Interesting. So does this mean that we’ve already HAD a flat tax all this time, since payroll taxes weren’t really going to be paid back, but were just going into general revenues?
Then it behoves us taxpaying folks to rise up and ** force** them to pay back all that they have taken.
Its our right.
Its our duty.
Its our money.
I just wanted to make a few points.
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I think we all need to get over this partisan crap. None of the political parties have views that I completely agree with. I saw a lot of statements that seemed like it was based on which party you are. It is kind of disappointing coming from a group as intelligent as you. Let’s LISTEN to the people we voted in (and don’t give me this I didn’t vote for Clinton, I didn’t vote for Bush crap) and evaluate the plan (or lack of plan) based ON THE PLAN- not on who made the plan (which is called, if I remember correctly, an ad hominid attack.
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Now, I am only 26, but I remember as early as middle school hearing that SS would not be there when I retired. I heard this from everyone, regardless of political party. This indicates to me that something will eventually have to be done about SS. When the SS administration starts cashing in on the debt, the government (hey, that’s us!!) will have to pay. This is done by raising taxes. Or, they could instead lower benefits. Neither of those seems particularly fair. But that is what has to happen. So, should we wait until 2040, and say “OHMYGOD!! We have to fix this in 2 years!!” or should we start now, which gives us plenty of time to fix it?
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What’s wrong with letting me take some of my money and putting it into a private account? I don’t see why that necessarily means you won’t get your benefits. The same things that the people in there 50’s worry about is the same thing I worry about. You know what? SS will still be okay when you retire, but not when I retire. Please, can we get on it now, before it is a real problem? If you don’t like Bush’s plan, cool. What is your plan? I just want a plan, ya know
– Sorry about the long windedness and bad typing
Again, I don’t think Bush intends to default on this debt to create a real crisis. I don’t think he’s so stupid to propose a law in effect saying “The USG shall not repay its obligations to the SS Trust fund” , the purpose of which would be to, I don’t know, create a real crisis, instead of the fake crisis he’s trying to foist by trying to pretend this debt won’t be repaid. In that regard I guess I disagree with the OP : political scaremongering is not unconstitutional.
Social Security IS NOT A RETIREMENT PLAN. It’s not a mutual fund. It is not supposed to have a “return on investment” or “pay back” anything. It pays a benefit (granted, based in part on how much you’ve paid into it). They way they pay that benefit is to collect taxes now to pay current beneficaries. The fact that there is a SS Trust Fund is to hedge against things such as changes in the economy and changes in demographics (i.e.,to *be able * to deal with such situations as in 2018, when more people will be drawing from SS than paying into it). I think a common misperception that people have that SS is some kind of personal investment because that surplus is not just sitting in some bankaccount but it is put into Treasury notes. But the purpose is not to maximize ROI for “investors” , but to ensure the health of the trust fund as a whole (e.g., to act as a hedge against inflation, economic fluctuations, etc.) . Again, I think Bush is trying to exploit that misperception (“You can get a better ROI than T-Bills if You invest it.”)
I think if Bush were honest about what they were trying to do, and not feed misperceptions about what Social Secuirty is, it would be much easier to evaluate their plan. If they said “We don’t think the government should be involved in a pay-as-you-go, tax financed social beneifit program for the elderly , widowed and disabled. We think you should keep the some or all of those taxes and invest it yourself. Of course , that means this program won’t be able to pay as many (or any) benefits in the future. In order to make sure that people over 55 still receive the same benefits that they are entitled to under current law, we will borrow money to make up the difference due to the loss of revenue into the program”.
But of course they don’t say that . They say: “The sky is falling! Social Security will be bankrupt in 2018! All that money you have invested in Social Security will be gone if we don’t act now or you’ll be left without a penny!”.
To be fair, the Dems also sometimes exploit the misperception that SS is a personal investment that people make that must be protected and not a tax-financed social program. However, I think it’s fair to say Bush would have a lot harder time selling with the former approach above than the later.
Damn coding.
rainwalker78, saw your post after I posted mine above. As to your points,
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I agree, if those proposing the plan would be forthright in what they are proposing and not explioit misperceptions. See above.
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You heard that from politicians (on both sides of the aisle) trying to engage in the same political BS that’s happening now. SS has been very stable for decades. As for waiting until 2040, that’s a false dichotomy. We can do something to make sure were OK in 2040. But we don’t need to scrap Social Security in order to do it. We can gradually increase taxes, increase the retirement age as life expectancy increases (which we are doing already), or decrease benefits. I think we should do all 3, with an emphasis on the first and lasy (progressively. First by raising the cap on SS-taxable income, and lowering benefits for wealthy ). Whatever the solution, it doesn’t require drastic measures, and what Bush is proposing is not a solution but a replacement (or partial replacement) with something else.
