from the exercise.
And while businesses sell bonds, they also buy bonds to park short term excess cash.
Krasting
I don’t know about “conspired”, but I have watched Obama for ten years and the Democrats for twenty and I have yet to see one of them who understands Social Security, and when I try to talk to them about it they put their hands over their ears and hum loudly.
IF that’s what it takes to earn a tin hat, I’ll wear it as a badge of honor.
“[While] businesses sell bonds, they also buy bonds to park short term excess cash.”
Which is not what they do with “RETIREMENT savings” (i.e. the pension plans), and the Social Security system does not sell bonds at all. As you point out, “SS cannot borrow.” Businesses can, and do.
Is it really so hard to understand that if the collected FICA taxes are greater than the benefits paid, they use the surplus to buy bonds, and if the FICA taxes collected are less than the benefits paid, they redeem bonds to cover the deficit?
Is your problem the word “deficit”? “The program cannot run a deficit,” you said. Yes, it can. And it has. Even the SSA calls it a deficit:
“After 2019, interest income and redemption of trust fund asset reserves from the General Fund of the Treasury will provide the resources needed to offset Social Security’s annual deficits until 2034….”
https://www.ssa.gov/oact/trsum/
Warren:
“After 2019, interest income and redemption of trust fund asset reserves from the General Fund of the Treasury will provide the resources needed to offset Social Security’s annual deficits until 2034….”
You are being silly. Selling off their bonds is like going to the bank and withdrawing funds, in this case the GF.
Warren,
You mean the less than 20% of US companies that still have them?
BTW,
Pretty sure cob took into account the cash on hand from SS in talking about deficits to the program.
Another cherry pick from you.
It is getting beyond tiring.
Warren
“cash flow deficit” is not the same as “program deficit.”
and the problem with words is that people of bad faith use cash flow deficit to mean program deficit. the one is normal business. the other is a problem.
in the case of SS a program deficit cannot occur. but there is also an “actuarial deficit” which means that present taxes will not be enough to pay future “promised” benefits. the fix for that is to raise the tax.
the required raise would not be large.. about one tenth percent per year, up to a total of two percent over twenty years. and the raise would not be money lost to a government black hole. it would be money given back to the people who paid it, with interest, to pay for their needs in retirement.
i believe you lose sight of this fundamental fact in all of your word games.
i would go further.
i don not believe most people can understand what “two percent over twenty years” means in terms of real life experience. i do not believe they even understand what “two percent” means.
they immediately imagine a 2% immediate increase in the tax with their income (and expenses) remaining what they are today. and they cannot even understand that they would not even miss that 2% if no one screamed “we are all going to die” at them.
Since in the same sentence that I said “program deficit” I mentioned redeeming bonds held in the SSTF to cover that “program deficit,” I assumed that I was clear enough. My apologies.
Warren
there is no need for apologies. but since i made a big deal out of the difference between cash flow deficit and program deficit, it seems to me you are still making the same mistake.
even as a mistake it would not be such a big deal if it were not for those who say that SS is broke and talk as if SS is the cause of the FEDERAL BUDGET DEFICIT and the NATIONAL DEBT.
SS has no effect on the federal budget or national debt beyond being a lender of money TO the “government.”
I will try to remember the use the term “annual deficit or surplus” in the future.
As for Social Security’s (non-existent) contribution to the National Debt, you’re setting up a strawman argument. I have never made such an assertion. As you point out, as far as the National Debt is concerned, debt held by the SSTF and debt held by the public are essentially the same — both are subject to the statutory debt ceiling.
Now I will throw up a strawman of my own. (And I have already heard you disavow this notion, so I do not attribute it to you.) Some people (not you, some politicians who should know better) have claimed that if we do not increase the debt ceiling, Social Security won’t be able to pay benefits.
Warren
don’t feel that you have to try too hard. my interest is not pedantry. i really don’t care about the words. i just want people to think about Social Security DOES.
i doubt very many people know what “debt held by the public” and “debt held by SSTF” even mean.
all i am trying to do is counter the widespread idea that somehow SS is responsible for “the” debt.
and the straw man you allude to is part of that. i am not sure if it is being said by people who want to raise the debt ceiling (which is probably necessary) or by people who just want everyone to keep thinking “Social Security” and “debt” in the same breath as though SS is IN debt, or SS causes “the” debt.
there is, as there often is in the lies of the more talented liars, a kernal of truth in the allegation. SS is currently being paid BACK what it lent TO “the government.” Since the government won’t raise taxes to pay the money back, or cut other spending to free up money to pay BACK what it borrowed FROM Social Security, it will “have to” borrow money from someone else to pay back the money it borrowed from SS. since this is borrowing to pay off an equal amount of debt, it should have zero effect on “the debt.” But because, as far as I know, the government accounting system does not count “owed to SS” as part of the debt, their books will show the money borrowed from the public to pay back the money borrowed from SS as an “increase in the debt.
this is bogus, deceptive reasoning and dishonest accounting, but it is what our essentially criminal congress has come up with.
that said, our criminal congress is what we have to deal with, and the only way to make them honest (about this) is for the people to understand what is going on and insist that they want to keep their Social Security and they are willing to pay for it… about a dollar a week, one one full percent now and another one full percent in about ten years… it doesn’t matter … the money needed is not going to change… it’s the difference between the payroll tax taken in and the benefits that have to be paid if SS is going to be meaningful retirement insurance.
there is so much double talk and plain lies going on that it is extremely difficult to carry on a conversation, let alone actually explain how the system works.
well, it matters a little bit.
the one tenth on one percent per year is the elegant solution. one percent now and one percent in ten years would work. so would one percent in ten years and one percent more in twenty years, but it would be clumsy, slightly less fair, and open to vicious demagoguery.
i know, or think i know, that you would be just as glad to see SS abolished. I hope that you will eventually see that the reality is that your ideal of free enterprise and every man responsible for himself is not going to work short of the Second Coming (of Jesus, not John Galt).
