Hi EveryoneAlthough I think some (maybe many)of you may disagree with this article on the future of Social Security, I think this a good Food for Thought commentary to be considered.Personally, having worked for a large State Governmental Agency for several years, it's amazing to me that they can plan/budge ahead for even one year, much less 27 years in the future! There are far too many unknown variables to even try to project numbers that far in the distant future IMHO.<snip>By Irwin Kellner, MarketWatchPORT WASHINGTON, N.Y. (MarketWatch) -- Contrary to widespread belief inside the Beltway, the Social Security System will not run out of money anytime soon. Here is the link to the complete article:http://www.marketwatch.com/story/beware-of-safeguarding-soci...BTW IF the Mayan Long Count Calendar is correct ~~ we all ain't got nuthin' to worry about anyways right? ;)Best Regards,Rich
they can plan/budge I meant BUDGET
Contrary to widespread belief inside the Beltway, the Social Security System will not run out of money anytime soon.... I'd rather have real money ... not the funny money that is stashed as IOUs in a West Virginia filing cabinet ...http://www.washingtonpost.com/wp-dyn/content/article/2010/08...Social Security, the trust fund and funny moneyBy Allan SloanTuesday, August 10, 2010There's real money, then there's funny money -- stuff that looks real but isn't.Today, let's talk about one of the world's biggest piles of funny money -- the $2.54 trillion Social Security trust fund. It matters now because Social Security revealed plans last week to tap the fund for $41 billion this year and will begin tapping it on a regular basis in less than five years.This year's cash deficit, the first since the early 1980s and the biggest ever, means the government will have to borrow money to redeem some of the Treasury securities in the trust fund. Even at a time when Uncle Sam is borrowing $1.5 trillion a year to keep his checks from bouncing, $41 billion is real money. Here's why the trust fund is funny money. Let's say I begin taking Social Security when I hit the full retirement age of 66 later this year. Because its tax revenue is below its expenses, Social Security would have to cash in about $3,400 of its trust-fund Treasurys each month to get the money to pay my wife and me. The Treasury, in turn, would have to borrow $3,400 from investors to get the money to pay Social Security. The bottom line is that the government has to borrow money to pay me, regardless of how big the trust fund is.
I agree, there is nothing to worry about. Here is another article on the same subject: http://www.nytimes.com/2010/08/16/opinion/16krugman.html?_r=...
The bottom line is that the government has to borrow money to pay me, regardless of how big the trust fund is.Hmmm. Would that be considered a kind of pyramid scheme?Shades of BernieBirgit
... I'd rather have real money ... not the funny money that is stashed as IOUs in a West Virginia filing cabinet ..My question is ~ How would you ever know since all current and future SS benefits will be electronically transmitted via Direct Deposit into your designated bank account? It's just a mind game brother .... just sayin'Best RegardsRich
My question is ~ How would you ever know...... have no fear ... the market will let you know when the entitlement chickens come home to roost. Last month, the IMF put out a paper that highlighted the fact that the US was bankrupt because of deficit spending and the entitlement programs. Their outlook was a bit grim as reviewed by economist Laurence Kotlikoff:http://www.kotlikoff.net/content/us-bankrupt-and-we-dont-eve...The U.S. Is Bankrupt and We Don't Even Know ItBloomberg 2010-08-10 Let’s get real. The U.S. is bankrupt. Neither spending more nor taxing less will help the country pay its bills.What it can and must do is radically simplify its tax, health-care, retirement and financial systems, each of which is a complete mess. But this is the good news. It means they can each be redesigned to achieve their legitimate purposes at much lower cost and, in the process, revitalize the economy.Last month, the International Monetary Fund released its annual review of U.S. economic policy. Its summary contained these bland words about U.S. fiscal policy: “Directors welcomed the authorities’ commitment to fiscal stabilization, but noted that a larger than budgeted adjustment would be required to stabilize debt-to-GDP.”But delve deeper, and you will find that the IMF has effectively pronounced the U.S. bankrupt. Section 6 of the July 2010 Selected Issues Paper says: “The U.S. fiscal gap associated with today’s federal fiscal policy is huge for plausible discount rates.” It adds that “closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 percent of U.S. GDP.”The fiscal gap is the value today (the present value) of the difference between projected spending (including servicing official debt) and projected revenue in all future years.Double Our TaxesTo put 14 percent of gross domestic product in perspective, current federal revenue totals 14.9 percent of GDP. So the IMF is saying that closing the U.S. fiscal gap, from the revenue side, requires, roughly speaking, an immediate and permanent doubling of our personal-income, corporate and federal taxes as well as the payroll levy set down in the Federal Insurance Contribution Act....Is the IMF bonkers?No. It has done its homework. So has the Congressional Budget Office whose Long-Term Budget Outlook, released in June, shows an even larger problem.