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(Washington Post)   You know how the Social Security trust fund was going to run dry by 2036? Well, turns out that might have been a tad bit optimistic   (washingtonpost.com ) divider line
    More: Obvious, social security, Labor Secretary Hilda Solis, trust funds, insurance fund  
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10760 clicks; posted to Main » on 23 Apr 2012 at 8:35 PM (4 years ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-04-24 05:56:20 AM  
Social security will never "run out" of money. New taxes will increase if necessary to cover expenses. Or we could stop going to war every 2 weeks and have enough money to give every retiree caviar and daily hand jobs until they're 100.
 
2012-04-24 06:35:39 AM  

gibbon1: sycraft: Unfortunately, it is just going to be solved by a motherfarker of massive tax increases.

A relatively small payroll tax increase of around 1% or so would bring it into balance. Whats funny about the raging and ranting about social security, is not just how much propaganda, ideology, ignorance, and misinformation there is, but how easy it is to find accurate information on how the program works, yet most people don't even try.

Global warming, evolution, pollution, economics, those are hard. But how a government run insurance program works? That's trivial to understand.


Trivial to understand, but politically impossible to fix. Somebody is going to be Royally Screwed out of trillion$ of dollar$, and it looks like the big losers are.... everyone born after 1955. You'll pay more and get much less. You'll be screwed especially hard if you're successful in life as it morphs into a welfare program.

"A relatively small payroll tax increase of around 1% or so..." No, but a cut of about 25% to benefits would keep it running. And that's the way it's heading. Not that politicians will be that up front about it. They'll just keep changing the calculation methods, so that the loss is more subtle and hard to understand for the average person.

Social Security is the biggest mistake the United States has every made. The whole program should have been stopped back in the early nineties. It is the reason most people today will retire into poverty. That and OBRA87.
 
2012-04-24 07:28:50 AM  
Actually, SS is a regressive tax: there is a top-end cutoff, and it is not very high. Warren Buffet pays a tiny fraction of what I pay, yet he receives a much larger benefit.

I wish people would quit using Buffet as an example. He doesn't have an "income". He increases his wealth with capital gains, therefore he pays a capital gains tax instead of income tax. That's why he pays a different tax rate. Capital Gains are not subject to Social Security taxes because it isn't wages. Also, you assertion the Buffet gets a lot more back even though he paid in a lot less is just dead wrong. Here is how it is figured: SS Publicans. So if he pays little or nothing in, he's going to get little or nothing back.

He is also free to work for $1 a year aqnd draw full belefits, where I face severe penalties if I make over $14 K annually.

Again, he's earning via Capital Gains. If you want to own shiatloads of stock and earn capital gains, you make a lot more than 14K and still get maximum benefits. But in Buffet's case, refer to the above.

That is why I, like most Libertarians, favor the Flat Tax, sometimes called the Fair Tax: You get so much---you pay so much; no exceptions, no excuses.

Here you are wrong again. A Flat Tax is everybody pays the same percentage of their wages (which again is separate from Capital Gains unless you want to roll that in. ) The Fair Tax is paying a national sales tax where everybody gets to write off the amount up to the poverty level. If you really where the Libertarian that you claim, you'd be bright enough to know this, as well as the fact that Buffet pays capital gains. You sound like a hard core liberal who is doing a piss poor job faking that he's a Libertarian.
 
2012-04-24 07:46:54 AM  
I think its rather funny that the majority of you look to cast the blame on your favorite villain instead of, ya know, trying to figure out how to fix things.

Learn 2 prioritize
 
2012-04-24 07:53:42 AM  

The One True TheDavid: I'd thought everybody ought to pay their fair share


SS is not income tax and doesn't contribute to the day to day functions of this country. You're essentially arguing for rich people to have to pay $4,500/mo for car or $35,000/mo for health insurance simply because it is more fair.

Why not have means testing at the supermarket where rich people pay $25 for a gallon if milk?
Why not make rich people pay $20 for a gallon of gasoline?
Why not have rich people pay $4.3M for same home that would cost a middle class person $290k?

Thats fair, right?

Listen to yourself.
 