E Mike:
A while back in this tread you directed a few comments at me. A late response:
EM: A 2% cut on a part time basis
is in no way, shape or form the same
as this plan.
BK: The 2011 2% cut provided an annual stimulus of $120B. If passed, the holiday discussed here would add about $160B to worker’s pockets. Six years difference – I say the two are close in terms of consequence. Clearly the “no way shape or form” is not correct.
EM: you did not address the income levels,
instead using a car dealer’s “up to $3700
in savings!
BK: The money quote is from LA Times and SS Works. Google this story and you will see that the $3,700 comes up often. You’re just stretching to say something nasty.
EM: ANd no mention of the $500 a month
BK: False. I said that EW has a base of two income families bringing the total benefit to $500 a month. Mass has 69% of families with two incomes. The median family income is right around $100k. Most of the two income families are in the cities, most of the families are part of EW’s base.
http://www.masslive.com/news/index.ssf/2017/02
/the_64000_question_what_child.html
EM: BTW, how many of the people you included in that 124 million do not pay into SS?
BK: Look at the report from SSA. It says that the data comes from W2s and 1099s. So how many of the 124m pay into SS? All of them. Yes, some make little money and pay little to SS but all 124m pay something,
BK,
You just keep getting worse. Waste of time talking to you.
The amount of money is unimportant. What is important is the duration of the action.
Just one point cause I am tired of fighting this kind of bs.
Know anyone that files a W-2 without paying any payroll taxes? In my family right now, there are around 25 of them. Large family, but anyone writing about SS should understand that pretty easily.
EM – “The money in unimportant”. A $160b tax benefit to the bottom half is unimportant? Please….
No, I don’t know anyone who has earned income and gets a w2 that does not have payroll taxes withheld. I checked with the IRS there some ways your family members could be exempt:
Qualifying Religious Exemption. This means you are in a religion that prohibits you from paying any taxes. Your religion would have to be followed by you an your family since 1950.
Nonresident Alien. Foreign students and educational professionals in the U.S. on a temporary basis don’t have to pay Social Security taxes.
Temporary Student Exemption. This is tricky, you must be a full time student AND you can only work for the college that you go to.
Foreign Government Employees. Employees of foreign governments are generally exempt from paying Social Security taxes on income paid to them as a result of their official responsibilities.
So em your family in a cult, or has loads of illegal aliens, students that work and go to the same school and others who work exclusively for a foreign government. Guess what? I don’t believe you.
Rather than making SS take the hit, and make the general taxpayer make up the difference, how about mandating a 2% wage increase for everyone? You get the same stimulus, and a positive effect on SS. Of course businesses will complain, but they will benefit from the stimulus too. After all, it is demand that drives business, not profits. Profits follow.
krasting
but it is not a 160 B tax benefit
it is denying people the right to save their own money for their own retirement in an account that protects their savings from inflation and market losses and insures them against death, disability, and the quite high chance of never making enough money to be able to save enough for a basic retirement.
nor is the 160 B a “stimulus”. The money that is “taxed” for FICA goes right back into the economy in the form of benefits that the elderly use to pay for their basic needs.
the “stimulus” if any comes from the money borrowed to “pay back” SS or taxes from others. you could get that stimulus without ever touching the payroll “tax.” And that would leave people with a very clear and direct claim on their retirement benefits because they “paid for it themselves.”
Essentially the same can be said for the previous FICA “tax holiday”… the stimulus, if any, came from the money borrowed to pay back the Trust Fund, and the whole “holiday” was a gimmic to exactly weaken the link between “i paid for it myself” and retirement benefits, as well as to give the enemies a chance to deny… falsely, that “SS does not contribute to the deficit.”
you, of course, are always a sucker for political lies. How is that “bombshell” coming along.. the one where you told us that new Hillary Emails had been discovered in addition to those the FBI had already dismissed as having nothing new or important to say.
you are a perfect fool for the dissemination of false information… lies.
it’s a lot easier to tell the people lies than it is to tell them the truth.
and “social security works” is, i am afraid, another disseminator of lies. hard to believe that people calling themselves “defenders of social seurity” would have to resort to lies… but they are not defenders of social security. they are part of the long plan to destroy social security by turning it into welfare. and then turning it into welfare as we knew it. and like all sophisticate Big Lies they work by pretending to take the “opposite” position of the main group of Big Liars.
There is one simple fact: Social Security is the ONLY way ordinary working people have to INSURE that they will have enough money to retire. My addition to this simple fact is to point out that the cost of keeping their Social Security insurance for themselves and their children is to raise their own payroll tax.. that is the money they save protected by Social Security… about one dollar per week per year.
Raising it about 2% all at once, or in some variation that results in paying the same amount for the same benefits, will also work, but it’s easiest to do it one tenth of one percent (one dollar per week) at a time.
Anyone tempted to believe Krasting needs to go back and read what he says and see if there is anything in it that would protect their ability to retire when they need to. It’s all shouting and hand waving and completely irrelevant to the real problem. The kind of scam that leads people to bet their savings on a horse race.
‘[As] far as I know, the government accounting system does not count “owed to SS” as part of the debt.’