‘Unofficial’ LiabilitiesBased on the CBO’s data, I calculate a fiscal gap of $202 trillion, which is more than 15 times the official debt. This gargantuan discrepancy between our “official” debt and our actual net indebtedness isn’t surprising. It reflects what economists call the labeling problem. Congress has been very careful over the years to label most of its liabilities “unofficial” to keep them off the books and far in the future.For example, our Social Security FICA contributions are called taxes and our future Social Security benefits are called transfer payments. The government could equally well have labeled our contributions “loans” and called our future benefits “repayment of these loans less an old age tax,” with the old age tax making up for any difference between the benefits promised and principal plus interest on the contributions.The fiscal gap isn’t affected by fiscal labeling. It’s the only theoretically correct measure of our long-run fiscal condition because it considers all spending, no matter how labeled, and incorporates long-term and short-term policy.$4 Trillion BillHow can the fiscal gap be so enormous?Simple. We have 78 million baby boomers who, when fully retired, will collect benefits from Social Security, Medicare, and Medicaid that, on average, exceed per-capita GDP. The annual costs of these entitlements will total about $4 trillion in today’s dollars. Yes, our economy will be bigger in 20 years, but not big enough to handle this size load year after year.This is what happens when you run a massive Ponzi scheme for six decades straight, taking ever larger resources from the young and giving them to the old while promising the young their eventual turn at passing the generational buck.Herb Stein, chairman of the Council of Economic Advisers under U.S. President Richard Nixon, coined an oft-repeated phrase: “Something that can’t go on, will stop.” True enough. Uncle Sam’s Ponzi scheme will stop. But it will stop too late.And it will stop in a very nasty manner. The first possibility is massive benefit cuts visited on the baby boomers in retirement. The second is astronomical tax increases that leave the young with little incentive to work and save. And the third is the government simply printing vast quantities of money to cover its bills.Worse Than GreeceMost likely we will see a combination of all three responses with dramatic increases in poverty, tax, interest rates and consumer prices. This is an awful, downhill road to follow, but it’s the one we are on. And bond traders will kick us miles down our road once they wake up and realize the U.S. is in worse fiscal shape than Greece.Some doctrinaire Keynesian economists would say any stimulus over the next few years won’t affect our ability to deal with deficits in the long run.This is wrong as a simple matter of arithmetic. The fiscal gap is the government’s credit-card bill and each year’s 14 percent of GDP is the interest on that bill. If it doesn’t pay this year’s interest, it will be added to the balance.Demand-siders say forgoing this year’s 14 percent fiscal tightening, and spending even more, will pay for itself, in present value, by expanding the economy and tax revenue.My reaction? Get real, or go hang out with equally deluded supply-siders. Our country is broke and can no longer afford no- pain, all-gain “solutions.”
There is nothing set aside. There was supposed to be but starting in the 1960s, LBJ and his merry band of Democrats began spending the SS surplus on other things and that practice has continued under every administration and congress since. There is nothing there. And now that the gummint is taking in less in SS taxes than it pays in benefits, the difference is being charged to your kids' and grandkids' credit cards. Krugman is a liar, plain and simple, who will say anything in defense of liberal policies, including contradicting himself. Much smaller deficits under Bush, for example, were going to sink the US, but vastly more enormous deficits under Obama are prudent and necessary.Germany and Britain are turning their economies around after putting in place plans to cut government spending. Canada has regained all the jobs it lost after spending cuts and tax cuts. We're doing the opposite and we are getting, and will continue to get, opposite results.The best way to shore up SS in the short term is to create jobs so more people are paying SS taxes. Small business, traditionally the American job engine, isn't hiring. Faced with higher taxes, more regulation (when they get the financial reform bill figured out), health-care mandates and an ever-increasing minimum wage, small business couldn't be more discouraged if the Democrats were trying to kill jobs on purpose.--fleg
Krugman is a liar, plain and simple, who will say anything in defense of liberal policies, including contradicting himself. Much smaller deficits under Bush, for example, were going to sink the US, but vastly more enormous deficits under Obama are prudent and necessary.Perhaps that's because there is no perfect answer, that is right for all times, til death to us part. Economics, perhaps more than any other discipline, is situational. I know over on your home board everything is black and white, always, there's a pat answer for everything and it never changes, but out here in the real world things do change.Bush's deficits were unnecessary. They accomplished nothing. The tax cuts allowed people to spend money in Chinese factories and South Korean sweatshops on flat-screen tv's and pricey jogging suits, and in trading up, ever up to bigger houses that developers were only too happy to build and private mortgage companies were only too happy to fiance and not look too closely.The current deficits are an attempt to stave off a massive deflation and credit contraction, the likes of which have not been seen for 70 years. The last time this happened and nothing was done, thousands of banks failed, unemployment went to 25%, the economy cratered for an entire generation.It's not "a lie" to be smart enough to tell the difference. It's vastly stupid not to be able to, however.
