Only Twenty Months Until Everything Gets Better

[dgs49]

I'm very leery of anyone who even uses the expression "Social Security Trust Funds." That nonsense category includes the billions and billions in worthless IOU's from the general fund.

There is no trust fund. It cannot be made "solvent" by including mountains of phony paper.

The relevant question is how do we make SS a PAYGO proposition?

[rubato]

SS works.

Got anything that works better? Over 70 years?



yrs,
rubato

[dales]

AU

[rubato]

I'm very leery of anyone who even uses the expression "Social Security Trust Funds." That nonsense category includes the billions and billions in worthless IOU's from the general fund.

There is no trust fund. It cannot be made "solvent" by including mountains of phony paper.

The relevant question is how do we make SS a PAYGO proposition?

US government debt is the most desired internationally by those with hundreds of billions to trillions to invest. This is why they accept such low rates of return on it.

I think they are a lot smarter than you are. Unless some Republican jackasses decide to default on the debt ....

yrs,
rubato

[Andrew D]

If you raise or eliminate the cap on the SS tax, do you then similarly eliminate the cap on the benefit (the max earnings used to calculate benefits is the same as the earnings cap, $106,800/year)?

The Congressional Research Service has recently (Sept 2010) done what looks to be a comprehensive analysis on the costs and benefits of raising or eliminating the tax cap, including the impact on federal revenue. For those who have the time to read it, the report is here (I've only read the summary and skimmed the full report): http://aging.senate.gov/crs/ss9.pdf

It seems to me that the answer is in the summary:

If all earnings were subject to the payroll tax, but the base was retained for benefit calculations, the Social Security Trust Funds would remain solvent for the next 75 years. However, having different bases for contributions and benefits would weaken the traditional link between the taxes workers pay into the system and the benefits they receive.

Well, yeah. It is long past time to sever that "traditional link".

And that suggestion does not even go far enough. Maybe we should retain the base for calculating the maximum possible benefit, but retaining it for calculating everyone's benefits just perpetuates a fundamental and unaffordable problem: The Social Security system is taking money from those who have less and giving it to those who have more.

We should eliminate the cap on income subject to Social Security taxation and means-test the benefits. Or we can stand around and watch as the whole system nosedives down the economic toilet.

I recognize that many people have paid into the system on the promise that they would get something back from it. Well, guess what? The system ain't got nothin' to give you.

It's rather like bankruptcy court: "Yeah, he owes you ten thousand bucks. And he owes this other guy ten thousand bucks. And then there's the guy behind you two, and the people behind him, and a whole shitload of other people he owes money to. But he doesn't have the money to pay all of you. So you're just going to have to take what you can get. And if that doesn't amount to much, hey, life's a bitch."

Hence means-testing. It's one thing to say "life's a bitch" to someone who has 401k income and Roth IRA income and a bunch of other income. It's quite another thing to say "life's a bitch" to someone who, without Social Security checks, is going to end up surviving on cat food.

Life sometimes sucks, but we have to make the best choices we can in the circumstances in which we find ourselves. And in the present circumstances, the whole system is going down the shitter unless we do the obvious things: Raise the eligibility age and means-test the benefits.

[dgs49]

Interesting how different people define "fairness," isn't it?

If I work hard throughout my life, live within my means, make sacrifices to save so that I will have a decent nest-egg to support myself after I retire, and maybe pass along a few bucks to my heirs, then I will get LESS in social security than my neighbor who, with the same income over the same working life, has lived from paycheck to paycheck, and retired with a huge mortgage balance and no savings. (I know several such people).

Means testing. FUNDAMENTALLY unfair. But so what, it's only unfair to OTHER PEOPLE, not me.

Just like taxing people with high incomes at about half their gross (all taxes considered), while less successful people pay not only much less in actual dollars (the only valid measure of what is being paid), but at a dramatically lower percentage, as well.

Graduated income taxation. FUNDAMENTALLY unfair. But so what, it's only unfair to OTHER PEOPLE, not me.