They do and they don’t. Obviously, it is a debt on one book (the Treasury) and an asset on the other (the SSTF). So it’s a wash on the Consolidated Report.
https://www.gao.gov/fiscal_outlook/understanding_federal_debt/interactive_graphic/components_of_federal_debt
However, intragovernmental debt is counted against the debt limit.
http://www.pewresearch.org/fact-tank/2013/10/09/5-facts-about-the-national-debt-what-you-should-know/
You are most definitely correct that people need to be educated on the workings of Social Security. It must, above all, be made clear that it is NOT a retirement SAVINGS program, but a retirement and disability INSURANCE program (and, to a lesser extent, a life insurance program). So, it is both an insurance against an early death (the survivors’ benefits) and against a late death (guaranteed income for life).
Coberly – I’m truly shocked. You just took a crap on Nancy Altman. Your ex friend and supporter Nancy Altman. You flat out call her a liar:
“social security works” is, i am afraid,
another disseminator of lies”
“hard to believe that people calling
themselves “defenders of social seurity”
would have to resort to lies”
OMG! You said that about Altman? It gets worse. You say:
“They are part of the long plan to destroy social security by turning it into welfare.”
WHAT? Nancy Altman is part of a secret plan to destroy SS? You’re nuts. The lady has dedicated her life to SS.
And finally:
“and like all sophisticate Big Lies
they work by pretending to take the
“opposite” position of the main group
of Big Liars.”
Yikes! According to you Nancy Altman is faking it. She appears to be a defender but her secret motive is to destroy SS.
May I remind you that your friend Bruce Webb wrote a glowing report on Altman’s book? Altman went out of her way to help you. She gave you a ‘hat tip” on the NW plan. You turn around and stab her in the back!
Webb summed up his thoughts on Altman’s book with these nice thoughts:
“you really could do no better
than buying (or borrowing) and
reading this book.”
And you call her a liar? I’ll send NA your thoughts.
Webb’s blog:
http://angrybearblog.strategydemo.com/2015/02/social-security-works-the-book.html
Krasting
this is like you. complete nasty hysteria based on overreading something to make it fit with your nasty hysterical world view.
I said nothing about Nancy Altman. I said “Social Security Works” is disseminating lies. And as far as I know the liar in chief there is named Eric Lawson. And he calls me far worse names than “liar.”
Altman wrote a book that I much agreed with, up to the last few pages where she suddenly went from knowing the difference between welfare and worker paid insurance, to proposing using the estate tax to fund needed increases in social security. since then she and others have given support to “scrap the cap” which would turn social security into welfare as we knew it. and the “Social Security Works” people have published hysterical distortions of the social security “debate” that i think amount to lies of the same type as the hysterical distortions published by Cato and other “non partisan” expert liars, who can count on people like you to repeat where they won’t be held accountable for the exact truth of what they have said.
saying that an organization associated with someone you like, or who may have supported you when they thought you agreed with them, is not the same as “crapping” on that person. Nancy and Bruce know where I disagree with them and where I agree with them. I do not condemn them as people. Social Security Works went from being a group of people I disagreed with in part, to a group of people represented by a very nasty person (Lawson), to a group of people who support their political program by distorting facts and concealing facts.
sorry, “crapping on” someone is not a part of my way of thinking about people and life.
Warren
you may be disappointed to learn that i agree with you here, i think.
the words are not important unless they are being used to obscure the facts.
i cannot imagine what your objection is to calling SS a savings program. People put their money in a safe place… the safest place available to them… and expect to get it back with interest when they need it. That is “savings.”
Whatever you want to call it, it IS what it DOES.
you are free to save or invest the rest of your money in any way you choose. but the first few dollars is “taxed” (forced savings) so that the rest of us don’t have to worry about supporting you if your savings and investments let you down at the worst possible time.
this is no doubt an infringement on your pfreedom, but it is a very benign infringement, like the speed limit or red light that tries to keep you from killing yourself with your “freee to be meee” libido.
failed sentence in my reply to Krasting re Altman:
maybe said better:
saying that an organization that is associated with someone you like has fallen into telling lies is not the same as calling that someone you like a liar.
but when there is strong disagreement even among friends it is hard to say “that’s not true” without it sounding like “that is a lie.”
and as long as i am here again i’ll say again that “scrap the cap” is the best way to destroy social security, perhaps short of Krastings “end FICA tax and let the government pay for Social Security, currently on the table.
it makes sure that even “the rich” not currently motivated to destroy Social Security will fight to protect themselves from being taxed to ‘save’ it. And should it pass, it will make sure the people who have hated Social Security from the beginning will be able to destroy it by “we can’t afford it” one benefit cut at a time.
correction
it is ALEX Lawson not Eric Lawson.
“[I] cannot imagine what your objection is to calling SS a savings program. People put their money in a safe place… the safest place available to them… and expect to get it back with interest when they need it.”
My primary objection is that they do not own it. If one dies early, his heirs get nothing from all that was taken from him during his life.
Furthermore, most of the money is NOT “put in a safe place,” but is paid out to current beneficiaries.
Social Security is an insurance program. That’s why FICA taxes are called FICA taxes: “Federal INSURANCE Contributions Act”
They are not Federal SAVINGS Contributions Act taxes.
Coberly – Altman is President of Social Security Works. She runs the show. Lawson is just a director.
Like I said, you took a dump on Altman. You called her a liar. It amazes me that you could be so rude to those who are your allies. Go ask Altman for support for your busted NW plan. I don’t think she would give you the time of day after your silly and inaccurate words.
