No. of Recommendations: 22
This article came out at the beginning of the month. I was saving it for the appropriate time and that just came in SP's post <http://boards.fool.com/ltltand-you-can-take-that-to-the-bank...

Social Security ended 2011 with a $2.7 million surplus. The noise machine has changed "common wisdom" with carefully tailored half-truths and very long-term projections.

So why all the talk about Social Security “going broke?” That theme filled the news after release of the latest annual report of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, as Social Security is formally called.

The reason is that the people who want to kill Social Security have for years worked hard to persuade the young that the Social Security taxes they pay to support today’s gray hairs will do nothing for them when their own hair turns gray.


David Cay Johnston, of Reuters, goes on to point out a much more serious budget problem.

But there is a much bigger problem that needs our attention. If we continue national security spending at current levels, with no future increases, the total cost would be $63 trillion, based on the figures in President Barack Obama’s latest budget. Unlike spending on Social Security, much of the national security spending goes overseas. And that makes us worse off.

http://blogs.reuters.com/david-cay-johnston/2012/05/04/socia...

Raising the $106k cap on wages subject to SS taxes would help a lot.
Print the post Back To Top
No. of Recommendations: 2
<<Social Security ended 2011 with a $2.7 million surplus>>

I think that's $2.7 Trillion.

intercst
Print the post Back To Top
No. of Recommendations: 1
"<<Social Security ended 2011 with a $2.7 million surplus>>"


Social Security is nothing but a Ponzi scheme.

It has a trust fund that is nothing but IOUs...which means...of course, those IOUs will have to be repaid with taxpayer money that no one talks about. Or more money will have to be borrowed..trillions...to pay those benefits.

There is no 'surplus'......the IOUs pile up to trillions already......there is no money in the lock box.....other than "taxpayers owe even more money since we spent it and just gave them these lousy IOUs we won't be able to pay'.....


There are now 2.2 workers per social security recipient. It started with 60..even in the 1950s there were 16 workers per SS recipient.


People don't pay in enough for the government to afford the current payout...no less future benefits promised....

Worse, SS disability is being bloated by the millions......since folks can't find work and you can get a doc to sign you off for SS disability for anything from a bad knee to imaginary back pain in 'soft tissue' that no one can medically disprove.

Give the gov't a few more years to fall off the financial cliff.

You better being saving for your own retirement. SS won't be there in 20 years.


t.

t.
Print the post Back To Top
No. of Recommendations: 1
<<Raising the $106k cap on wages subject to SS taxes would help a lot. >>



So you acknowledge that there is a serious problem, despite decades of denials by Democrats and liberals?


And as usual, the first choice for doing anything is always to raise taxes. What a lack of imagination.



Seattle Pioneer
Print the post Back To Top
No. of Recommendations: 1
intercst,

I think you're right. I was paraphrasing the article after a hike at the Santa Fe Ski Basin and then sharing a liter of margaritas w/ MDH while eating a very late lunch<G>.

Thanks,
PM
Print the post Back To Top
No. of Recommendations: 4
So you acknowledge that there is a serious problem, despite decades of denials by Democrats and liberals?

SP, you never fail to disappoint with your rapier like comment which strikes with the accuracy of a hammer on the thumb -- and makes about as much sense. As many know - and certainly you should if you're going to comment on SS - there's been talk for decades about raising the income limit for SS.

BG
Print the post Back To Top
No. of Recommendations: 62
And as usual, the first choice for doing anything is always to raise taxes. What a lack of imagination.

Only if you don't like to pay for what you get.

I'm really sick and tired about conservatives bad-mouthing taxes. Taxes pay for the common good - see the Preamble to the Constitution. If you want to give up interstate highways, police and fire protection, etc., move into the boonies and take care of your own needs w/o help from anyone else.

MDH and I paid the max income tax rate for many years before retirement w/o complaint. It really frosts me that people think lower taxes is the be-all, end-all goal in life. I happen to like living in a civilized country.

I also see no need to pay for a military that dwarfs the rest of the world's. Once you have that situation, you feel you have to use it. I'd really rather not pay to be the world's bully to impose Pax Americana.

PM
Print the post Back To Top
No. of Recommendations: 0
<<As many know - and certainly you should if you're going to comment on SS - there's been talk for decades about raising the income limit for SS.

BG >>


Liberal Democrats are always talking about raising almost any kind of tax. It's pretty much a defining characteristic.


I might add that a few years ago liberal Democrats were saying that the solution for Medicare's woes was to raise the income limit. It was raised to infinity and doing so didn't amount to a spit in the ocean as far as solving Medicare's problems.



Seattle Pioneer
Print the post Back To Top
No. of Recommendations: 1
<<I also see no need to pay for a military that dwarfs the rest of the world's. Once you have that situation, you feel you have to use it. >>



I agree that can be and has been a problem. Most notably with Johnson getting the United States entangled in Vietnam. Everything was wound up and he could hardly say no.

Of course, much the same thing is true of the Fed's ability to create unlimited numbers of dollars. Both Bush and Obama succumbed to trillions of dollars of spending because doing so was so easy.



