Myths About Social Security

JoeTheEconomist · Mar 5, 2014

longview said:
Social security had real possibilities for success,
but a few changes would have had to been made in the early 60s.
The idea that everyone working puts 15% of every dollar they make into an account,
that is invested to buy a pension, is sound accounting.
The system was set up to pay current retirees with incoming receipts,
but the receipts quickly grew in an expanding economy to be many times the outlay.
In 1967 Johnson go the law changed to be able to declare surplus SS receipts
part of the general fund,(the SS administrator would determine how much was surplus.)
Something had to be done, as the quarterly SS receipts were getting close to exceeding the
the quarterly deficit. once all the bonds were sold to SS, there were no other
investment options opened for the SS administrator.
Rather than allow SS to invest in other securities, the Government decided to offset the deficit
with the SS surplus.
By Regan's term, they needed more surplus in the SS, so they raised the rate.
Under current law SS cannot invest in anything other than federal securities (bonds).
If there was no deficit, there would be no bonds.

Disclaimer: Some of what I have stated is conjecture based on my reading history
and the treasury bulletin.
SS should hold bonds equal to the difference between the total receipts (and interest)
and the total outlays.

Just facts. SS revenue has never been 'declared part of the general fund'. It is a completely internet myth. In 1969, the government changed the way it reports the income to the public. That has no impact on the actual revenue. If you cheat on your income taxes, and tell the government that you made 1/10th what you did - you aren't actually poorer.

Just facts. Today payroll taxes are 15.3%, only 10.6% goes to buy the pension. That rate went into effect in the 90s.

JoeTheEconomist · Mar 5, 2014

longview said:
The system was set up to pay current retirees with incoming receipts,
but the receipts quickly grew in an expanding economy to be many times the outlay.

I would like to see your source on that statement. By the time that LBJ was President, SS had accumulated about a 18 billion dollar reserve. Here are the Trust Fund balances since inception :

Social Security History

You should note that none of the money disappears in 1967.

MTAtech · Mar 5, 2014

MrVicchio said:
you "help others" by stealing from free individuals and chain to poverty and dependency generations of people.

Ah, if giving money to poor people creates "dependency" why is it that the rich oppose increasing the estate tax? Why doesn't having money given to you for nothing lull the children of rich people into lives of complacency and dependency? I think we need to save the rich children from generations of this cycle of dependency.

The dependency trap line has many unspoken assumptions:

1. That the current safety net setup constitutes a "hammock."
2. That people will in substantial numbers not work as long as they can barely get by.
3. That an opportunity ladder exists for each and every person, accessible only on their initiative.

Throughout most of human history the poor were left to starve and die in the streets and it didn't provide them the incentive to lift themselves out of poverty. Yet, conservatives contend this ridiculous notion that the poor are worse off with government help.

Renae · Mar 5, 2014

MTAtech said:
Ah, if giving money to poor people creates "dependency" why is it that the rich oppose increasing the estate tax? Why doesn't having money given to you for nothing lull the children of rich people into lives of complacency and dependency? I think we need to save the rich children from generations of this cycle of dependency.

The dependency trap line has many unspoken assumptions:

1. That the current safety net setup constitutes a "hammock."
2. That people will in substantial numbers not work as long as they can barely get by.
3. That an opportunity ladder exists for each and every person, accessible only on their initiative.

Throughout most of human history the poor were left to starve and die in the streets and it didn't provide them the incentive to lift themselves out of poverty. Yet, conservatives contend this ridiculous notion that the poor are worse off with government help.

Why do think it's okay to force people to give up thier hard earned money? Your cause is "just"? Despite your intent the utter destructing of poor black families and generations of people who live on welfare should open your eyes yet you refuse to accept the failure. You believe this time it will work.

MTAtech · Mar 5, 2014

MrVicchio said:
Why do think it's okay to force people to give up thier hard earned money? Your cause is "just"? Despite your intent the utter destructing of poor black families and generations of people who live on welfare should open your eyes yet you refuse to accept the failure. You believe this time it will work.

