Debaser: You take SS’s “nonsustainabilitiy” as a given. Where did you get that idea? It’s been sustained for seven decades already, for the very good reason that income (not recipient/contributor ratio, income) has always matched outgo. That’s all it takes.
You go on to say “Certainly, the overall concept of round after round of participants paying for their predecessors is very much the same.” No, it is not. I already laid it out for you. What part of “exponentially-increasing number of entrants” in the definition of a pyramid scheme don’t you understand? Every round of payouts typically doubles the required number of new entrants. That’s “very much the same” as SS my pasty white butt.
Same goes for you too, pervert. You both seem intent on disparaging the program as fraudulent and doomed, another thing I already pointed out. You would know better if you read what was given to you instead of listening to RW talking heads try to make you feel better about cutting your own taxes, consequences be damned.
The discussion both in this thread and nationally is about how to fix a weakness in the system, not destroy it, something only a small minority even of Republicans want to do. Do you have anything of substance to contribute on-topic?
There was never any need to sell the idea of Social Security to the middle class. It was the Great Depression, after all. The elderly of Middle America were often in dire straights. The program was one of those dangled to keep the middle class from becoming the revolutionary class.
Originally it wasn’t conceived as pay as you go. They tried to allow a trust fund to build up but there were those people demanding relief now so the system started working the way we have come know it. That is, it started to work. Period.
I think your idea is quite sensible, THespos. Conservatives pimp the flat tax at other times. How come it ain’t good enough here?
I don’t agree that this would condemn it to the status of just another welfare program since everyone who reached retirement age would still get a check and not just po folks. The stigma of welfare comes when getting help “regular people” don’t. I think BobLibDem’s suggestion of means testing ( that is- determining the income of the recipients so those who need it less get less or none ) would lead to the stigma and thus should be avoided.
I have a solution for the salary cap problem that i haven’t heard mentioned anywhere on these boards, in the media, or in politics. First, let’s look at the problems.
The problem with the current salary cap: The poor and middle class get screwed, as they pay a huge portion of their paycheck compared to the rich. Additionally, it doesn’t raise enough money to keep the system solvent.
The problem with raising the cap: The upper-middle class gets screwed, while the rich feel barely any effect.
The problem with eliminating the cap: The rich get screwed. Although this may not seem like a bad thing to many people, while i think the rich should pay a greater share in running the country, i think they should also be able to enjoy their money.
The ultimate solution: Tax the normal rate (approx. 13%) up to the salary cap (currently $90,000), then tax a lower rate (around 3 or 4%?) for any additional income over the salary cap. In this case, everyone gets screwed fairly equally and it would be a big jump in solving the SS problem.
No ElvisL1ves, Goddamnit, no! You need to educate yourself.
It has become a Ponzi scheme. Prove me wrong by showing me the stats that show the retiree’s of the Boomer gen will be compensated by my generation at the present rate. (I say my generation because you just have to be the youngster).
My generation is going to get pimp-slapped by SS taxes trying to support them all. And I’m the oldest in my family! Nobody gives a shit about the tens of thousand’s my parents have paid in with no benefit save for the $255 funeral payment. Where did that money go?
If you’re too dense to see that it’s your money deducted from your check every pay period and still refuse to have any say in where it goes, there really is no debate. I just don’t understand why people sit back and let the government take money arbitrarily without questioning why it’s not being put to better use.
Anyone have a 401(k)? How’s the retirement looking comparing that to SS?
Ah, no. Not at all. Social Security has only lasted seven decades because of regular tweaking by congress. They’ve pumped money into it and raised the rates of payroll taxes in order to keep it afloat. (It started at only a 3% tax, not the current 12.4%.) Even now, it’s generally agreed to by everyone that SS is doomed to collapse unless we change something. (Older retirement age, less benefits, tax the rich, etc). You are ignoring reality to claim that everything is OK, and the system will keep working indefinately.
Yes. It is. That’s how SS works. I’m a worker. I’m paying SS taxes that go to the current retirees. Then, when I retire, the current workers will be paying for me. This isn’t in dispute by anybody who knows what they are talking about. You should really read up on the program. It makes sense to at least know what you are talking about before you enter into a debate on the subject.
Your cite doesn’t say this. My wilkepedia page doesn’t say this. I just checked and dictionary.com doesn’t include this in it’s definition of “pyramid scheme” or “ponzi” scheme.