Seattle Pioneer
Print the post Back To Top
No. of Recommendations: 7
And as usual, the first choice for doing anything is always to raise taxes. What a lack of imagination.

Raising taxes in order to save Social Security is the solution that nice Mr. Reagan chose in 1983.

That's probably why he's considered a pariah, and no Republican wants to be associated with him.
Print the post Back To Top
No. of Recommendations: 7
I might add that a few years ago liberal Democrats were saying that the solution for Medicare's woes was to raise the income limit. It was raised to infinity and doing so didn't amount to a spit in the ocean as far as solving Medicare's problems.

The conservative Republican solution was to simply increase spending but borrow the money.

Much more creative, but less of a solution, I think.
Print the post Back To Top
No. of Recommendations: 23
Liberal Democrats are always talking about raising almost any kind of tax. It's pretty much a defining characteristic.

And teaPublicans are simply STUPID. Not naive, not ignorant. They are stupid. They talk about cost without any consideration of value. That is what defines them and it is off-the-chart stupid.
Print the post Back To Top
No. of Recommendations: 2
Scott Burns "How the Social Security Trust Fund Was Supposed To Work"

http://assetbuilder.com/blogs/scott_burns/archive/2012/05/23...

The purpose of the 1983 reform was to build a larger trust fund balance. The idea was to deal with the major increase in benefit commitments that would come when the boomers retired. Accumulation of a large amount— like the $2.6 trillion now in the fund— would make the program safe for the 75-year projection period.

With no actuarial deficit over that 75-year period there would have been no need to discuss raising the employment tax—or any other tax— to pay the benefits, if the government had not over borrowed for everything else. If we had had a balanced budget, the Social Security surplus could have paid down other federal debt. Then that credit could be used later to redeem trust fund assets.

But that didn’t happen. While retirees have a preemptive call on federal spending because of the trust fund, the only choices for making good on those promises will be to raise taxes, reduce benefits for future retirees, or print money. Worse, fixing the problem isn't just a matter of increasing the employment tax (or the income tax) to bring in the needed revenue. Check this paragraph from a summary of the recent Trustee reports:

"The projected 75-year actuarial deficit for the combined Old-Age and Survivors Insurance and Disability Insurance (OASDI) Trust Funds is 2.67 percent of taxable payroll, up from 2.22 percent projected in last year's report. This is the largest actuarial deficit reported since prior to the 1983 Social Security amendments, and the largest single-year deterioration in the actuarial deficit since the 1994 Trustees Report."

Since the employment tax is 12.4 percent (employer and employee portions combined and not including the current 2 percent break for workers) we're talking about a 21.5 percent increase (2.67/12.4) in the employment tax to get the necessary money coming in. This would, in theory, make the program sound over the next 75 years. You don’t have to be a Tea Party member to rebel at the idea of that big a tax increase.

--------------------------------------------------------------
One can certainly point their finger at Dubya for fighting two wars on the cuff & largest entitlement expansion in 50 years[medicare part-D]. I seriously doubt that our financial situation would have been better under a democratic president. First, they largely felt that medicare part-D wasn't generous enough. Second, our Iraq adventure couldn't have occurred without democrat support for the Iraq War Resolution. They continued our involvement in Iraq & Afghanistan while becoming entangled in Libya & inching toward involvement in the Syria situation.

AS more & more boomers roll onto SS & medicare entitlements, the demands on tax revenue will make the programs unsustainable if no changes are instituted. I see unwillingness of either party to address this issue. Though I expect much finger pointing to blame the other side as our nation will be required to increase revenue via higher taxation or entitlement benefit reductions.

Like many of this board I have noticed wasteful defense spending.* Unfortunately, even if the defense dept was shuttered; there ain't enough there to make up for the increased entitlement demand. And in any case the democrats appear just as willing to project military power as the republicans.

I expect the entitlement spending & wasteful spending throughout the gov't to seriously impact future US stocks returns which will end some folks FIRE status & unable many from attaining that status in the future.

*http://boards.fool.com/problems-in-defense-procurment-298370...
http://boards.fool.com/hanger-queens-29906511.aspx
Print the post Back To Top
No. of Recommendations: 1
PM:"I'm really sick and tired about conservatives bad-mouthing taxes. Taxes pay for the common good - see the Preamble to the Constitution. If you want to give up interstate highways, police and fire protection, etc., move into the boonies and take care of your own needs w/o help from anyone else.

MDH and I paid the max income tax rate for many years before retirement w/o complaint. It really frosts me that people think lower taxes is the be-all, end-all goal in life. I happen to like living in a civilized country.

I also see no need to pay for a military that dwarfs the rest of the world's. Once you have that situation, you feel you have to use it. I'd really rather not pay to be the world's bully to impose Pax Americana":

- - -

There's nothing in the Constitution about robbing Peter to pay Paul.

Your idea of 'common good' is not that of the founders, who had ZERO welfare transfer payments in mind. They didn't even have public schools. That was the responsibility of the states for nearly 2 centuries and is till mostly the responsibility of states and local governments.

It wasn't until FDR that the dems invented 'common good' to mean you can steal from one to give to others under the guise of 'common good'. (socialism).