Krasting
I did not call Altman a liar. I said Social Security Works has been telling lies.
Altman has been calling for some version of “make the rich pay” for about as long as I have been trying to tell people that they can… they must… pay for Social Security themselves…. about an extra dollar per week each year.
Altman stopped talking to me when she realized I was not going to stop telling her she was making a mistake that would help the haters of Social Security destroy it.. That was about eight years ago. I did not know she was president of Social Security Works. I do not know if she authorizes the lies. Her name would never have come up if you weren’t trying to make me out as some kind of Judas.
My entire dealings with Social Security Works have been with Alex Lawson who is not a nice person.
Your whole purpose on Angry Bear has been to try to discredit me and sow dissension and mostly cause a distraction from the only point I have to make:
Social Security is insurance paid for by the workers themselves for their own retirement. It is important that they continue to pay for it themselves. The cost to keep it solvent forever amounts to a “tax” (insured savings) increase of one tenth of one percent per year… about a dollar per week at todays pay levels.
Warren
when you put your money into a savings bank, the only thing that makes it safe is the government FDIC insurance,
and the money is not kept there for you. it is lent out to others. when you need your money back, it comes directly from others who are in turn putting their money into the savings bank (or repaying the loan of your money.)
If one dies early with dependents, SS pays them back “your money” and often a great deal more than you could have left them as an inheritance. But there is nothing stopping you from buying private insurance of making private investments, or saving more in a bank.
It’s not as if SS has taken away all of your money. Since you are making two or three times what your grandparents lived on, i am sure you could find another ten percent to invest if you think that is what is going to make you rich. SS only wants you to pay FICA insurance in case your investments don’t work.
Ask your heirs if they would rather take a chance on you leaving them a million dollars or on their having to take care of you in your old age.
And don’t get paralyzed by words. SS is insurance. It is insured savings. Look at what it does. I can’t think of any definition of “savings” that is materially different from what SS does…. except that SS adds that insurance.
No matter what you call it, Social Security has been one of the most successful government programs ever devised. It drives government haters crazy. That’s a secondary benefit at no extra charge. I call that a win-win.
Your bank account is insured savings, and we do pay for that insurance, too. It is not free. But with a savings account, one has a legal claim on that money. That account has one’s name on it. Not so with Social Security. One does not have any legal claim on one’s FICA taxes or benefits. (Fleming v. Nestor, 1960)
Waren
your understanding of law and the constitution are primitive.
when i reached 62 i asked for my pension from social security. they looked my contributions up in a file with my name on it and sent me the money with no fuss. they’ve been doing for quite a few years now. and they have done the same for two hundred million other people.
the congress can deny the right of an alien communist his social security in the height of the communist hysteria, but i don’t think they can get away with denying the rights of ten thousand people every day…. unless of course the liars who have fooled you can fool enough people that they let it happen.
that’s the chances you take in a democracy. but your right to your social security money is far, far more secure than your right to your vanguard money. you can look it up.
warren, btw
the GOVERNMENT pays for FDIC insurance. contemplate that.
Coberly says:
“The GOVERNMENT pays for FDIC insurance.”
Completely and totally false.
http://www.aba.com/Tools/Economic/Documents/WhoPaysDepositInsurance.pdf
“The DIF is funded mainly through quarterly assessments on insured banks, but also receives interest income on its securities. The DIF is reduced by loss provisions associated with failed banks and by FDIC operating expenses.” https://www.fdic.gov/deposit/insurance/
BK:
I guess you could make that argument; but then, you would be ignoring every bailout of every form of FDIC on deposits going back into history where the Trewasuy or the Fed pealed off millions and billions because the FDIC did not have funding to back them up. Indeed, most investment houses and loan companies like Goldman Sachs and GMAC were made banks so as to be backed up with federal funds. Technically Coberly is correct.
I’ll pile on: “The FDIC receives no Congressional appropriations – it is funded by premiums that banks and thrift institutions pay for deposit insurance coverage and from earnings on investments in U.S. Treasury securities.”
https://www.fdic.gov/about/learn/symbol/
“[Congress] can deny the right of an alien communist his social security in the height of the communist hysteria, but i don’t think they can get away with denying the rights of ten thousand people every day….”
And yet by implementing a tax on benefits, Congress did just that. By increasing the retirement age, Congress did just that.
“I guess you could make that argument; but then, you would be ignoring every bailout of every form of FDIC on deposits going back into history where the Trewasuy or the Fed pealed off millions and billions because the FDIC did not have funding to back them up.”
Interesting. Examples?
It is interesting to me that Warren can interpret the complex way FDIC is funded…ultimately a mandatory insurance plan paid for by a “premium” or “tax” imposed and enforced by the government…in a way that leads to the opposite conclusion that he reaches when considering Social Security… a mandatory insurance plan paid for by a premium or tax imposed and enforced by the government.
Warren
increasing the retirement age. imposing a tax on benefits in no way keep people from collecting the benefits they paid for. They do affect the amount of benefits above what they paid for that they might have expected… almost in the same way that companies do things with “their” money that affect the returns you can get from your stocks… which have no guarantee whatsoever.
we can get lost in the complexities and semantics of all this… and i think that is your purpose here… but the basic fact remains:
People need Social Security to insure that they will be able to retire when they can no longer work. They pay for that insurance themselves… by means of putting a part of their income into Social Security where it earns an effective interest better than they could get from any “safe” investment while also being insured against losses due to inflation, market losses, and their own failure to thrive.
And to guarantee that Social Security will be there for themselves and their children it will be necessary for them to increase their own contribution by 2% over the next twenty years… about one dollar per week per year being the easiest and most elegant way of doing that.