Where are you getting this “exponentially-increasing number of entrants” from? This is not a requirement of a ponzi, or pyramid scheme.
Pyramid schemes usually count on a geometrically increasing base (not exponentially increasing), IIRC. Each person brings in two (or more) people, until the whole thing collapses. SS isn’t quite that bad, but still has the problem of an increasing number of beneficiarlies relative to the contribtors.
A geometric increase is linear. Participants-vs.-time in a pyramid is a second-order curve. A pyramid is automatically doomed to collapse, and is therefore automatically fraudulent, because it inevitably reaches a population limit in only a few generations. It *cannot * be sustained, no matter what.
SS has been sustained for all this time because it is sustainable, it faces pressures but not hard, unbreakable, unavoidable limits. The comparison to a Ponzi pyramid is false, and those who spread the notion are subject to having their motivations for doing so questioned.
Debaser, can you confirm for us that you’ll stop accepting your checks as soon as they’ve matched your lifetime contributions?
A geometric increase isn’t linear-- it’s doubled on each iteration. 2,4,16,32,64… A linear progression would be 2,4,8,16,32…
A pyramid scheme can easily increase more rapidly than a geometric progression since it can more than double during some iterations. But it doesn’t really affect the ultimate outcome.
And you’re right about the unsustainability. It’s the same thing that led Malthus to his conclusions about population increases, and crashes.
I’m not arguing with your conclusions, just want to get the math right.
I’ll do you one better. Just doing some quick math: I’ve paid in about 31,000 into Social Security so far. You can keep it. That’s my contribution to the system. It can go towards the existing retirees. (In fact, it already has.)
The state run TV here in PA is showing a town meeting on Social Security by the PA AFL-CIO. Their top suggestion for reform is to raise or remove the wage cap as THespos asked about. The speaker claimed it would completely eliminate the funding gap over the next 75 years. I’ve heard otherwise too, that it wouldn’t quite do the job ( but repealling the Bush tax cuts would! ) I guess that again it depends on which economists you talk to.
Like I said, it’s “Pay As You Go”. The money has been spent ( or lent to the Treasury to be spent later ).
I’m all for people understanding how SS works but the last way to go about that is to compare it to a retirement account. Retirement investments build wealth by managing risk. Risk as opposed to security. There is no risk involved in SS. There is a defined benefit no matter what happens to the markets. Find an investment vehicle that promises defined payouts no matter what and compare THAT to Social Security. What’s that? Payouts would be less because the government, not needing profits, can operate on a slimmer margin? Huh! Well then, now you know why people sit back and support Social Security. Because it works.
False. The government could default on the payments. Politicians could change the laws. There’s risk in everything. But, actually government bonds and t-bills actually have a promise from the government to pay you, so these have much less risk than SS which does not.
OK. Social Security gets beat by money market investment vehicles. T-Bills, T-Bonds, State Bonds, etc. These things are actually less risky than SS, since they promise to pay and can’t be broken unless the government collapses. The return they offer is also much better than the return of Social Security.
Of course, the market offers a much greater return. But, if given the choice between existing SS and an investment in T-Bills, any reasonable financial planner would choose the T-Bills. It’s a no brainer.
It seems clear that many people who are opposed to privatization simply have no idea of basic financial and economic facts. If people in this country were better educated about finances and the benefits of compounding interest than the voters would be storming washington to demand private Social Security investment accounts.
Anybody who wants an IRA can have one, tax-free. Most anybody who wants a 401K can have one, similarly tax-free. There’s nothing stopping anyone from starting a privatized, risky, unguaranteed pension plan if they want. But we still have to fund a guaranteed one.
The notion Debaser sets before us that SS is more likely to default than the Treasury is just silly. It is not politically conceivable that either party would stiff such a large group of committed voters, or even let it be considered for that matter.
Incidentally, friend, the SS fund effectively already is invested in the other government debt instruments you mention, and already is earning those high returns that fascinate you, to whatever extent they’re real.
The point of refuting the common Ponzi-pyramid analogy, if it isn’t clear, was to get into the motivations of those making it. It is certainly much easier to rationalize eliminating a system instead of fixing it if you can make it accepted wisdom that by its nature it *cannot * be fixed. That’s clearly the intention, and it’s just as clearly a lie. It would help the cause of the drown-it-in-the-bathtub gang much more to explain why they want it eliminated, why their ideology demands it - but then, having made their case honestly, they’d have to accept its resounding rejection (which is happening anyway), and that isn’t in the nature of an ideologue.