Throughout most of human history the poor were left to starve and die in the streets and it didn't provide them the incentive to lift themselves out of poverty. Yet, conservatives contend the poor are worse off with government help.

This meme is thrust upon Americans to swallow which happens to serve the interests of the wealthy conservatives that benefit from those policies. Modern conservatism uses the smoke-screen of self-reliance, individualism and character to mask policies which are self-serving, bigoted and cruel. The cadre of conservative billionaires don't want to pay higher taxes that will be used to help "those people." Thus, they invent a myth that the best way to help the poor is to NOT provide them any help at all. This way, according to them, their misery will give the poor the incentive to become educated and industrious. As I said earlier, this has never worked in all of human history.

Their objective is to keep taxes on the rich low and keep government out of their hair. But these people's numbers are small, so they need to fund propaganda groups like the Heritage Foundation to create false data and spread the message to middle-class conservatives, who are generally stupid enough to swallow their lies. Thus the pro-life conservative-leaning worker who listens to Rush Limbaugh will repeatedly vote for the party that is less likely to protect his safety, less likely to protect his job, and less likely to benefit him economically.

joG · Mar 5, 2014

MTAtech said:
Throughout most of human history the poor were left to starve and die in the streets and it didn't provide them the incentive to lift themselves out of poverty. Yet, conservatives contend the poor are worse off with government help.

This meme is thrust upon Americans to swallow which happens to serve the interests of the wealthy conservatives that benefit from those policies. Modern conservatism uses the smoke-screen of self-reliance, individualism and character to mask policies which are self-serving, bigoted and cruel. The cadre of conservative billionaires don't want to pay higher taxes that will be used to help "those people." Thus, they invent a myth that the best way to help the poor is to NOT provide them any help at all. This way, according to them, their misery will give the poor the incentive to become educated and industrious. As I said earlier, this has never worked in all of human history.

Their objective is to keep taxes on the rich low and keep government out of their hair. But these people's numbers are small, so they need to fund propaganda groups like the Heritage Foundation to create false data and spread the message to middle-class conservatives, who are generally stupid enough to swallow their lies. Thus the pro-life conservative-leaning worker who listens to Rush Limbaugh will repeatedly vote for the party that is less likely to protect his safety, less likely to protect his job, and less likely to benefit him economically.

I hope you feel better now.

MTAtech · Mar 5, 2014

joG said:
I hope you feel better now.

Countering absurd memes and narratives does make me feel better.

Renae · Mar 5, 2014

MTAtech said:
hout most of human history the poor were left to starve and die in the streets and it didn't provide them the incentive to lift themselves out of poverty. Yet, conservatives contend the poor are worse off with government help.

This meme is thrust upon Americans to swallow which happens to serve the interests of the wealthy conservatives that benefit from those policies. Modern conservatism uses the smoke-screen of self-reliance, individualism and character to mask policies which are self-serving, bigoted and cruel. The cadre of conservative billionaires don't want to pay higher taxes that will be used to help "those people." Thus, they invent a myth that the best way to help the poor is to NOT provide them any help at all. This way, according to them, their misery will give the poor the incentive to become educated and industrious. As I said earlier, this has never worked in all of human history.

Their objective is to keep taxes on the rich low and keep government out of their hair. But these people's numbers are small, so they need to fund propaganda groups like the Heritage Foundation to create false data and spread the message to middle-class conservatives, who are generally stupid enough to swallow their lies. Thus the pro-life conservative-leaning worker who listens to Rush Limbaugh will repeatedly vote for the party that is less likely to protect his safety, less likely to protect his job, and less likely to benefit him economically.