I have opposed increasing the retirement age and tried to point out that there is no “need” to increase it if people just pay an extra one dollar per week each year. By gradually increasing the “tax” instead of imposing it all at once, the people paying the tax will be those who are going to be living longer. It is intellectually dishonest of those who want either to cut benefits directly, increase the retirement age, or kill social security entirely to complain that increasing the retiement age robs them of benefits they paid for. It has done no such thing, but it is a cruel and stupid way to “save” social security… imposing a mortal burden on the very old in order to save a dime for the young and relatively wealthy. it is merely ironic that those young and relatively wealthy will one day be old and poor and desperate to retire, or destitute because no one will give them a job at their age..
the arguments of Warren, and Krasting, are fundamentally dishonest “cherry picking” of points that seem to support their position when taken out of context ignoring the “rest of the story.” only the sad fact of the limitations of human intelligence… to consider all the facts in context at the same time… excuses them, somewhat, from the charge of being liars if not damned liars.
it doesn’t excuse them of the charge of being tedious time wasters, or in Krastings case of being an extremely dirty and loud drunk who can’t be evicted from the parlor because the host has an exaggerated idea of “free speech.”
“It is interesting to me that Warren can interpret the complex way FDIC is funded…ultimately a mandatory insurance plan paid for by a ‘premium’ or ‘tax’ imposed and enforced by the government…in a way that leads to the opposite conclusion that he reaches when considering Social Security… a mandatory insurance plan paid for by a premium or tax imposed and enforced by the government.”
Yes, Social Security is a mandatory INSURANCE plan, we have established that. It is NOT a SAVINGS plan.
“[Increasing] the retirement age… in no way [keeps] people from collecting the benefits they paid for.”
It sure does if you die before reaching the increased retirement age.
But I agree with [almost] all of your “basic facts”: “People need Social Security to insure that they will be able to retire when they can no longer work. They pay for that insurance themselves… by means of putting a part of their income into Social Security where it earns an effective interest better than they could get from any ‘safe’ investment while also being insured against losses due to inflation, market losses, and their own failure to thrive.”
Nonetheless, Social Security is insurance, not savings.
Warren
i am glad you agree with me about the basic facts.
as for losing your savings if you die before you can retire, or before collecting all of your savings back in the form of retirement benefts… well that is the nature of insurance. if you die without having the fire you lose all that money you paid in as premiums.
if this is what upsets you about my using the word savings in connection with SS I would be perfectly willing to let you continue to be upset without becoming upset myself.
but seriously, don’t you think it’s a rather “special” argument when for most people SS acts (almost) exactly as a “savings” account, only better. Remember all the people who collect much more than they “saved” because they die or get disabled long before they have had a chance to save much, and those who live much longer than their savings could have paid for.
it sounds to me that by yelling about SS not being “savings” you are just trying to weaken the case for SS.
The case for SS lies in what it does, not in what it is called. Some people don’t like what it does, or the way it does it, but they have yet to come up with anything that works as well in the real world, flawed as it is, but the one we have to live with.
You can call it “savings”. You can call it “insurance”. You can call it “Shirley”. Whatever you call it does not change the fact that SS is one of the most successful government programs we have, has helped keep millions of Seniors out of poverty, and is entirely paid for by the people who contribute to it.
“[As] for losing your savings if you die before you can retire, or before collecting all of your savings back in the form of retirement benefts… well that is the nature of insurance.”
Yes, that is the nature of insurance, not of savings. So don’t call Social Security “savings.”
“[It] sounds to me that by yelling about SS not being ‘savings’ you are just trying to weaken the case for SS.”
It seems to me that by pushing the false notion that Social Security is “savings,” you think that the case for Social Security is so weak that it needs that fabrication.
Warren
if you put your money into an ordinary savings account you will lose half of it to inflation by the time you retire.
almost the same is true of safe bonds.
if you invest in the market or your own busines you might do very well or you might lose everything,
if you want to reserve “savings” as a term of art, feel free. but i don’t see where i hurt you or misrepresent Social Security if from time to time I call it “savings.” i usually follow that with “insurance.” and make the point that the key to its importance to most people is the insurance.
here is a difference for you to think about: i have looked pretty carefully at Social Security and listened to the objections, and lies, of the Big Liars for over ten years now. My claim to fame (that is a sad joke) is that I discovered that the cost of “saving” Social Security…. from the 15 Trillion Dollar Unfunded Deficit! ™ amounts to one tenth of one percent of payroll per year, or about one dollar per week in today’s terms.
your objection to my occasional use of the word “savings” amounts to a pedantic insistence that “savings” can only mean what you say it means. most people are a little more relaxed about the use of words, and the more intelligent of them will make the slight effort it takes to understand what the speaker means… what the reality he is pointing at is.
my use of “savings” is no more misleading that my failure to use capital letters where your sixth grade teacher insisted they had to be used. grow up a little. you’ll be happier.
My objection is simply that your use of the word “savings” to describe Social Security is wrong and misleading. Your persistence indicates that that is your intention.
If you want to look at rates of return, start with the Social Security Adminstration’s own numbers: https://www.ssa.gov/OACT/NOTES/ran5/an2012-5.html
It’s pretty grim. The average one-earner couple retiring now is looking at a long-term rate of 4.5%. Singles and two-earner couples will see about half that. Things are worse for future generations. Especially when taxes are raised, or benefits reduced, to match FICA taxes to benefits. Someone like my son is looking at an IRRR of less than 2%.