Possibly, depending on how it’s done. Of course, these shortfalls could be made up for in many ways, such as the OP’s suggesting of ending the upper limit on the tax.
False. The government could borrow more money to cover expenditures. It could also do many other things such as ending the upper limit on the tax, increasing the retirement age, or tying benefits to inflation rather than wages.
False. (Extention of #2)
True!
False. It’s clear from reading threads on the SDMB that many people against privatization are completely ignorant about finance and economics. It tends to be the more savvy investor types who would prefer privatization. I favor it, and my Bachelor of Science in Business Administration came from a top three business specialty college and included a concentration in Finance. If you don’t like me as an example, then I give you Alan Greenspan. He’s in favor, and he’s certainly not ignorant about finance and economics.
Dude. You have entirely missed my point. I was specifically trying to point out to Debaser that while SS shares some characteristics of a Ponzi scheme, it is not a Ponzi scheme. In that regard I was agreeing to you. See below for more.
Meanwhile your constant calls for me to educate myself would sound more intimidating if you had bothered to read * your own cite*. You claimed that Ponzi schemes require a non linear number of new entrants. This is not true. The cite you gave to back up the assertion does not. I pointed this out to you with quotes from your own cite and you simply repeated the assertion. Would you do us the courtesy of pointing out where in your cite “geometric”, “exponential”, or any other phrase which indicates a growing number of new participants?
I don’t think this is accurate. The T-Bills that the treasury department issues to the Social Security Administration are actually Special treasury bills identical to those that you and I can buy with the exception that they have a slightly higher interest rate and you and I can not buy them. They have the same force of law behind them. Defaulting on them would be similar, politically and economically, as defaulting on genreal T-Bills. In fact, I could argue that defaulting on these T-Bills might be worse than defaulting on others. Since no foriegn interests own them, we could not use any sort of national defense excuse (not that such an excuse would hold much water).
On re reading, are you talking about the “debt” that SS owes to retirees rather than the debt the government owes the SS?
You miss the point. The government is taking 12.4% of my income to this plan that I don’t agree with. Money is tight for most people. If I had that 12.4% to invest on my own, I would be able to almost double the amount I’m putting into my 401k and IRA.
BTW, IRA’s and 401k’s are certainly not tax-free. They can be tax deferred. This means that you don’t pay taxes on the money going into them. But, you do pay taxes on the money you take out. Also, you pay taxes on all of the compounding interest on that money that you made. Then there’s Roth IRA’s, which don’t take taxes on the back end, but do not give a tax deferment when you contribute.
So, at the end of the day, the government gets it’s money.
It’s not silly at all. The government could default on Social Security. They are actually considering making dramatic changes to it right now. A lot of things could happen in the 40 years before I’m planning on retiring.
The government defaulting on T-Bills is much less likely. These have an actual promise to pay, something that the Social Security system does not. They are much more secure of an investment. Really.
I’m not making this up, and what I’m saying isn’t controversial. Any person who knows what they are talking about would agree with me. You betray your own ignorance by arguing against such a basic concept.
This is true, kind of. The money paid into the system is immediately paid out to retirees. However, sometimes there is money left over. When this happens, that money is indeed invested in government money market investments. However, this is only happenning with the leftovers. It’s not even close to the same thing as taking a persons investment dollar and putting all of it into these types of investments and letting it grow and compound over time. Basically, you are comparing a cab ride to owning a car.
Oh, I know… We’re evil. :rolleyes:
(I don’t like the new rolleyes smiley, so please just visualize in your head the old rolleyes smiley instead.)
Oh, I see. This is the part where we make up stuff about eachother randomly?
The system as it’s currently set up is fundamentally flawed. I’m not lying when I say that. It’s true. (Notice how even though you disagree with me I’m not calling you a liar back?) Private investment accounts make a whole helluva lot more sense for a myriad of reasons than the existing flawed system. However, I don’t want to scrap the system. Obviously some of you like it, and that’s OK. You can keep it. I just want to get my 12.4% back, so that I can choose an investment option that doesn’t suck.