Rubato, all Ponzi schemes work great until they collapse. By all rational measures, SS is a Ponzi scheme that has collapsed. It's only saving benefit is that there are still tens of millions of people paying into it, and the Government has a seemingly infinite ability to borrow in order to prop it up.

SS is a failed scheme that failed to take into account predictable increases in population and lifespan. For most middle-class people today, it is a horrible bargain. We would have been MUCH. MUCH better off if, as an alternative (proposed tepidly by Bush43) we had been compelled to take ours and our employers' contributions and invest them in equities and bonds over our working lives. Compare what we would have, considering normal investment returns, with the present value of the SS annuity, and SS loses. But the most poignant difference in "outcome" would be that for those of us who will check out before starting to collect, WE WOULD ACTUALLY HAVE THAT MONEY IN OUR ESTATE, which contrasts with the current system in which we will have NOT A FUCKING DIME(!). (And please don't think about the fact that American men of Black African ancestry get the absolute worst bargain of all, given their shorter expected lifespans).

The Greatest Generation is reaping huge benefits from the SS scheme, but those before them and we who follow them are getting screwed, big time. Unless you happen to live to be 90 or more, in which case you will make out well, but probably won't be aware of it.

[rubato]

If all earnings were subject to the payroll tax, but the base was retained for benefit calculations, the Social Security Trust Funds would remain solvent for the next 75 years. However, having different bases for contributions and benefits would weaken the traditional link between the taxes workers pay into the system and the benefits they receive.

The 'traditonal link' is weak to begin with. SS is already a redistributive system with the highest payers getting less back per contribution than the lowest payers. This would merely be a shift in that direction.

Due to some unusual changes in the SS tax laws my wife was offered the ability to get 4 years worth of contributions back for the years she was a resident. When I calculated her benefits based on the lower contribution there was no reduction. So we took the cash (If she asked for her contributions back then Kaiser-Permanente also got their half back as well. ).

yrs,
rubato

[rubato]

"...

Rubato, all Ponzi schemes work great until they collapse. By all rational measures, SS is a Ponzi scheme that has collapsed. ... "

Pure gassing. It is fully funded until ca 2037 and based on current calculations the shortfall then will be a marginal cut in benefits ca 14-20%.

yrs,
rubato

[rubato]

"...
SS is a failed scheme that failed to take into account predictable increases in population and lifespan. ... "

Still more gassing.

The life expectancy for a 65-year old has only increased slightly and much of that increase was erased when the SS age limit was raised:

http://delong.typepad.com/sdj/2011/05/a ... jones.html
"... Is it true that life expectancies have gone up dramatically since 1940, when Social Security first went into effect? Sort of. In 1940, lots of children still died young.... But childhood mortality doesn't affect Social Security one way or the other.... What we care about is the people paying into the system... and how long they live after they retire. So how much longer do retirees live these days? Answer: For men, life expectancy at age 65 has gone up from 78 to 83. Since retirement age has gone up from 65 to 67, this means that over the past 60 years the expected payout period has increased by about three years. ... "


yrs,
rubato

[rubato]

Interesting how different people define "fairness," isn't it?...

Graduated income taxation. FUNDAMENTALLY unfair. But so what, it's only unfair to OTHER PEOPLE, not me.
... " .

It is no more 'fundamentally' unfair than a scheme of compensation which says that one person can work 2080 hours per year and live in poverty and someone else who works much less hard with shorter hours and more vacation can make 100 times as much.


"suffering" must be leavened into the fairness equation otherwise you get idiotic and brutal ideas like it is 'fair' to take away $1,000 more per year from someone already living in poverty to give $10,000/yr to people like me.


The meaningful definition of 'fairness' is "what system is acceptable to society as a whole". At the end of the day the rich will only be able to benefit from their wealth if the large majority of society voluntarily agree to accept the rules of that society and abide by them with a minimum of coercion. If the outcome of the rules is too brutal the costs of enforcement will be so high you cannot pay them no matter what your tax rate.