The best way to shore up SS ... so more people are paying SS taxes.I agree, raise the SS tax and do away with the cap so the affluent will pay more tax.
Krugman is a liar, plain and simple,I suppose he lied his way to a Nobel Prize, too.
I agree, raise the SS tax and do away with the cap so the affluent will pay more tax....mendomann... the only problem with your "solution" is the fact that if you confiscate more money from the rich in the form of higher taxes, then you should pay them a higher benefit ... and that higher benefit would soak up a large fraction of the additional $s that you have taken. If you choose to withhold the extra benefit due for the extra tax money paid, the system reduces to more of a welfare program than Roosevelt's vaunted "insurance" program intended. Besides, the extra $s is not a permanent fix ... it only delays the inevitable collapse by a few yrs because social security solvency is only calculated for the next 75yrs. In '82, when the Greenspan commission presented their "fix": significantly higher taxes, 65yr eligibility >>> 66 >>> 67, those changes did not a result in a "permanent fix" ... 28yrs in and the system is broken ... again. Any additional tinkering with the system parameters will result in a similar delay in the collapse ... but it will not provide a permanent fix. "The problem with socialism is that eventually you run out of other people's money" ... Margaret Thatcher
do away with the cap so the affluent will pay more taxLike so many other liberal policies, this one is a job killer--which will result in less SS tax paid rather than more. Why? Because successful small businessmen will find themselves paying around 65% in taxes on the next dollar earned (39.6% federal, 10.55% in CA or 11% in OR, plus now another 15% in Medicare/SS taxes). Given the responsibilities and liabilities that come with running one's own businesss, never mind the work, it just wouldn't be worth it for a lot of successful people to hire more employees to expand to the point where taxes get that high.I worked for H&R Block one season after I retired to get some language experience by doing taxes for Spanish-speaking clients. DW was still working at the time and we had some investment income, which put us in a high tax bracket. So I ended up keeping about 55% of what I made, even less if you counted transportation and other work-related expenses. Totally not worth it and if I had been doing it for the money, I would have stopped doing it.Hating the rich is a losing proposition. The Russian and Cuban communist parties couldn't make it work and the American Democratic Party can't either.--fleg
Like so many other liberal policies, this one is a job killer--which will result in less SS tax paid rather than more. Why? Because successful small businessmen will find themselves paying around 65% in taxes on the next dollar earned (39.6% federal, 10.55% in CA or 11% in OR, plus now another 15% in Medicare/SS taxes). Yes, that's why the economy was doing so poorly in the late 80's, after Reagan increased the social security taxes, and had an income tax rate higher than the ones you posted.And I remember how awful the economy was in the 90's, too, when the tax rates were higher than the ones you posted.Do you think everyone is as ignorant of history as you are?
raise the SS tax and do away with the cap so the affluent will pay more tax. I have another plan: phase out giving lower/non-earning spouses 50% of the worker's benefit (not the death benefit, I mean while both are alive). Even though I worked minimum-wage jobs until I had children, took 10 years out of the workforce to raise children, worked part-time for another 6 years while they were in school, and didn't have a professional job till 6 weeks before my 40th birthday, and then went back to part-time from age 52-55, when I retired(!)---I still earned well over 50% of my husband's SS benefit. The women I know who are/will take advantage of the 50% benefit are the wives of very high earners who don't need the SS taxes of lower-earning workers to shore up their retirements. We should phase out this benefit asap.
