Good luck. I’ve pointed it out also, with cites, and he hasn’t responded to me either. A retraction is in order, but I’m not going to hold my breath.
Really? Anyone? I’m sure those in the lowest income groups will be happy to hear this. 
Well, this is exactly how the current law reads. When the trust fund runs out the law specifically calls on the SSA to lower everybodies benifits so that the system stays solvent. I agree that no one will let this happen. But it requires changes to prevent it. Investments in other vehicles do not.
True enough. As I said, the trust fund is invested in special Treasury bills. However, since treasury bills are paid back by taxes, this does not alleviate any tax player burden.
Yes. I understand this. The problem, of course, is that you have not refuted the Ponzi similarity allegations at all.
Ok. Let me rephrase what you are saying regarding the “risk” of SS to see if I understand.
You are comparing the risks of investing in some other vehicle (T-Bills, Mutual funds, and the like) with relying on SS payments. In order to make the comparison fair, we should probably postulate a private investment which would match the expected SS payout. In order to simplify it, we should probably use T-Bills. So, if a private individual invested 12% of his income in T-Bills while another simply paid into the SS fund. Ideally, the person investing in private vehicle would be exempt from paying into SS (as well as being exempt from recieving benifits).
In this sort of idealized scenario, it seems to me that the risk is pretty close to even. I think you might be right that SS has a slightly greater risk. The government could lower benifits or increase the payments without increasing benifits. It seems very unlikely that this would be done on a short term basis. As I said above concerning the current law, most everyone agrees that the SS shortfall will be addressed years before it occurs. What I mean is that any changes in the payment / benifits ratios will be much longer term than is indicated by terms like “default”. This risk does not seem very great to me in other words.
Meanwhile in order for a similar thing to happen to the other investor, the government would have to enact some sort of new profit confiscation scheme. I think I agree that this is even less likely. So, I agree that SS has a slightly higher risk (as an investment) but I think that they are pretty close.
Of course this changes in either direction if we assume more risky investments by the private investor or different ages for the SS investor.
Have I missed anything?
Of course, the private investor has other advantages. His heirs get the benifits of his investments even if they have reached the age of majority or are not his spouse. But in terms of risk, I’m not sure this factors in.
Tell us, O Wise One, what they’ll depend on in their old age under a privatized system, having depended upon voluntary contributions in their working years that had to compete in their budgets against food, clothing, and shelter.
Exactly why SS needs more cash coming in. We’re together so far.
Freudian slip? Yes, the total bill is not alleviated. The looting of the trust fund that had been planned to prevent that forces pay-as-you-go to continue into the burdensome range. Both parties have been responsible for that over a long period of time. Unfortunately, not both parties are willing to address it responsibly at the moment.
IOW, benefits are reduced, while number of recipients is greater, with the difference being made up in Enron dividends. You can see why this plan is not in fact “under consideration” but circling deep down the drain already, right? Debaser, you chime in with “They are actually considering making dramatic changes to it right now.” Um, no, not really, not anymore - for the same reasons that your idea that the government could realistically default is, as I already said, silly.
Tell me what part you’re having trouble with and I’ll try harder. Is it the idea that every generation in a pyramid requires twice the number of entrants as the one before, until you get to a generation requiring more entrants than the population of Earth? Is that what anyone is seriously comparing to Social Security? Or *you * have a go at it, how about it? Perhaps, Debaser, you can favor us for once with your *own * definition of “Ponzi scheme”, or for that matter of any other term you like to use to simply derogate rather than explain Social Security. But this shit is getting you nowhere in a hurry.
It’s going to be underfunded in a few decades with no changes in the numbers, yes, unless the underfunding pressures created by the Reagan/Dubya deficits are eased. But your idea of “fundamentally flawed” is that it’s fraudulent, doomed to collapse, hopeless, nothing to do but gut its corpse and trust in the NASDAQ instead. That is a lie, and I don’t mind calling you out on it.
Nope. You’re dead on, and I agree with you 100%. I’d say that SS clearly is a higher risk than T-Bills. But, looking at the big picture, the difference is pretty small compared to stocks or bonds for instance.
Yes, there are many other reasons that an investment that an individual owns and has control of such as passing on benefits. But, even if you ignored all these other benefits and advantages, Social Security is more risky than government money market vehicles.
This remains a fantasy of yours. Your own cite debunks this, as has been pointed out by more than one person. I’ve given cites that show it not to be true. It’s really odd that you keep clinging to this. It’s a loser. You’re wrong, and you’ve been proven wrong. Give up on it and move on to another point.
This is not my major problem with Social Security. My biggest gripe is that it is a bad investment. It doesn’t take advantage of compounding interest, and as such is wasteful and foolish. If instead of going to SS, our 12.4% went into private funds invested in even the safest of funds, we would be getting back far greater returns.
That is a silly strawman. It’s one thing to set that straw man up, but it’s really over the top for calling me a liar for something I haven’t even said. This really seems to be a theme of yours. Someone who is in disagreement with you = liar. If you need to construct staw men, even transparently silly ones, to prove your point then you do.
Forgive me. I thought that was the question I was asking you. Only not quite so snottilly.
You seem to be laboring under the impression that the trust fund was at one time meant to be put somewhere other than in Treasury Bills. Could you answer me where you think it was originally meant to go? Some sort of SSM (Social Security Mattress perhaps?
Well, we can agree on this too. Well, then again, probably not.