2012-04-24 08:57:16 AM  
Unless of course we do something CRAZY like lifting the FICA cap. Then it's pretty much solvent forever.

This is another manufactured crisis like the Post Office being forced to fund 75 years of pension obligations in 10 years, engineered by Republicans to dismantle anything in government that works.
 
2012-04-24 09:12:20 AM  
removing the cap would cost me about $120,000 per year. I make less than $500,000 per year.
 
2012-04-24 09:49:59 AM  

gibbon1: Some days I'm hopeful for the world. Then I realize lots of people can't wrap their head around something as simple as insurance.


28.media.tumblr.com

Insurance does not work that way!
 
2012-04-24 10:03:22 AM  
i.imgur.com

Separated at birth?
 
2012-04-24 10:07:46 AM  
www.mybaycity.com

renew!
 
2012-04-24 10:28:08 AM  
No more Motorized Scooters for Medicare People
 
2012-04-24 10:49:42 AM  

madgonad: Since nobody has a clue, I thought I might add some reality to the thread:

1. Dropping the employee SS contribution rate from 6.2 to 4.2% (and leaving the employer 6.2% contribution alone) is a 21% reduction, not 33%.


The contribution rate was dropped from 12.4% to 10.4%. The "employer contribution" is just an accounting ruse. The cost of the employer contribution is borne by the employee. When a company is figuring the cost of hiring a new employee, this money is factored in with salary, 401k matching contributions, benefit coverages, etc. Both self employed and non bear the full cost of the FICA tax. Same goes for Medicare tax. The employee, in reality, pays the full 2.9%.
 
2012-04-24 10:55:34 AM  

cman: think its rather funny that the majority of you look to cast the blame on your favorite villain instead of, ya know, trying to figure out how to fix things.

Learn 2 prioritize


But if you fix things, you have fewer things to demonize the other side with. Can't have that, now can we? Who cares about the real problems, we just need our daily fix of hating the other side.
 
2012-04-24 11:03:55 AM  

Nightsweat: Unless of course we do something CRAZY like lifting the FICA cap. Then it's pretty much solvent forever.


[ciatation needed]

Most of the analysis that I have seen shows that this will help, but it will not 'fix' the problem. We will need other options like increasing the retirement age threshold or increasing the tax rate to actually make the program solvent.

That being said, I have no problem in reducing the size of the SS trust fund to about 1/2 of what it is now. This trust fund should be there to even out the change in income and outflow distributions and nothing more. There is little reason that I can think of to have a $2.5 Trillion mountain of intragovernmental debt sitting in the bank bearing interest.
 
2012-04-24 12:05:11 PM  

madgonad: 8. The 'Trust fund' is invested in US bonds/securities which is both good and bad. Bad, because the Feds don't pay much interest, but good because you could imagine the potential for corruption if SS money was invested in the open market. It is a safe place to put money. Insurance companies park billions in low return investments for the intrinsic security of the holding.


I found a picture of this 'Trust fund' to go along with your post:

encrypted-tbn0.google.com
 
2012-04-24 01:46:43 PM  

HeadLever: Nightsweat: Unless of course we do something CRAZY like lifting the FICA cap. Then it's pretty much solvent forever.

[ciatation needed]

Most of the analysis that I have seen shows that this will help, but it will not 'fix' the problem. We will need other options like increasing the retirement age threshold or increasing the tax rate to actually make the program solvent.

That being said, I have no problem in reducing the size of the SS trust fund to about 1/2 of what it is now. This trust fund should be there to even out the change in income and outflow distributions and nothing more. There is little reason that I can think of to have a $2.5 Trillion mountain of intragovernmental debt sitting in the bank bearing interest.


Citation given - OK it's not 100%. It's like 95%. The rest is easy.
 
2012-04-24 02:17:01 PM  
Two part easy solution to this "problem":

Drop the income cap on SS tax contributions. Lock the SS funds out of the General fund so they can't be borrowed form. Problem solved.
 
2012-04-24 03:02:54 PM  

Spektyr: Drop the income cap on SS tax contributions. Lock the SS funds out of the General fund so they can't be borrowed form. Problem solved.