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You CAN invest your own money. The governement provides plenty of vehicles inlcuding 401Ks and roth IRAs. Look, if you agree with the statement in my above post about what an honest description of the proposal being made is, i.e.,
“We don’t think the government should be involved in a pay-as-you-go, tax financed social beneifit program for the elderly , widowed and disabled. We think you should keep the some or all of those taxes and invest it yourself.”, I can accept that. I don’t accept it, but people are entitled to have different opinions. Unfortunately, this administration is stifling honest debate by pretending they are fixing some eminent crisis (sound familiar?)
Thats mtgmans quote.
justwannano , sorry about that.
In other words, you have no money in the bank, despite what your statements say, because they loaned it all out as mortgages? And that gives them grounds to refuse to let you make a withdrawal?
There is a Social Security Trust Fund (remember all the stupid “lockbox” arguments a few years back)? It has assets consisting of Treasury bills, which represent debt on the General Fund of the Treasury.
Perhaps one of the lawyers here can explain to you the difference between your personal bank account and money you hold in a fiduciary capacity, as trustee for another beneficiary?
The concept is not too difficult to grasp, I think.
Lemur, I am quite well aware of the fact that Social Security payments are a tax, not some kind of government pension fund. But any ethical government honors its obligations – I get regular statements from SSA advising me that I have enough quarters in to get thus and so (retirement, disability, etc.).
Essentially, what I’m saying is that our government has collected Social Security tax from me and others and publicly stated for years that part of the reason for the sum collected was to be able to pay out to citizens paying such taxes as they reached retirement age. It is a reasonable expectation for such citizens to believe government statements of this sort, and to make future plans with this in mind. There is a moral obligation to pay out Social Security to such people.
Abbie Carmichael, as a Boomer who is childless not by choice, I cannot express my disgust at your post.
Quite so, and we’ve already set pretty high barriers to keep them from defaulting on it in the first place(see the OP’s cite of the 14th amendment). I don’t believe for a second that Bush intends to default. Doing so intentionally would be a blatant violation of the 14th amendment and he would be impeached and imprisoned for sure. There is just one sticking point.
I think he may not be able to help it. The money is gone. It is spent. The only way he can pay back the securities the SS trust fund owns is to either cut other items out of the budget(freeing up some general money like Clinton did and actually paying back the securities, as Clinton urged Bush to do when he left office) or to sell more securities(literally passing the buck to whoever buys those securities). The number of people, organizations, and nations willing and able to buy said securities seems to be dwindling.
As to the merits of Bush’s plan for allowing some tax money to be diverted to private investments, I really don’t have much of a problem with it. I prefer private investments myself and I have zero confidence in being able to draw SS benefits when I retire in forty years or so. I have no objections to some small percentage of the trust fund being used for private investment. Not all of it, but enough for a pilot to see if better returns are achievable. Currently any monies surplus from current payments draw the current T-note interest. It is generally fairly easy to beat T-note rates with a diversifid portfolio. Even a small portion of the trust fund would represent one of the largest portfolios around.
No, I’m not SS hardliner who fights against any change. Far from it actually. I even tried to keep my kids out of the system(which will likely be a footnote in history by the time they retire) by not getting them social security numbers. Man was that ever a mess and is that ever a long story that I don’t want to get into here.
Enjoy,
Steven
Ya know back in the 60s when I was around your age I was certain SS would not be there when I retired.It was in serious trouble. Well its still around. They have done some tweeking since then and the whole system is currently healthy.There are gonna be some ups and downs. What you cannot do is let some politician get a strangle hold on it.
I’m quite surprised at how many want the system dismantled. Thats what GWs plan will do. It will turn SS into a quaint government program that will only supply pocket change when a paycheck is needed.
If it is necessary to raise taxes,excuse me contributions,now , then do it. I’m OK with it
.Prod your president to eliminate pork. Pay back what he owes the SS. And leave the necessary programs like SS healthier not weaker.
Treasury bills are not the government loaning money. They are the government borrowing money, which has to be repaid with interest. It is an IOU, as I mentioned. It is not a fund that has been built up. IOW, once Social Security begins to spend more than it takes it, the government will not only have to come up with the money to pay benefits, but also the money to pay the interest on the T-bills. They are not generating future revenue, they are incurring future costs.
This is the coming crisis that Bush is talking about and Democrats are eager to deny. And, contrary to RTFirefly’s stupid misrepresentation, Bush is not questioning the obligation of the government to repay that in any way, shape, or form. He is asking how we are going to meet this obligation that, as Bush mentioned and manhattan emphasized, we have to pay.
Liberals would prefer to meet that obligation by raising taxes, which is their default response to pretty much anything. Republicans are coming up with new ideas that would not only resolve the crisis on the long term, but do so in such a way as to provide a better return on the “investment” than 2%.