Sigh. No, this is not even close to a fair characterization of the plan being considered. Look, I tried to play fair and point out to Debaser points where his rhetoric seems to go too far. You seem to want to respond with even more inflated rhetoric from your side. Enjoy. I’d much rather discuss the issue rationally.
Yes. None of the cites brought up so far mention this. It seems to be a bald assertion of yours. Allow me to step in your direction for a moment. I agree that some Ponzi schemes and some Pyramid schemes have this flaw. Some keep it hidden while others are more up front about it. However, the fact remains that an ever increasing number of participants is NOT part of the definition of either Ponzi or Pyramid schemes. Allow me to illustrate.
A pyramid scheme could be constructed which required only a constant number of new entrants (and old entrants could re enter the scheme with their profits). The only thing we have to change from your assumptions is that later entrants have to pay more to enter.
No. The only aspect being compared to SS, as I said, was that money paid to current benificiaries comes from future benificiaries. That is any profits seen by participants are simply a result of new entrants into the system. Either in greater numbers or paying a larger entrance fee.
Ok, last one. I won’t do that anymore.
I really don’t see that the Reagan/Dubya deficits have anything to do with SS. With the possible exception that they make it more difficult to pay back the trust fund. But even if those deficits had never happened, we would still have exactly the same size trust fund to pay back.
I tell you what. Respond to whatever you want. I’ll consider that the last word unless you specifically ask a question.
You have to ask yourself: What percent of the workforce is capable of financing their own retirement if they had access to the taxes going into SS now? I don’t know what that number is, but my guess is that it is well over 50%. Given that, why the hell are we strapping ourselves into this straightjacket of a program? Put some significant restrictions on how the money can be invested to minimize the risk, and then finance the retirement for the poor out of general revenues.
Well, you have me here. There is always the chance the Republican leadership will succeed in doing something dumb like screwing up Social Security. Until the fools get themselves thrown out at the next election.
I was talking about private investments. The government can’t just start putting SS money into T-Bills for individuals because the people who have already paid in expect the government to pay out. The government can’t borrow its way out of debt. And if the GOP ever manages to implement their plan to borrow to cover the transition costs T-Bills are going to be a lot more risky and potentially lucrative investment. Because investors will lose confidence in our financial stability and interest rates will have to go up.
I’m no economist but I feel I do have a grasp of the situation. Enough not to be put off by the rhetoric of the enemies of Social Security anyways.
They’d only be able to invest money they’d earned or received, and could live only off the interest unless they knew when they’d die - and that’s happening later and later on average. SS payments are for life, and depend only on the continued existence of a working generation.
I don’t either. Who does?
It isn’t given. You already said you’re guessing.
That’s essentially how the system works now, pardner - SS itself puts the “significant restrictions” on investments by doing the investing itself. Money transferred to retirees does come out of workers’ pay already.
It doesn’t mean beans if you call the pay-as-you-go money FICA or general income tax, suit yourself - but that change would make the tax less regressive. Which is why the GOP won’t do it, of course.
And the answer, as it has been for 70 years, is Social Security.
Then what is? What risk-free private investments do you offer? T-bills? The money’s already there. You do seem to have a clearer idea of what Bush is proposing than he does - I’m laboring under the handicap of only being able to respond to what trial balloons he’s actually floated, and there just aren’t any that are more than handwaving.
Be very careful about responding to new “investment opportunities” in your spam. They’re still out there, and their operators say exactly that.
Ah, here we go:
That wouldn’t be a pyramid anymore, but an obelisk. It would also not hit any natural, unavoidable limits, as you say. But then there wouldn’t be any actual profits, either - just money being transferred around, not created. Get past that step, and you get past the doomed-to-failure fraud part, and you get a transfer payment system. But it is then not a pyramid or a Ponzi scheme.
The point about that name being used to denigrate rather than understand holds as strongly as ever.
Wait for it …
Well, there you go. The more revenue that has to go to paying T-bill holders, the less is available for all other purposes, and the greater the temptation to plunder SS while keeping it off the books. Interest payments on the national debt, the accumulated total of the deficits over the years, account for something like a third of the total budget. A third of the taxes you pay goes to pay for previous years’ irresponsibility, and the debt is increasing annually.
Much is said by the privatize-everything faction about “the miracle of compound interest”. That’s great if you’re getting it, but at the same time someone else is paying it, and they have their limits. That would be us taxpayers, of course.
I’m sure someone already brought this up but income tax is progressive while SS tax is regressive after 90k. Someone who makes 130k pays more in income tax and less in SS tax. At the end of the day I think most everyone pays about the same in taxes in all their forms, they just pay different taxes (the rich pay in income tax, the poor pay in consumption taxes, the middle class pay a mix of taxes).
Either way, medicare is a bigger threat than SS. But raising the cap doesn’t sound like a bad idea, especially since in today’s US 10% of people make 74k a year or more (its probably closer to 10% making 80k a year or more now).
Actually, the tax is still progressive to a degree.
Well, threat is probably a bit harsh. But I agree that medicare is in worse financial shape. However, this is primarily due to the fact that medical costs keep rising so fast.
Well, you’d have to alter the formula used to calculate benifits. Currently people are paid based on a progressive scale based on what they paid in. The scale is fixed so that poorer retirees (who paid less into SS) get more of thier wages replaced by SS (measured as a percentage) while richer retirees still get more benifits (measured in actual dollars).
Altering the benifits formula so that payments made on income over 80k does not count towards benifits calculations might sound like a good soak the rich scheme, but it really would represent a fundamental shift in what SS is.