"everybody pays the same" (whether it is a rate or a fixed amount) is an arbitrary and artificial rule which can not be made separately from the equally arbitrary rules about who gets paid how much. If you decide that "everybody pays the same and everybody GETS paid the same" then you have a good chance of getting society to accept that rule.

yrs,
rubato

[Liberty1]

It is no more 'fundamentally' unfair than a scheme of compensation which says that one person can work 2080 hours per year and live in poverty and someone else who works much less hard with shorter hours and more vacation can make 100 times as much.

What a load of BS. IT's abosolutely none of your business what anyone makes. Value is determined by what someone is willing to pay.

I'm sure you'd be willing to pay a surgeon $20 to fix your brain.

I have a better idea, why don't we just make minimum wage be $200/hour, yea, that'll work.

[rubato]

It is the business of the people who make the rules governing society, in a democracy that would be us, to make rules whose outcome is acceptable and just to most of the members of that society.

If you wish to say "fuck you all" to most, or many, of the members of your society you can have no complaint when they rape your daughter and burn down your house. Because we do know that when pressed into severe want or injustice people will do that.

yrs,
rubato

[Andrew D]

If I work hard throughout my life, live within my means, make sacrifices to save so that I will have a decent nest-egg to support myself after I retire, and maybe pass along a few bucks to my heirs, then I will get LESS in social security than my neighbor who, with the same income over the same working life, has lived from paycheck to paycheck, and retired with a huge mortgage balance and no savings. (I know several such people).

How do you reach that conclusion? What method of calculation actually used in administering the Social Security system yields that result?

Means testing. FUNDAMENTALLY unfair. But so what, it's only unfair to OTHER PEOPLE, not me.

No one can know what will happen in the future, but if I continue to earn what, on average, I have earned since I started paying into the system, and if Social Security is means-tested, I will get less out of it than I will if it is not means-tested. How is that "unfair to OTHER PEOPLE, not me"?

What I am proposing amounts (unless some disaster befalls me) to a reduction in what I would otherwise get. How am I being unfair to other people?

Just like taxing people with high incomes at about half their gross (all taxes considered), while less successful people pay not only much less in actual dollars (the only valid measure of what is being paid), but at a dramatically lower percentage, as well.

Are you forgetting payroll taxes? Yet again?

Low-income working people -- that's working people, not people living on the dole -- pay a higher percentage of their incomes in taxes than do those who are better off. Can you explain how that is fair?

Graduated income taxation. FUNDAMENTALLY unfair. But so what, it's only unfair to OTHER PEOPLE, not me.

So what should we have? A flat tax? A tax that pretends that snatching food from the mouths of babies who have the misfortune of being born into low-income families is somehow the same as interfering with a high-income family's ability to afford a vacation home?

The fact is that those of us who have managed to amass wealth would not have been able to do so without the societal structure in which all of our wealth-amassing activities have been imbedded.

Sure, we've worked for it. I worked my way through undergraduate school. I cleaned up after kids dribbling snot and smearing cotton candy on carousel animals. I carved raw, whole -- guts and all -- fish into chunks so that ignorant people could hurl them in the direction of seals who weren't hungry. Etc.

And I worked my way through law school. Eventually, I got a summer job at a law firm, but until then, I spent my time between and after classes ringing up people's cafeteria lunches and dinners.

And I worked like hell after that. I put in 80-hour weeks, week after week, month after month. And I was amply rewarded in income for that. Which is a good thing: I earned it.

I am self-employed now, so I don't push myself that hard. (And medically, I couldn't push myself that hard anyway.) But I've paid the price for that: My income varies greatly from year to year, but the average is barely half of what I was making at the firm.

Still, even that reduced income provides a comfortable life. Not the luxuries that those who pushed themselves harder than I did now enjoy, but a comfortable suburban life.