Again. You posit that its okay to steal from people because others fail at life because you care. You really dont care about the poor. Your jealous of others success. You feel empty and to give your life meaning you support class warfare and tell yourself you are doing good things. You ignore real human history. Yes. Poor folks staved in much of human existence. Why? Because they were not free. They were forced to work for others. They were "cared for" by elitist tyrants (see modern day cuba) and starve while thier masters dine on steak. You are a terrible person.

Renae · Mar 5, 2014

MTAtech said:
Countering absurd memes and narratives does make me feel better.

With bull**** and lies.

longview · Mar 5, 2014

JoeTheEconomist said:
I would like to see your source on that statement. By the time that LBJ was President, SS had accumulated about a 18 billion dollar reserve. Here are the Trust Fund balances since inception :

Social Security History

You should note that none of the money disappears in 1967.

Joe, I am sure I am wrong on some of the details, but there is a difference between
the Treasury Bulletin receipts and The SS reported receipts.
This is a delta of $216 Billion, in just those 5 years.

TB SS
1992 381,535 342,591
1993 393,158 355,578
1994 425,087 381,111
1995 447,104 399,497
1996 472,490 424,451
http://www.fms.treas.gov/bulletin/b46.pdf

Henrin · Mar 5, 2014

MTAtech said:
Ah, if giving money to poor people creates "dependency" why is it that the rich oppose increasing the estate tax? Why doesn't having money given to you for nothing lull the children of rich people into lives of complacency and dependency? I think we need to save the rich children from generations of this cycle of dependency.

That is a little silly considering the money is at that point their money.

Why do you think you can equate welfare with inheritance? People have the right to give their wealth to whomever they please and those receiving the wealth have the right to receive it. I hope you're not going to claim people have the right to other peoples property that was taken from them by force.

JoeTheEconomist · Mar 5, 2014

MTAtech said:
Ah, if giving money to poor people creates "dependency" why is it that the rich oppose increasing the estate tax? Why doesn't having money given to you for nothing lull the children of rich people into lives of complacency and dependency? I think we need to save the rich children from generations of this cycle of dependency.

This is the essence of liberalism. "I think" I am smarter than everyone else. It is why you think that rich children need to be saved. The poor need to be saved. The less intelligent need to be saved. Liberalism is in essence putting your thought into someone else's lives.

This isn't to say that you are wrong. All of these people may need to be saved. And you have the freedom to do it with your own money. That is where liberalism fails because it is never with their money. It is always saving someone with someone else's money.

JoeTheEconomist · Mar 5, 2014

MTAtech said:
“The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.” -- John Kenneth Galbraith

“The test of our progress is not whether we add more to the abundance of those who have much it is whether we provide enough for those who have little.” -- Franklin D. Roosevelt

"lessons of history, confirmed by the evidence immediately before me, show conclusively that continued dependence upon relief induces a spiritual disintegration fundamentally destructive to the national fiber. To dole our relief in this way is to administer a narcotic, a subtle destroyer of the human spirit. It is inimical to the dictates of a sound policy. It is in violation of the traditions of America. Work must be found for able-bodied but destitute workers. The Federal Government must and shall quit this business of relief. "

~ FDR 1935

JoeTheEconomist · Mar 5, 2014

MTAtech said:
No. People, in general, are not living longer. Life expectancy is correlated to income. Look at the Social Security Administration study. Look at Table 4: since 1977, the life expectancy of male workers retiring at age 65 has risen 6 years in the top half of the income distribution, but only 1.3 years in the bottom half.

Conservatives favor raising the Social Security age because people live longer -- except that the people who really depend on Social Security, those in the bottom half of the distribution, aren’t living much longer. So you’re going to tell janitors to work until they’re 70 because lawyers are living longer than ever.

It is surprising that the United States does not have the longest life expectancy.

JoeTheEconomist · Mar 5, 2014

MTAtech said:
Throughout most of human history the poor were left to starve and die in the streets and it didn't provide them the incentive to lift themselves out of poverty. Yet, conservatives contend the poor are worse off with government help.