Yes, that is better than a savings account. But anyone who puts their money into a savings account for retirement is probably on the low-income side of things, and will do much better with Social Security. But that is exactly the point — to protect people from their own stupidity.
I paid into SS for 30+ years. I now get an annual income from it. Maybe you don’t want to call it a savings plan, but it sure feels that way.
Sure, Jerry, that’s the whole idea. They want you to feel like you provided for your own retirement, when you provided for your father’s and grandfather’s, and your children and grandchildren are providing for yours.
Again, that’s how insurance works. (Except insurance companies are required to have reserves. Social Security is not.)
Social Security is more like buying annuities from a life insurance company. It might fell like savings, but it’s not. (And it sure doesn’t feel like savings to your heirs. When you’re gone, it’s gone.)
By Law, it must have a reserve of at least one year of payments. You know this as even I have said this.
Warren
I recommend you start a savings account for your children. When you’re gone, you’re gone.
SS is not designed to be your kids’ inheritance. It is designed to guarantee you will be able to retire when you need to. Your kids will appreciate not having to support you. They never had a guarantee you would have any savings left to leave them without SS.
Warren
i am not sure what it is that you say is my “intention.” I try to be as honest as I can, given that words don’t mean the same to everyone and that complicated things are hard to explain in a blog comment or even main post.
There seems to be something about your way of thinking that grabs hold of an idea and can’t let go even to learn more about the complexities of that idea. I am going to speculate shamefully (i really have no idea) that this “grabbing hold” is related to your “grabbing” hold of any money you think is “yours”. Freud had a way of describing that type of personality, which i only mention so that you will know that it has been described so it is a common enough phenomenon, but not everyone shares it. Life is better without it…. if you can let go of it.
I’m treading on thin ice here. I want to treat you decently and kindly. but my own personality disorder makes me think that means trying to explain to you what you are doing wrong. I don’t make many friends that way.
anyway, thank you for coming as far as you have in understanding what SS is, even if you don’t like it.
warren
and no one is trying to fool you about what SS “is,” except for Cato and similar white ring non partisan think tank expert liars.
SS is your money paid in and your money paid back. To think you are paying for your grandmother and your grandkids will pay for you is just to fail completely to understand what “money” is.
when you put your money in a bank, someone else spends it. and when you take your money out of the bank, some else put it in the bank so it is there for you to take it out. that’s the way all money and investment and savings work… except for stuffing it in a mattress or burying it in the back year where moth doth corrupt and man steal and inflation diminish to nothing.
If you are calling Social Security “savings,” then you are trying to fool people.
Warren:
You are construing coberly words to continue a discussion which has no merit.
Warren,
Look at what it does, not what you call it. Just like, you are better off looking at what someone does, rather than what they say.
Run – You say:
“By Law, it must have a reserve
of at least one year of payments.”
Not true. Stop making up stuff that you think supports your case.
Jerry, the word “savings” implies ownership. You own whatever amount of money you have put into your savings account. You own the stocks, bonds, and mutual funds shares in your retirement accounts. You do not own your FICA tax payments.
Shall we argue the meaning of “imply” now?
Krasting
I don’t know about “the law” but Social Security operates with a “one year’s full costs” reserve and considers itself in “actuarial insolvency” when that reserve is expected to fall below 100% (of one year’s costs within ten years.
this is close enough to “it must have a reserve of one year’s costs” for your “stop making stuff up” to meet my definition of hysterical misrepresentation.”
nor can i see how this “supports” the case for Social Security in any meaningful way. The Trust Fund could disappear tomorrow and SS would continue to pay benefits directly out of current taxes, and could pay full “promised” benefits with a small increase i the FICA tax… about one half percent immediately to make up for the lost interest from the Trust Fund and then about two tenths of a percent per year to keep up with the increasing costs of baby boomer retirement until it reached the full 2% that will be needed to pay for the longer life expectancy of those currently paying the tax.
in fact the “immediate and permanent” increase of about 3% that SS says would be needed to close the 75 year actuarial gap would do the job quite nicely for the next 75 years, after which another 1% would probably be needed, and that would be enough for the forseeable future (the infinite horizon.
please note, the 2% and one tenth % that i mention apply to the tax the worker pays out of his paycheck. the 3% and future 1% that SS refers to would be the combined worker and employer taxes. so the worker would only see about a one and a half percent increase in his tax…. mandatory savings…
you can try to distort the truth and misdirect the people by pouncing on half truths, distortions, and forced special definitions, but the facts remain.
you have no standing whatsoever as an honest “debater” and are only the kind of person who would go into a crowded theater and shour “fire” so he could pick the pockets of the people crushed during their attempt to save themselves.
i can only hope that at least on this forum my answers to your hysterical lies can point people in the direction of finding out the truth for themselves. otherwise i would not bother to reply to you.
Perhaps I misinterpreted Bruce’s comment once??? I do not believe I did though.
Jerry
thanks for your help.
I am afraid Warren is a lost cause. He will continue to insist upon his own definition of the word “savings” and accuse those who use it in the natural way are trying to “fool” people.
he insists that “savings” requires that you “own” what you have “saved.”
i’m not sure that is a useful distinction. the need for Social Security “savings” is exactly because workers cannot count on keeping their private savings from being lost to inflation and market failure, bank failure, or just thieves in the night.
no doubt you “own” the money you save in a jar buried in the back yard, but when you go to dig it up and it isn’t there, or inflation has cut it’s value by 90%, what good does “owning” it do you?
you may own your stocks, but there is no legal requirement that you ever get “your money” back from those stocks.
with bonds here is a stronger legal claim, but again no guarantee you can get your money back.
with a bank account, absent the Federal guarantee, your ownership of your savings will not get your money back if the bank fails.
so what does “own” mean, other than “guaranteed by the government”. and SS “savings” are guaranteed by the government as well as anything is guaranteed in this life, and better than most “legal ownership.”
but even that will not survive continuing to elect people who are determined to destroy Social Security.