And none of that would have been possible were it not for the societal structure into which I had the good fortune to be born. I owe the people who maintain that societal structure, because were it not for them, I would not have what I have. It is FUNDAMENTALLY FAIR that I pay a larger percentage of my higher income than they pay of their lower incomes.

What is FUNDAMENTALLY UNFAIR is the notion that I somehow did it all by myself and owe the society around me nothing. That is pure egoism. And it is false.

We could play into that lie. But we have wisely chosen to consider the truth instead. And the result has been more fair than the me-me-only-me-I-did-it-all-by-myself-so-it's-me-me-only-me ideology that permeates the pseudo-conservative right.

[BoSoxGal]

[quaddriver]

Andrew I think DSG was using a 3rd person when he wrote the 'unfair to others not me'

And its true. I paid in the max each year for over the last 10 years and I paid a good chunk before that. lets say I have 20 years to go (because I do)

If I do well for myself, My SS bennie will be less than many others, and a far worse percentage when compared to what I paid in.

I would have rathered to have had the $$ from day one to invest.

But the point remains, a lower income earner will get back far far more than they put in assuming a normal lifespan. I will get back more than I put in, assuming a normal lifespan. Why should my return on forced investment be lower than the other guy? because I did well for myself? Definition of a Ponzi scheme. If the original point was to guarantee a minimum benefit as a safety net, then they could have billed for it, but they didnt.

Instead my retirement age will be raised at least one more time, before I retire. The amount of money I earn subject to the tax will forever be 'infinite' instead of previously capped. All to pay for the boomer population.

this program is a success how?

[Joe Guy]

But the point remains, a lower income earner will get back far far more than they put in assuming a normal lifespan.

Let's say a person born in October 1964 currently earns $60,000 per year and another person born the same month earns $120,000 per year. And let's assume that historically the higher earner always earned twice as much as the lower earner.

At age 67 (based on current SS benefit rules) the person that earned $60,000 per year will receive $22,268.00 per year and the person that earned $120,000 per year will receive $29,676.00 per year.

Please explain how the "lower income earner" gets far more back than he contributed versus the higher income earner.

[quaddriver]

But the point remains, a lower income earner will get back far far more than they put in assuming a normal lifespan.

Let's say a person born in October 1964 currently earns $60,000 per year and another person born the same month earns $120,000 per year. And let's assume that historically the higher earner always earned twice as much as the lower earner.

At age 67 (based on current SS benefit rules) the person that earned $60,000 per year will receive $22,268.00 per year and the person that earned $120,000 per year will receive $29,676.00 per year.

Please explain how the "lower income earner" gets far more back than he contributed versus the higher income earner.

I stated that I would get back a lower return on investement. At an uncapped taxable earning amount, the 120 guy paid 2x the 60K guy, but did not get 2x back.

I also stated that if I do well for myself, ie. retirement investments, distributions - whatever, that will lower my pay out from SS, futher penalizing me.

*all govt services* fail the means test. If the cost for armies, roads and FDA inspectors is equal per citizen, at a flat tax the wealthier are getting ripped off. At a progressive tax rate they are getting more ripped off. There are no ethics or moralities in existence that say otherwise.

[BoSoxGal]

Social Security is based upon the premise that we have a collective responsibility to the least among us; the low-income worker is as fundamentally important to upholding the system as the wealthy person, if not more so. The low-income workers are the ones upon whose labor and sweat the wealthy become enriched disproportionately. If the wealthy then pay more as a share for SS, that's entirely moral.

[quaddriver]

Social Security is based upon the premise that we have a collective responsibility to the least among us; the low-income worker is as fundamentally important to upholding the system as the wealthy person, if not more so. The low-income workers are the ones upon whose labor and sweat the wealthy become enriched disproportionately. If the wealthy then pay more as a share for SS, that's entirely moral.

Nice altruistic view of something that never happened or was stated by the creators.....(which was why it excluded most women and blacks?)

[Joe Guy]

Nice altruistic view of something that never happened or was stated by the creators.....(which was why it excluded most women and blacks?)

You might want to read this.