This meme is thrust upon Americans to swallow which happens to serve the interests of the wealthy conservatives that benefit from those policies. Modern conservatism uses the smoke-screen of self-reliance, individualism and character to mask policies which are self-serving, bigoted and cruel. The cadre of conservative billionaires don't want to pay higher taxes that will be used to help "those people." Thus, they invent a myth that the best way to help the poor is to NOT provide them any help at all. This way, according to them, their misery will give the poor the incentive to become educated and industrious. As I said earlier, this has never worked in all of human history.

Their objective is to keep taxes on the rich low and keep government out of their hair. But these people's numbers are small, so they need to fund propaganda groups like the Heritage Foundation to create false data and spread the message to middle-class conservatives, who are generally stupid enough to swallow their lies. Thus the pro-life conservative-leaning worker who listens to Rush Limbaugh will repeatedly vote for the party that is less likely to protect his safety, less likely to protect his job, and less likely to benefit him economically.

What a verbal laxative.

This goes back to the problem with liberalism. Liberals think that they are smarter than everyone else. Liberalism isn't about helping anyone. It is about having power to force people to listen.

FYI... At 25% effective tax rates, I don't think anyone is keeping taxes on the rich low. Mind the effective tax rate (including payroll taxes) on low-wage worker 1%.

MTAtech · Mar 5, 2014

MrVicchio said:
Again. You posit that its okay to steal from people because others fail at life because you care. You really dont care about the poor. Your jealous of others success. You feel empty and to give your life meaning you support class warfare and tell yourself you are doing good things. You ignore real human history. Yes. Poor folks staved in much of human existence. Why? Because they were not free. They were forced to work for others. They were "cared for" by elitist tyrants (see modern day cuba) and starve while thier masters dine on steak. You are a terrible person.

Paul Krugman wrote in 2011 about the political and moral differences in this country and he's right.

All Tale of Two Moralities
...
What are the differences I’m talking about?

One side of American politics considers the modern welfare state — a private-enterprise economy, but one in which society’s winners are taxed to pay for a social safety net — morally superior to the capitalism red in tooth and claw we had before the New Deal. It’s only right, this side believes, for the affluent to help the less fortunate.

The other side believes that people have a right to keep what they earn, and that taxing them to support others, no matter how needy, amounts to theft. That’s what lies behind the modern right’s fondness for violent rhetoric: many activists on the right really do see taxes and regulation as tyrannical impositions on their liberty.

There is no middle-ground here. I think we have a better country when we help each other out and you think that taxing you to help 'those people' is stealing.

MTAtech · Mar 5, 2014

MTAtech said:
Countering absurd memes and narratives does make me feel better.

MrVicchio said:

With bull**** and lies.

Click to expand...

If you think that I have lied, you are incumbent upon displaying where I have lied, or your claim of lying has no merit.

I just think calling my words lies, is your admission that you have no intellectual counter to what I have written.

Henrin · Mar 5, 2014

MTAtech said:
Paul Krugman wrote in 2011 about the political and moral differences in this country and he's right.
There is no middle-ground here. I think we have a better country when we help each other out and you think that taxing you to help 'those people' is stealing.

I really do not understand how anyone can consider it moral behavior to take someones property by force and give that property to another person. It's also a bit silly to say it's morally sound because of it's result for a few different reasons, but for the reason that is relevant, it should be noted, that it is undoubtedly true that every thief will benefit from his crime, and it is undoubtedly true that if he was to give what he has stolen to others that they would benefit from his crime as well.

MTAtech · Mar 5, 2014

Henrin said:
I really do not understand how anyone can consider it moral behavior to take someones property by force and give that property to another person. It's also a bit silly to say it's morally sound because of it's result for a few different reasons, but for the reason that is relevant, it should be noted, that it is undoubtedly true that every thief will benefit from his crime, and it is undoubtedly true that if he was to give what he has stolen to others that they would benefit from his crime as well.