Social Security is the least progressive of federal taxes. I cannot understand the determination of Democrats to retain and increase it, despite all their rhetoric about tax “fairness”. Unless their other principles - “government is more important than people”, “soak the rich”, “bureaucrats know how to spend your money better than you” - are taking precedence.
Regards,
Shodan
Yes Apos we had a flat tax all this time. The surplus created by the 1983 raising of the Social Security taxes has been spent on war and subsidizing income tax cuts, both of which are deeply immoral ways of spending money that was not meant for either purpose. These were effective transfers of Social Security funds into general revenues. Having blown it, they now want to renege on paying it back from general revenues - as has been pointed out above, the general revenues portion of the Federal budget would have to go on a diet when outgo is greater than income starting around 2018 or so - by instituting this plan.
A morally bankrupt solution that involves ratifying the remarkably incompetent and irresponsible economic policies of the past four years. It emphasizes the radicalism of the right, in contrast to a half century ago, when Eisenhower created the postwar bipartisan consensus by not going after Social Security when he was elected as the first Republican president since the New Deal.
This kind of moral bankruptcy used to be radical fringe territory; the current swine resident on the right have now managed to make it look respectable. Lipstick on a pig.
Mike H It’s not cynicism, it’s realism.
A) At the current pace, some time in the next 40 years or so Social Security will be taking in less money then it needs to pay out AND will have no surplus.
B) In 40 years or so, I will be in the correct age bracket to qualify for Social Security payments.
A+B=C
C) IF nothing is changed, there will not be enough funds available to make payments to me and my age-group, at the currently funded levels.
The options I see? rainwalker78 said it well.
Yes, eventually we’ll have to make some changes to the Social Security System.
Partial privatization is one possible change. And, as previously mentioned, so are gradual raising of the retirment age, raising the amount of income subject to SS tax, and reducing the rate at which we increase of benefits. I’m sure there are other ideas out there as well.
All of these options and ideas deserve to be fleshed out, evaluated and debated in public forums.
My question is:
What is the real reason Bush is pushing the privatization angle?
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He’s investigated everything and believes privatization is the best of all possible solutions?
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He genuinely cares for today’s 30-year-olds and wants to ensure that when they turn 67 in 2042 they will get more than they’d get with today’s system?
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He wants to help his buddies on Wall Street?
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He hates SS because it was invented by the Dems?
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Something else?
What is Bush really thinking?
** Tastes of Chocolate **
Well yes, sometime in the next 40 years, Social Security WILL be taking in less money than they payout. And it may be around 2018, as Bush keeps saying. But you know what? They planned for this little eventuality . That’s what the SS Trust fund is for. In fact, it’s happened before in the past as others pointed out, and the sky didn’t fall then either. They just dipped into nest egg that the trust fund has been building. It IS cynicism to exploit a fact like “Social Security will be taking in less money then it needs to pay out” (In any GIVEN YEAR) , when the system is already built to accomodate this with the Trust Fund.
It also cyncism, ** Shodan ** , to exploit the fact that the SS Trust fund is invested in Treasury Securities and say “well gee! There is no way the Government can repay all that debt thats owed to SS!” when (a) The government is constitutionaly bound to honor that debt and (b) the solution being proposed by Bush is NOT to shore up the SS Trust Fund by investing it in something more secure than Treasuries (which would be what exactly?), but instead to divert money going into the trust fund into the private sector. Do you honestly think the SSA would have a better time collecting on Enron stock than T-Bills? It’s also a real act of hubris to run up the National Debt in the first place and then go “We can’t pay that back!” (And he’s not just saying it to the SSA trust fund, in effect the American people, but to anyone else holding our notes, foreign investors , sovereign governments, etc. Way to give them confidence in our credit, George. But you didn’t think of that, did you?). Also, Shodan, Bush has said that he will guarantee benefits under current law to those over 55. How do you think he’s going to do that AND allow the yuppies to fund their quasi-goverment run mutual funds* with their FICA taxes? Your choices are raise taxes or borrow it (thus ADDING to the national debt). Given your anti-government anti-tax diatribe posted above nad your lack of faith in the goverment to honor is debt, that puts you in quite a pickle, doesn’t it? Unfortunately, our President thinks the same way as you do.
Nobody is saying nothing should ever be changed. But it is a false choice to say that because something we knew was going to happen anyway and was planned for (What Bush is calling the “Bankruptcy” of Social Security in 2018) means we must take a drastic step that won’t solve the problem anyway but add to it. As I said in this thread and the one on what you would change to SS, there are small tweaks that can be made, including, yes, raising FICA taxes (Yes, Shodan is now hissing like a vampire touched by a crucifix). BTW, I don’t think SS taxes can be called a flat tax or even “least progressive” when you don’t have to pay ANY taxes over ~90K . That’s a highly REGRESSIVE tax if you ask me. If we were to make SS a truly flat tax (including things like capital gains), then we wouldn’t have anything to worry about for the next 100 years. You could even let people invest some of it in stocks, junk bonds, or gamble it away in Las Vegas. But that’s not what you had in mind, was it ** Shodan ** ?