Coberly – You go on for 1000 words and say nothing.
The SS Trustees have set the year 2034 as the year that the TF will run out. There is no provision in current law that forces SS to do anything before that date. There is nothing on the books that mandates any reserve at all. Run said it was the law. No it is not.
BUT – I think it should be the law. I don’t believe that SS can operate without at least a year in reserve. SS run a cash deficit 7 out of 12 months today. In 10 years the deficits will be in 10 of 12 months.
I have stated my position on this at AB many times. It is the only area of SS that Bruce Webb and I agree on. Stephen Goss has written papers on this topic. This is a must do change in the law.
Can we agree that there should be a new law that mandates that SS have a TF that is equal to 100% of the next 12 months of benefit payments?
Come on, agree with that.
bk
Krasting
there isn’t a chance in hell i would agree with you about anything. you have a diseased mind. but here is more “nothing:
SS has a policy (i don’t know about the law, but i suspect it is written somewhere as “law”) that requires it to treat any time the Trust Fund is projected to falll short of 100% of benefits as “actuarial insufficiency” and to report to congress so that congress can do something about it.
better than that, i have a plan that will guarantee that Social Security never falls into “actuarial insufficiency”. it proposes to raise the payroll tax one tenth of one percent whenever the trustees project that the Trust Fund will fall short of 100% of a fullyears benefits within ten years.
And I have shown that according to every Trustees Report for the last ten years that plan would prevent “actuarial insolvency” forever.
now, of course, you can scream that i have not prevented actuarial insolvency because on the very minute that the Trustees project that shortfall in ten years it is technically “actuarially” insolvent. But if the law has mandated that as of that minute the tax is raised one tenth of one percent, then “actuarial insolvency” disappears.”
as for your remarks: 2034 is more than ten years from now. there is no provision in the law that requires SS to do anything… in fact SS cannot do anything, the congress must do it.
and what this whole fight is about is requiring the congress to do it. and not do something incredibly harmful to people like cutting benefits or raising the retirement age, or politically stupid like raising the”cap” or otherwise requiring “the rich” to pay for Social Security beyond what represents to them a reasonable cost of the insurance they are getting based on their wage income.
SS can in fact operate perfectly well with no reserve at all beyond what it takes to manage the day to day fluctuations in income vs costs.
your having “stated your opinion” on this or anything else is as significant as “a pig grunted.”
if you chose to “agree with” this… call my plan to pass a law that raises the payroll tax one tenth of one percent whenever the trust fund is projected to fall below 100% of benefits”… as meeting your call for a Trust Fund that has 100% of the next twelve months of expenses, i can only point out that my plan exceeds your “law” s reqruirement by ten years.
i don’t give a damn whether you agree with me or not. but it would amaze me if you even understood that i have been calling for what you say you want for the last ten years.
re Krasting
and a cash flow deficit is NOT the same as a deficit in SS finances. That is what the Trust Fund was created for… as long as the trust fund makes up the cash flow deficit, there is no deficit in SS finances.
The current law (? long established policy) that calls for action by congress when TF is projected less than 100% in ten years” far exceeds Krastings call for “TF at least 100% of the next 12 months.”
note that falling below 100% is not the same as TF exhaustion. TF will take another 5 years to run out after falling below 100% of a full year’s reserve.
I don’t think Krasting is smart enough to understand this.
I have not seen the 2017 Trustees Report yet. But I expect that either this year or next year it WILL report actuarial insolvency.
After that point the one tenth of one percent increase in the payroll tax will no longer prevent actuarial insolvency. But a slightly higher percent would… say a dollar and a half instead of a dollar a week. or even a half percent the first year, followed by the tenth percents per year after that. or even the 3% (combined) that the Trustees say would prevent insolvency for 75 years… but, alas, leave the people 75 years from now faced with another “significant” tax raise of one percent combined.
Iit happens that even after 2018 a one tenth percent tax increase would prevent actual insolvency (but not actuarial insolvency), but that would give us more screaming of “we are all going to die” than i think congress could resist without doing something stupid… like a compromise, like adding oneyear onto the retirement age, cutting benefits, raising the cap, and raising the payroll tax “only” one percent. because you see all of those are “equivalent” in the mind of a politician, though they have incredibly different harmful effects on real people.
but congress no longer listens to real people or cares about them. only what their funders care about and what can “deliver the votes” from people who have been fed hysteria and deprived of a chance to understand the real choices.
It has come to my attention (and perhaps Mr. Coberly will object on this count, too) that my use of the word TAX to describe FICA contributions is inacurate, and possibly misleading.
Keeping with the notion of INSURANCE, specifically that FICA is the “Federal Insurance Contributions Act,” they should be called “premiums” (or perhaps “premia,” to keep the Latin plural).
Warren
relax. you can call it a tax if you want to. but i can point out it’s not “really” a tax since you get the money back, in your name, with interest.
and you can insist it’s not “savings” if you want… but i will continue to call it savings at times when i want to emphasize that it’s the safest way workers have to save part of their earning so they will have enough to retire. in fact, as we both agree, it is insurance.
but i have had people, also word bound, insist that it can’t be insurance because with insurance you pay a small premium against a small possibility of a large loss. they just can’t handle the idea of a large premium against the almost certain probability of a crushing loss.
nor would i care to try to separate out the part of the “tax” that is “premium” from the part that is “savings with interest.”