There wasn't even an income tax till about 1900.....and that was on the top 1% of earners....99% paid nothing.

SO let's go as far back to the 99% paying no taxes...and the top 1% paying just a teeny bit......small fed government doing only the 7 things outlined in the Constitution.

Silly you...police and fire? The feds have essentially nothing to do with that ...for 99% of the activity. It is state and local governments, not the feds!..... (the feds only enforce the borders (Coast Guard and border patrol) and we have the FBI which is the only fed police force - outside now of TSA).

For 150 years, the folks got on fine without 'federal highways'....... and most of the first 'highways' were toll roads...like the PA turnpike, the WV turnpike, the NJ turnpike, the OH and IN and iL turnpikes, the FL turnpike, and on and on. Built by private money or state/private money. The bridges were toll bridges.

The very name 'turnpike' goes back to England and colonial times...when private folks built a 'road' and you had a toll collector at the ends...when you paid your fee to use his road, he'd 'turn the pike'(gate) , allowing you to pass.

Even today in TX and other states/cities, they are building tollroads in record numbers without fed money.

You do know that the 'interstate system' was built by Eisenhower mainly for MILITARY use to be able to move tanks and troops in the 1950s to counter any Soviet attack on the US? That's why your bridges had to be at least 16 feet above the roads ......the height needed to transport tanks on a flatcar carrier. Trucks only need 13'6......

And, ever increasing taxes to rob more from Paul to give to Peter or vice versa...... including YOU retired folks who will collect far more on average than you paid in.....and over 10 times as much for Medicare than you paid in....... is , well, 'unsustainable' no matter how much you increase taxes on the young.

In 20 years, SS and Medicare simply won't be there. THere is no way to pay for the promised benefits. Things will be massively scaled back, rationed, means tested....or non-existent.

That's reality.



t.
Print the post Back To Top
No. of Recommendations: 1
<<And as usual, the first choice for doing anything is always to raise taxes. What a lack of imagination.

Raising taxes in order to save Social Security is the solution that nice Mr. Reagan chose in 1983.>>


Taxes were raised and benefits were cut, by increasing the retirement age to 67 and by increasing the amount of Social Security income subject to income taxes.

And you will notice that while the claims at the time were that this would make Social Security permanently safe, that was a bogus claim as always.

What Reagan did was to raise taxes on those people who were working in order to assure that the WWII would continue to receive benefits sort of like what they had expected. People who had paid from zero to ten percent Social security taxes during their working life imposed 12.4% payroll taxes to pay for their own benefits --- on others, not themselves.

One of the major problems with Social Security has always been that people don't receive benefits in proportion to what they pay in taxes, but collect as much as they can in benefits and impose as much in taxes that they DON'T pay as possible.

It's a corrupt system. Democrats would extend the corruption by further reducing the relationship between amounts paid and benefits collected.


Younger generations are catching on to this Ponzi scheme though, and have exempted themselves from paying portions of Social Security taxes. If they are smart, they will insist that the amounts they pay are permanently reduced or eliminated.

Let the rotten Ponzi scheme die of it's own failure to finance benefits.



History of payroll tax rates:

http://www.ssa.gov/oact/progdata/taxRates.html


Seattle Pioneer
Print the post Back To Top
No. of Recommendations: 1
<<SO let's go as far back to the 99% paying no taxes...and the top 1% paying just a teeny bit......small fed government doing only the 7 things outlined in the Constitution.
>>


But Tele---

Who would insure that our gasoline is adulterated with alcohol?



Seattle Pioneer
Print the post Back To Top
No. of Recommendations: 1
Social Security is already broke. It has no real assets.

The trust fund is a scam to fool people into thinking that it is somehow "funded." Benefits are paid out of taxes and borrowing, which is exactly what would happen without a trust fund.

The only economic significance of the trust fund is that benefits will be limited to S.S. taxes when the trust fund uses up its bogus "assets."
Print the post Back To Top
No. of Recommendations: 0
<<The only economic significance of the trust fund is that benefits will be limited to S.S. taxes when the trust fund uses up its bogus "assets." >>



That assumes Gen X, Y and Z are still payinf Social Security and Medicare taxes.

Already they are getting a discount on Social Security Payroll taxes, something previous generations never managed to negotiate.

What could be next? Giving employers the same discount? Extending discounts permanently? Increasing the discount?

If Gen X, Y and Z decided to, they could impose a new retirement system that would fund their own benefits, rather than paying for someone elses. If they are smart, they will do so.

That would leave the current Social Security system with it's IOUs but no current taxes.


Seattle Pioneer
Print the post Back To Top
No. of Recommendations: 0
<<The only economic significance of the trust fund is that benefits will be limited to S.S. taxes when the trust fund uses up its bogus "assets." >>

That assumes Gen X, Y and Z are still payinf Social Security and Medicare taxes.

Already they are getting a discount on Social Security Payroll taxes, something previous generations never managed to negotiate.


A discount? Social Security and Medicare taxes had been increasing until the temporary cut in the employee portion of the SS tax:

http://www.ssa.gov/oact/progdata/taxRates.html

I'm guessing that it will go higher.
Print the post Back To Top
Advertisement