The first part is certainly doable provided the cap on benefits is simultaneously dropped.
 
2012-04-24 03:07:05 PM  

Nightsweat: Citation given - OK it's not 100%. It's like 95%. The rest is easy.


Thanks for the source. You are right that it is pretty close, but I would catution that this study was done in 2008. Things have changed a little bit in the last 4 years and this may not be quite as true as it once was. Just for a reference, the unfunded liability for Social Security was estimated at 15.8 Trillion in 2008. Last June that was up to 21.4 Trillion
 
2012-04-24 03:12:34 PM  

Spektyr: Lock the SS funds out of the General fund so they can't be borrowed form.


That will not really help the matter all that much. First, piling up a mountain of cash will take this money out of the economy. Second, cash is still a goverment liability and does not bear interests. So as the years go on, the value of you pile of cash becomes quite a bit less. At least the IOUs that currently make up the Trust Fund bears interest which should, in theory, keep up with inflation.
 
2012-04-24 03:17:59 PM  

HeadLever: Second, cash is still a goverment liability and does not bear interests. So as the years go on, the value of you pile of cash becomes quite a bit less. At least the IOUs that currently make up the Trust Fund bears interest which should, in theory, keep up with inflation.


The government is not earning interest on those IOUs. They pay interest when they buy back the bonds. We would be better off sitting on a mountain of cash. At least then we still have the cash when we need it rather than a fark-ton of debt to pay back.
 
2012-04-24 03:46:50 PM  
I really wish they would let people opt out of SS.
 
2012-04-24 06:04:42 PM  
Wow... You mean the Ponzi scheme that is SS is failing? Say it isn't so...

People go to jail when these fail only if rich people lose their asses, not when the 99% do...
 
2012-04-24 06:24:04 PM  

Nightsweat: Unless of course we do something CRAZY like lifting the FICA cap. Then it's pretty much solvent forever.

This is another manufactured crisis like the Post Office being forced to fund 75 years of pension obligations in 10 years, engineered by Republicans to dismantle anything in government that works.



Wrong.

Social Security doesn't "work" - that's why it's bankrupt. Ditto the Post Office.

And if you could do the math, you'd find that you'll get back about 7% of what you paid in. Why would you want to force more money into something that is such a disaster, that it loses 93% of the money?

Normally, after about 25 years, a pension fund is grossly over funded. It's the sum of all the conservative assumptions. If you think the fund will return 7%, you use 6 3/4 in your actuarial assumptions. After a couple decades like that; the fund has "deteriorated to aggregate funding" and it becomes self sustaining without more money. (except maybe a bit in exceptionally bad years.)

If Democrats understood finance; Social Security could have been like that. We could have full benefits without that crushing tax, because it would have become self funding back in the 1970s. It would be the largest Sovereign Wealth Fund on Earth, and every major company on the planet would be paying for America's retirement. But instead, a bunch of spendthrift assholes stole the money to blow buying votes. They specifically exempted SS from all the laws in ERISA just so they could steal the money.

The fundamental flaw in Social Security is the underlying premise that you can trust a bunch of politicians with your retirement money.
 
2012-04-24 06:26:02 PM  

umad: The government is not earning interest on those IOUs.


Sure they are as the treasuries that make up these IOUs are interest bearing. Now you are correct that this money also comes from the goverment (from the general fund to be specific) so basically they are shifting money from one part of the goverment to another in order to satisfy the interest obligations. You can see this on the TreasuryDirect website as the twice a year there are big spikes in interest payments.

At least then we still have the cash when we need it rather than a fark-ton of debt to pay back

Not really. Remember, inflation will eat away at the value of that mountain pretty quickly. It takes about 12 years for that mountain to have about 1/2 of its former value. Lastly, don't forget about the economic ramifications of removing about 2.5 Trillion from the money supply.
 
2012-04-24 06:57:19 PM  

m1ke: I really wish they would let people opt out of SS.


------

They do. Go get a job with a railroad. The railroad retirement system pays more than twice as much as SS and has about $25b in reserves.
 
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