do away with the cap so the affluent will pay more tax.While I prefer no tax increases, if there must be one, let it be a VAT. That way people like mendomann, who are so happy to take away other people's stuff, end up feeling some of the pain themselves.France supports its "free" healthcare with a 19% VAT on most stuff, IIRC, and 8% on food. If you are so concerned about the well-being of your fellow man, you should be perfectly happy to get 8% less food for your money (or lower quality food) on their behalf, right?Of course, high unemployment comes with higher taxes, and that's why European unemployment is about where ours is now during good times. When you pay 19% more for everything, you buy less stuff. And the folks who make the stuff you can't buy because of the high taxes lose their jobs. Funny how that works.--fleg
<<Like so many other liberal policies, this one is a job killer--which will result in less SS tax paid rather than more. Why? Because successful small businessmen will find themselves paying around 65% in taxes on the next dollar earned (39.6% federal, 10.55% in CA or 11% in OR, plus now another 15% in Medicare/SS taxes).Yes, that's why the economy was doing so poorly in the late 80's, after Reagan increased the social security taxes, and had an income tax rate higher than the ones you posted.And I remember how awful the economy was in the 90's, too, when the tax rates were higher than the ones you posted.Do you think everyone is as ignorant of history as you are? >> For Goofy and his fellow liberals, the solution for every problem is higher taxes and the reason for every economic success is higher taxes. Seattle Pioneer
in the late 80's, after Reagan increased the social security taxes, and had an income tax rate higher than the ones you posted.Reagan's top income tax rate was 35%, down from the 70% he inherited and lower than the top rate will be in four months when the Bush tax cuts expire. That helps explain the economic boom that started early in his presidency and lasted until recently. Clinton raised the top rate to 39.6%, still way below the 70% it had been before Reagan.Reagan also closed down the loopholes that rich people used to dodge those high taxes. So rather than invest in tax shelters that produced nothing of value, just to avoid taxes, rich folks invested instead in the free market and got us out of the Carter malaise. The Social Security tax never hit "rich" people because it was capped, so that's irrelevant.And don't forget, when Bush's "tax cuts for the rich" went into effect, the top earners ended up paying more tax than before and a larger total percentage of total tax revenue. That's because cuts stimulate economic activity, making the rich (and almost everyone else) better off so that even though their tax rate is lower, they make more and pay more taxes. Killing the goose that lays the golden eggs out of hatred for those who have more than you do is a short-sighted strategy.--fleg
Reagan's top income tax rate was 35%, down from the 70% he inherited and lower than the top rate will be in four months when the Bush tax cuts expire.From that notorious liberal publication, Forbes:Everyone remembers Reagan's 1981 tax cuts. His admirers are less likely to tout the tax hikes he accepted as the 1981 recession and his own tax cuts began to unravel his long-term fiscal picture--a large tax increase on business in 1982, higher payroll taxes enacted in 1983 and higher energy taxes in 1984.http://www.forbes.com/2010/02/02/barack-obama-ronald-reagan-...That helps explain the economic boom that started early in his presidency and lasted until recently.Uh, it didn't start "early" in his Presidency. If you recall (and I'm sure you don't) we had a "double dip" recession early in his Presidency. The biggest aid to the economic recovery was that OPEC collapsed, the price of oil fell by 2/3rds, and that rippled down through the production and supply chain.And don't forget, when Bush's "tax cuts for the rich" went into effect, the top earners ended up paying more tax than before and a larger total percentage of total tax revenue. This is arrant nonsense. They paid a larger total percentage because they got a much larger total percentage of the income. All the wealth flowed to the top. Who should have paid more, the single mother holding two jobs to feed her kids?Seriously Dude, try a new flavor of Kool-Aid.
Goofy: "This is arrant nonsense. They paid a larger total percentage because they got a much larger total percentage of the income. All the wealth flowed to the top. Who should have paid more, the single mother holding two jobs to feed her kids?"wealth envy of the libruls again!They just can't imagine the whole pie getting bigger.It's always the 'pie is the same size' and they got a larger percentage of that pie!Amazing inability to realize that if the pie gets five times bigger, even though the 'single monther holding two jobs to feed her kids' is earning 50% more, making 50% more each year...the fact that that represents a few less percentage of the pie that is five times bigger is the ONLY issue to the libruls like Goofy. I'm all for it. If the size of the pie goes up 500%, and the top earners now earn 70% of the pie, up from 65% of the pie, and the lower earners only make 30% of the total five times larger pie, instead of 65% of a five times smaller pie...I'm all for it.And of course, the higher earner pays more income tax with more income. If the taxes drop in half, and he earns five times as much, it just doesn't dawn on Goofy......that is he paying 2 1/2 times as much. All he can do is 'wealth envy' and 'percentage of the pie'. No ability to think of a larger size pie. It's always 'wealth envy' and 'they earn more than me' and "I want a bigger SHARE' of things (not just more income). I wonder how the country will survive if full of Goofy librul types. Maybe it won't. Too many vote for libruls no matter what - drones responding to union calls and blind pull the same lever type thinking. After all, they've been promised 'social justice' (wealth redistribution) and 'wealth redistribution' and 'everyone getting a bigger share of the pie' type blather for so long they actually believe it.t.
This is arrant nonsense. They paid a larger total percentage because they got a much larger total percentage of the income.That's what I said: "That's because cuts stimulate economic activity, making the rich (and almost everyone else) better off so that even though their tax rate is lower, they make more and pay more taxes.And now if you'll excuse me, I have to wipe off the spittle that flew from Goofy's mouth as he expressed his hatred for those who have more than he does.--fleg
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