Rich stop paying social security

[haymarket]

Not really. You have to pay benefits to existing beneficiaries. There is a 17.9 trillion dollar shortfall today. That is more than a year of GDP. Visit Fix Social Security NOW, and tell us where we are wrong.

Where is this "17.9 trillion shortfall today"?

 

[haymarket]

"Tremendous Surpluses" what are you talking about. The system is now has a 17.9 trillion shortfall - which is on top of the tremendous surplus of which you speak. Social Security has never and I repeat never had a year in which it was actuarily sound.

The system only has surpluses to the extent that you fully intend to shut the system down without paying people who are making payroll tax contributions today.

By all means, please do present us a year by year breakdown of SS and let us see which years were or were not a surplus or deficit.

 

[TurtleDude]

Even that is a gross distortion of reality. You and I both know the government taxes the same money time and time and time and time and time again beyond count or calculation. Potentially, each time the same money changes hands from one new owner to another, it can be taxed. That is simply the way money works and the way taxation works. There is nothing startling or radical about that simple reality.

that is a dishonest comment. the corporation is nothing but a conduit to transfer income and wealth to those who own it. You justify any system that means the government takes more money from people. When other moneys change hands its for an exchange of value meaning its income. Here the government takes twice from the same income that comes from one income producing transaction. it is double taxation

 

[haymarket]

that is a dishonest comment. the corporation is nothing but a conduit to transfer income and wealth to those who own it. You justify any system that means the government takes more money from people. When other moneys change hands its for an exchange of value meaning its income. Here the government takes twice from the same income that comes from one income producing transaction. it is double taxation

It is a 100% factual and honest observation.

As an attorney, you well are aware that a corporation is a legal person with its own legal obligations and that includes taxation. That is separate and distinct from actual human beings who have their own separate and distinct legal obligations including taxation.

http://en.wikipedia.org/wiki/Corporations

A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members

Are you in support of removing that legal status from corporations?

 

[maquiscat]

so make the accounts privately owned and controlled... and then Congress can't spend it. hooray! problem solved

That's how Galvaston TX and Chile (or one of it's neighbors) does its SS like program and those are doing beautifully.

 

[TurtleDude]

It is a 100% factual and honest observation.

As an attorney, you well are aware that a corporation is a legal person with its own legal obligations and that includes taxation. That is separate and distinct from actual human beings who have their own separate and distinct legal obligations including taxation.

Corporation - Wikipedia, the free encyclopedia


Are you in support of removing that legal status from corporations?

I oppose taxes on corporations since they are nothing more than tools of the owners. You support the government taking two cuts from income that was created once

 

[haymarket]

I oppose taxes on corporations since they are nothing more than tools of the owners. You support the government taking two cuts from income that was created once

But you support the concept of legal personhood for corporations?

 

[sawyerloggingon]

Interesting. Rarely have I had a "polite" debate that featured me accusing the other of arrogance and then leaving.

The arrogance of youth is a forgivable fault, we have all been there. I remember well how easy it was to trash the generation that came before me.

 

[sawyerloggingon]

The flaw in the man's reasoning is that Social Security is not a closed-system. It affects other parts of the economy particularly the debt. If you raise payroll taxes, it means that you are not raising income taxes. Today we spend a trillion dollars more than we collect. Raising payroll means that we can't raise income taxes. We are literally putting our 401K contribution on our child's credit card.

Again, Social Security is not a closed system. Social Security cures one person's poverty by creating it somewhere else. Poverty in the 35 and under set has exploded higher since we started raising SS taxes in the mid 70s. This started in earnest about 1977. For someone born in 1970, the cost of SS in lost savings is almost $600,000.

A third point is that SS is already highly progressive. While people pay the same tax rate, what you get is heavily weighted to people who have a lower-wage. High wage workers can get back as little as $0.40 on the dollar according to SSA.

You make some valid points.

 

[JoeTheEconomist]

Galveston did not start with any legacy costs. Chiles were so minor that they were paid for by the sale of state run industries. Both of these retirement systems started almost to the day of the greatest bull market in the history of the world. Can you name a retirement system that is doing beautifully that mirrors Social Security that didn't start on the day of the greatest bull market in history. Just curious.

