Social Security taxes

Cecil's Columns/Staff Reports
21

No, you don’t get it.

That the Federal Government is borrowing money is not altogether a good thing (it’s not altogether a bad thing, either, since it’s become such major factor in the economy that to stop it cold would cause a complete collapse of the whole system). But they’d be borrowing it anyway, and the debt would be coming due in 20 years time anyway.

Anyway, let’s face it. On the assumption (a risky one, in this day of sound bites, slogans, and general illiteracy) that you actually mean what you say, your language shows you to be some kind of anti-government loony to begin with. So why don’t you just be honest and admit it.

John W. Kennedy
“Compact is becoming contract; man only earns and pays.”
– Charles Williams

22

Ya know guys, its really stupid to argue with Cecil in the first place (I know this from personal experience). Its even stupider when it becomes obvious you are not even familiar with what Cecil is saying - and with what three others of us have been trying to explain in different words. The government is going to borrow the money one way or another. SSA is going to invest money one way or another. There is nothing more to it.

23

This is a flat-out lie.

Treasury bonds are sold to millions of private and corporate investors. They do not have to sell debt to the SSA.

24

Hopefully this will clear up some of the confusion here. Let’s compare two plans using the figures I posted before. (I admit I made them up but the real figures would yield the same results.)

Plan A (the “pay as you go” plan)

In 2000, $90,000,000,000 is paid out in SS payments. $90,000,000,000 is collected in Social Security taxes.

In 2020, $110,000,000,000 is paid out in SS payments. $110,000,000,000 is collected in SS taxes.

The net results are $200,000,000,000 is collected and $200,000,000,000 is paid out.

Plan B (the simple version of the “pay in advance plan”)

In 2000, you pay out $90,000,000,000 in SS payments. You collect $100,000,000,000 in SS taxes. The surplus $10,000,000,000 is spend on other things.

In 2020, you pay out $110,000,000,000 in SS payments. The $10,000,000,000 surplus from 2000 was spent on other things and is gone. You therefore collect $110,000,000,000 in SS taxes.

The net results are you collected $210,000,000,000 in SS taxes in order to pay out $200,000,000,000 in SS payments.

Plan B2 (the more detailed version of Plan B)

In 2000, the government collects $100,000,000,000 in SS taxes. The government pays out $90,000,000,000. The government buys $10,000,000,000 of Treasury Bonds with the surplus. The government takes the $10,000,000,000 it just received as income from selling these bonds (to itself) and spends it on other things.

In 2020, the government has to pay out $110,000,000,000 in SS payments. The government decides to cash in the $10,000,000,000 worth of Treasury Bonds it bought back in 2000. In order to pay off these Treasury Bonds, the government raises $10,000,000,000 through taxes. The government then raises the remaining $100,000,000,000 it owes on SS also through taxes.

The net results are the same as Plan B.

The bottom line is you have a choice of paying out $200,000,000,000 worth of Social Security by collecting $200,000,000,000 or $210,000,000,000 in taxes. Which is a better idea?

Now you might argue that the “other things” the government spent that surplus $10,000,000,000 on were good things that deserved to have money spent on them. Maybe so, but I think the government should have openly raised taxes for those purposes rather then raising it for one reason (Social Security) and spending it on something else.

25

No one is arguing that at all. Show me where someone says what they are spending the money on is ‘good’. What we are saying is that they are going to spend it one way or another, and they are going to sell debt one way or another. What difference does it make who they sell the debt to? The government IS openly raising money - and spending it on what they say. In 2020, that $10 mil will be paid back with money from income taxes rather than from SSA taxes. It really doesn’t make a difference one way or another.

26

John W. Kennedy:

and:

You refer the SSA and the US government as though they are two separate entities–clearly the view of an entrenched bureaucrat. Once again, there is no ‘investment’ here-the SS surplus is given over to the Federal government who then squanders it. From one pocket of the same pair of pants to another. When repayment time comes, the money will again be extorted from the American people.

“No, its not foolproof…unfortunately, fools are very clever people.” --Joseph Caro

27

Right, whereas if the treasury bonds were sold to private individuals or corporations, then come repayment time the money would be…

what?

28

Private individuals and corporations do not have the power to tax.

29

You are a lunatic.

Please go away.

John W. Kennedy
“Compact is becoming contract; man only earns and pays.”
– Charles Williams