SS is what it does. the words don’t matter. they are just a starting place to try to explain to people what it does. so they won’t be fooled by the people who insist it is just old senile uncle sam fumbling with worthless iou’s from one pocket to the other.
That’s easy — it’s ALL insurance, and NO savings.
Coberly,
I have come to the conclusion that Warren is essentially in agreement with you about what Social Security does. All he can do is argue about words. It is kind of like arguing about what Trump says, not what he does.
jerry
you are right.
Warren
Of course it is. Tell your congressman. And all your friends.
But the premium has to go up in order for it to be insurance that will be worth having: enough to live on when can’t work any more.
The good news is the premium only has to go up about a dollar a week.
“Technically” it has to go up one tenth of one percent per year for about the next ten years. About a half a tenth of one percent per year for the ten years after that, and about a tenth of a tenth of a percent per year after that. And that should be enough. Total increase would be about 2% while your income will go up over 100%, leaving you with twice as much money in you pocket AFTER paying the increased premium while you are still young, and about twice as much real income in retirement as today’s workers have.
In a better world, everyone could invest their own money and it would reliably, unfailingly, return to them enough to live on when they no longer can or want to work, while growing the economy.
But we don’t live in that better world. Even those of you who will do well with your investments need Social Security so there will be someone to buy the goods and services you invested in. Old people with no income don’t buy much. Neither do young people terrified of becoming old and poor… as they would be if they saw that was what was happening around them.
But a word of caution: if you say that SS is “not savings” you will confuse most people who don’t have your advanced knowledge of the precise meaning of words… they will think they won’t get their money back. Better to say to them that SS is insurance that protects their savings from inflation and market losses, and insures them against loss of income, or a lifetime of low income.. too low to save enough to be able to retire, or support their families in case they die or become disabled.
For everyone who “loses his savings in SS” by dying too young to collect everything he saved… about ten million will never have enough “savings” (or investments) to leave to their children anyway.
And without Social Security about a hundred million of them would have to be supported by their children when they get too old to work.
SS is the best bet they have. A prudent hedge they can count on while using the rest of their money to save or invest in any way they please.
Yes, Jerry, Coberly and I do agree on what Social Security does.
I argue about words because words are important. They convey information. If we use incorrect terms, we mislead those to whom we are trying to impart information. Sometimes people mislead by intention, and sometimes not.
Those who do not want to mislead people about the Federal INSURANCE Contributions Act will not call the contributions “savings.”
Warren
I’m glad we have reached the point where we can argue about semantics and not Social Security.
Words mean different things to different people, or even to the same person at different times.
It is important to understand that words “point to” something. they do not “mean” something. They certainly are not that “something.”
Words can be used to mislead, but you need to look closer to see if the person intends to mislead, is just making a mistake by using a word to “mean” something that most people would not use that word to mean, or is using the word to point at a true thing that in some important way takes on at least part of the common “meaning” of the word.
Usually when people intend to deceive they don’t do it by choosing one “wrong” word. They do it by directing attention away from the reality by constructing a whole context in which the words they use “seem” to mean one thing while hiding the truth.
I would have thought that by the emphasis I have placed on calling Social Security “insurance,” you would understand that when i refer to Social Security protecting your savings I am not trying to deceive you or anybody else.
MOst people would understand that they need to “save” for their own retirement. saving means not spending some money that you have (or have earned), and implies putting it in a safe place, and particularly doing something with it that protects its value from inflation.
The idea that it can’t be “savings” because there are circumstances in which you or your heirs might not get it back is probably incorrect. At least it is a “special” definiiion that most people would not immediately think of.
But most importantly, you need to recognize that I can’t be trying to fool you or anybody else by my use of the word to help explain what SS does. It is insurance, yes and most important. But it is insurance of your savings. The best you can buy.
I am sorry that there is some chance your savings in SS will not be there for you or your heirs if you die too young to collect it. But since you can lose your “savings” far more easily without SS insurance, I think you might consider letting go of your special and obscure and no doubt “technically correct” (according to you) definition… at least the part where you accuse people who use the word to mean what most people understand by it of trying to fool you or them.
Anyway, the above reply to Warren is offered as a courtesy to help, if possible, Warren save himself from a too rigid idea of what words are, and the essentially paranoid certainty that people who use a word slightly differently from the way he thinks it should be used are trying to fool him or others.
I don’t know if Warren can fee himself from this intellectual and psychological trap, but I am going to try to stop spending my time on it.
Otherwise, thanks to Warren for trying. I think we have accomplished a great deal if he understands what SS “does.” And if he also understands that in the world we have… not the one he, and perhaps I, would like to have, in the world we have SS is the best way most people have to insure that they will be able to retire at a reasonable age.
i would urge anyone who is sure they could do better on their own to go ahead and do that with the money they have after paying the payroll tax. It is a bit dishonest to blame SS for not being able to leave anything to your heirs, when you are spending the other 90% of your income on more expensive cars instead of saving (investing) it for their inheritance.
It by using words just slightly incorrectly, that people twist the language to fit their agenda. The word that has positive connotations, such as SAVINGS and RIGHTS, are used where they do not quite fit to make the listener think that the idea to which they are attached (but which don’t quite fit), is a Good Idea.
The meaning of words is changed by two groups of people — those who do not know what they are doing, and those who know EXACTLY what they are doing.