*Ooh, and how about the irony of free market, capitalist, conservative Republicans proposing governement run mutual funds? Don’t want the government “making your health care choices”, but it’s ok for them to make your investment choices huh?
BTW, I realize I quoted you **, Tastes of Chocolate **, but was slamming Shodan for what he said in his post . I certainly didn’t mean to slam you-- , just to respond to your posts which made me think of the things Shodan said. Hope no offense is taken.
Yep, Mike H, the irony of all this is that we have a system that’s actually quite close to perfection, since everyone gets to do what they want/are capable of to fund their retirement.
Those making less than the SS limit, who probably have a tough time saving on their own, know that SS will be there, if we do what we need to do to keep it there, which is not all that much, really. It does call for discipline and forethought in the management of general revenues to keep SS as is, though, qualities sorely lacking in the current Administration, so it’s hardly surprising they would propose a crazy scheme that involves borrowing trillions of dollars to fund a retirement plan that if left alone is currently running in surplus, and will continue to be in surplus for more than a decade longer than today. Borrowing is their answer to everything; it’s the only thing they really know how to do.
Those making more can fully fund their 401k’s, thereby relying for the lion’s share of their retirement on what they can save on their own. The limit on these this year is 14,000 dollars, an amount large enough to fund most people’s retirements. If you don’t have a plan at work you can do IRA’s or Roth IRA’s. Business owners can do SEP IRA’s, which have a much higher limit.
This whole privatization scheme is like the space shuttle: a solution looking for a problem.
Emphasis added.
Arg. What I really want to emphasize is that just because [Chris Farley Mode]we “have” a “surplus” in “our” social security “trust fund” it doesn’t mean anything.
Sure, in the future social security will have a revenue stream from both social security taxes and the t-bills. What people don’t take into account is that future taxpayers will have to pay for that revenue stream with increased income taxes.
Pantom (despite the wailing and gnashing of teeth) has a point. Creating a “trust fund” is really just another way of saying that social security taxes and general revenues are commingled. Right now we are paying a portion of our general expenses out of what we call “social security taxes”. In the future we are going to have to pay a portion of our social security expenses out of our general fund. But the money has to come from somewhere, and that means out of the pockets of the taxpayers. Yes, the money is guaranteed to be there…because future taxpayers will have guaranteed to pay it. Or rather, we today have guaranteed that taxpayers in the future will pay it. What they have to say about it remains to be seen.
And of course Pantom is also right that because of the way social security taxes are structured, they are a very regressive way to pay for general revenues. It would make far more sense to adjust the social security tax every year to pay for that year’s social security payments. Wait, no it wouldn’t. It actually it would make more sense to scrap the social security payroll tax and fund social security payments out of general revenues. The amount of social security payments and the amount of taxes to cover those payments would be decided politically, like all payments. That would be the biggest way to reintroduce progressivity to our tax code.
But he’s wrong that all we have to do is keep the current system and we’re golden. We need to stop the pretense that workers are paying for their own retirements. They are paying for current retirees, and they will always be paying for current retirees. Scrap the separate regressive tax for social security.
And recognize that as we have more and more retirees and fewer and fewer workers, there will be fewer workers supporting more retirees. That means either higher taxes on the workers, or lower benefits for the retirees. If the economy in the future is much larger, then higher taxes on the workers will be sustainable. But if the tax burden is too high eventually the workers are going to storm the nursing homes and force a reduction in payments. Either that or a general economic collapse as taxes approach 90% and the entire economy goes off the books. Simple demographics.
Well, lemur866, the thing is, the entire economy has that problem, not just Social Security. Stocks, bonds, real estate - you name it, if you have the kind of selling pressure on assets you’re going to have problems. One of the logical disconnects here is that if the number of people of working age supporting people in retirement declines, it affects everything, including the returns on stocks that this whole scheme is dependent on. You are simply not going to make those returns if such large numbers of people are retired, which kills the whole basis that this privatization scheme rests on.
And actually, you’re right that just funding SS out of general revenues would make the most sense, but it’s funded the way it is as a compromise, so that the tax is paid by the people who get the most benefit out of it. It was a way of getting it passed, and a way of keeping support all these years. It’s a telling measure of just how radical the right has become that even this isn’t enough for them anymore. It’s also a measure of the dishonesty of all this that they see nothing wrong with subsidizing their income tax cuts from the regressive Social Security tax, and then call repaying what amounts to a loan to general revenues that is being used for this specific purpose, and for the Iraqi war, a shortfall in Social Security.