Taxes aren't theft.

We have a nation and Congress has a legitimate power to tax. We 'take your property by force and give' it to defense contractors; government workers; and many, many others. If you think all of that is theft, you don't believe in having a country.

Renae · Mar 5, 2014

MTAtech said:
If you think that I have lied, you are incumbent upon displaying where I have lied, or your claim of lying has no merit.

I just think calling my words lies, is your admission that you have no intellectual counter to what I have written.

the fact you give intellectual cadence to Paul krugman merely solidified ypu as one full of bull****. Stealing from free people to find a cause you believe it's good is still theft.

Henrin · Mar 5, 2014

MTAtech said:
Taxes aren't theft.

We have a nation and Congress has a legitimate power to tax. We 'take your property by force and give' it to defense contractors; government workers; and many, many others. If you think all of that is theft, you don't believe in having a country.

People have this strange idea that when I say taxes are theft that I'm speaking of opinion, but I assure you there is no opinion in applying the word theft to any all instances of property being taken from the rightful owners without that owners consent. Furthermore, taxation in the United States at least was never to be involuntary.

Amanda1858 · Mar 5, 2014

JoeTheEconomist said:
H.L. Mencken once observed "For every complex problem there is an answer that is clear, simple, and wrong." The debate about Social Security reforms proves his point.

Today there is a simple answer: Americans are living too long. This answer is supported by data which shows life expectancy increasing from 63 in 1940 to more than 77 today. The logical conclusion is that “Americans are living longer and thus receiving benefits for more years.” While clear and simple, the conclusion is a mix of bad data and faulty reasoning.

Increasing life expectancies does in fact create two financial burdens for Social Security. First, it can mean that people are living longer in retirement so that they will collect benefits for a longer period of time. Second, it also can mean that people become more likely to reach the age where they can collect benefits at all. Yes as Americans live longer, Social Security will pay more in benefits.

Those consequences are however only half of the story. What the argument fails to consider is that Americans who live longer, work longer and contribute more to Social Security. So it is very possible that rising life expectancies can improve the financial imbalances in Social Security. So whether the negative impact offsets the positive impact really depends upon at what age Americans are living longer.

The primary cause of this increase in life expectancy is a reduction of infant mortality. Believe or not, fewer babies dying is a financial plus for Social Security. Infants born after 1963 statistically will on average collect less than they contribute to Social Security. The data from the Urban Institute a non-partisan think-tank says that an average wage worker (single or married, male or female) contributes more than he expects to collect – and that assumes every worker lives to the age of full-retirement.

Many do not. Advances in medical science saved my brother at the age of 21. Better doctors and better medicine allowed him to work until he died at the age of 44. Over the 23 years of additional life, my brother contributed close to $60,000 without ever collecting a penny. Life expectancies of Americans rose because of people like my brother, and yet Social Security made a lot of money on the increase.

This argument also ignores the way Social Security works. The benefits formula uses the 35 highest years of earnings to compute benefits. Thus when a worker works 36 or more years, the benefits formula removes a year of earnings. As a consequence of math, Social Security in many cases collects free money by Americans living longer. Americans whose live expectancy extends from 55 to 67 are at times a cash-cow for Social Security.

Projecting life expectancy is not an exact science. In fact, the Social Security Administration has faced public scrutiny over its estimation model. I provide some research here to create some a framework for prospective. According to research from SSA,

· The life expectancy of the average 30 year-old male (someone who typically has attained eligibility for benefits) increased by almost 9 years since 1940.

· The average 65 year-old male in 1940 expected to live about 12 years, whereas in 2010 he expected to live 16.4 years. Today Social Security requires people to wait an additional two years, the increase in retirement benefits based on this research would be less than 2.4 years.

· Statistically, Americans are more likely to reach the age of full retirement. In 1990, the SSA projected that someone who was 21 had a 72% of reaching full retirement-age. The Social Security Administration reports that figure had risen to slightly less than 79% by 2009.

I wish that I could tell you that 9 more years of work could offset the additional benefits generated by Social Security. I can’t. I can tell you that life expectancy of an infant is not relevant to a discussion about a pension system and that the public debate about Social Security does little to clarify the question of how increasing life expectancies of Americans affects Social Security.

You left out the part of how the Social Security program would probably be OK if the politicians had kept thier hands off of it during the VietNam War. I hear they "borrowed" money from Social Security and never paid it back. Wonder why we never hear about this in all the discussions on why the program is going broke?

JoeTheEconomist · Mar 5, 2014

MTAtech said:
Paul Krugman wrote in 2011 about the political and moral differences in this country and he's right.
There is no middle-ground here. I think we have a better country when we help each other out and you think that taxing you to help 'those people' is stealing.

Your points are disconnected from reality. It is not possible to describe 43% of the public as unfortunate. Fortune means chance, and when you are in league with 43% of the public, then you aren't unfortunate you are average. 43% of the public has no income tax bill. So please stop pretending that the evil rich don't already help the less fortunate. The top 5% of the public pays something like 50% of the tax revenue. Your argument has no end until the government takes everything.

JoeTheEconomist · Mar 5, 2014

Amanda1858 said:
Wonder why we never hear about this in all the discussions on why the program is going broke?

The reason that you don't hear about it is because most of it is internet myth.

Amanda1858 said:
You left out the part of how the Social Security program would probably be OK if the politicians had kept thier hands off of it during the VietNam War. I hear they "borrowed" money from Social Security and never paid it back. Wonder why we never hear about this in all the discussions on why the program is going broke?

The man who ran Social Security in 1944 disagreed with your statement, and went as far as to predict that SS would face continually rising payroll taxes until the system could not be supported. Let me know if you want a link.

Just Facts. In 1967, Social Security was a paygo system - by definition there was very little for the politicians to put their hands on.

Just Facts: without the government repaying that money, Social Security would not have been able to pay full benefits in 2010, 2011, 2012, 2013, and so forth until 2031.

MTAtech · Mar 5, 2014

JoeTheEconomist said:
Your points are disconnected from reality. It is not possible to describe 43% of the public as unfortunate. Fortune means chance, and when you are in league with 43% of the public, then you aren't unfortunate you are average. 43% of the public has no income tax bill. So please stop pretending that the evil rich don't already help the less fortunate. The top 5% of the public pays something like 50% of the tax revenue. Your argument has no end until the government takes everything.

What is clear is that you do not know who those 43% who pay no federal income taxes.

According to USA Today:

Who are the 47%? The Tax Policy Center's Donald Marron said they fall into three main groups:

The working poor. The earned income tax credit and the child credit can help families making $50,000 or more pay no taxes or get money back. About 60% of those not paying income taxes do contribute to payroll taxes -- which means they must have some source of earned income.

The elderly. An increased standard deduction for those over 65, and an exemption on part of Social Security earnings, means that many older Americans pay no income taxes -- even though most of them paid into the system through decades of paying taxes.

The low-income. A family of four claiming only the standard deduction and personal exemptions pays no federal income tax on its first $27,000 of income.

But not all non-taxpayers fit into those categories. Even the ultra-wealthy can avoid paying taxes -- for example, if their income comes from tax-exempt bonds. Tax Policy Center data show that perhaps 24,000 of the top 1% of earners pay no federal income taxes.

"There are certainly people all through the income distributions who don't pay taxes," Marron said. He said the 47% figure has risen because of high unemployment, and will fall again during the recovery.

The elderly are generally people that worked all their lives and now are retired on a lower income. It is insulting to call them unfortunate. That's the way the system is designed. To be eligible for Social Security and Medicare, the biggest programs, one had to have a significant work history.

Myths About Social Security

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