 

[JoeTheEconomist]

Where is this "17.9 trillion shortfall today"?

In the Trustees Report : "Summary measures for a time period that extends over the infinite horizon are also included in this report. These measures provide an additional indication of Social Security’s very long-run financial condition, but are subject to much greater uncertainty. These calculations show that extending the horizon beyond 75 years increases the unfunded obligation. Over the infinite horizon, the shortfall (unfunded obligation) amounts to $17.9 trillion in present value." source : 2011 Trustees Report: Section II.D, Projection

75 year numbers are junk because they include revenue but not the cost associated with taking that revenue. This is why anytime you hear Blah, blah, blah fixes the system for 75 years you know that you are being played for a fool.

 

[JoeTheEconomist]

By all means, please do present us a year by year breakdown of SS and let us see which years were or were not a surplus or deficit.

Why bother with a breakdown. Here is the ice cold fact, in 1983 the system went into insolvency. It had zero dollars and payroll taxes didn't cover the obligation of existing beneficiaries. The system was sitting on promises versus revenue that it had taken in over as much as 40 years - without a penny to make good on them. This is why the paygo numbers are so worthless. If you think that paygo numbers are good, please explain why no public company is allowed to use that accounting method.

 

[imagep]

The flaw in the man's reasoning is that Social Security is not a closed-system. It affects other parts of the economy particularly the debt. If you raise payroll taxes, it means that you are not raising income taxes. Today we spend a trillion dollars more than we collect. Raising payroll means that we can't raise income taxes. We are literally putting our 401K contribution on our child's credit card.

Again, Social Security is not a closed system. Social Security cures one person's poverty by creating it somewhere else. Poverty in the 35 and under set has exploded higher since we started raising SS taxes in the mid 70s. This started in earnest about 1977. For someone born in 1970, the cost of SS in lost savings is almost $600,000.

A third point is that SS is already highly progressive. While people pay the same tax rate, what you get is heavily weighted to people who have a lower-wage. High wage workers can get back as little as $0.40 on the dollar according to SSA.

I am not disagreeing with you on facts, but I think that you are not looking at social security for what it is, or should be.

High wage workers who don't live long don't get a penny back, and neither do low wage workers. What one gets back is much more dependant on how old they live than how much they put in. Thats because social security isn't a savings plan, it's insurance.

It should be an old age insurance program. that means it doesn't matter what % you get back. Some people die young and never get a penny back, others live long and prosper from the social security system. When we start discussing how this group or that group gets overcompensated or undercompensated from social security, we are loosing focus on the fact that it is old age insurance, not a savings plan.

 

[cpwill]

The arrogance of youth is a forgivable fault, we have all been there. I remember well how easy it was to trash the generation that came before me.

:roll:

arrogance is a trait that knows no age. my generation is - if anything - currently worse (though I have hopes for how events may shape us). that being said, the "you are young and arrogant" line doesn't alter actuarial reality in any way whatsoever.

I think I'll take the "arrogance" of openly accepting that the Boomers have written some checks we can't cash rather than the "I'm gonna get mine and screw the country" attitude that some certain others have expressed on this thread. You want to know what's arrogant? What's arrogant is assuming that you are so important that it is worth driving the US of A off of a fiscal cliff in order to sustain your lifestyle.

 

[JoeTheEconomist]

I am not disagreeing with you on facts, but I think that you are not looking at social security for what it is, or should be.

My fault. The $0.40 projection comes from a Social Security Administration, and figure is the present value of projected future benefits, including the possibility that you die before collecting. A person who lives into retirement will get better than the $0.40 and someone who dies early will get 0. The $0.40 is a composite, what you are likely to get back for every dollar contributed.

You are correct that Social Security is insurance. This figure allows you to look at SS on an investment return basis.

 

[imagep]

In my fantasy world, I would divide social security into two different programs. One would be a forced savings program with cap which once it is reached there is no more requirment for the forced savings, and the other would be old age insurance.

It's almost impossible for most folk to do any realistic retirement planning. It seems that it should be a simple task, but everytime I have tried it for myself, I run into this one issue: when will I die? I dunno. I could pull a figure from my rear, or I could just use the average age of death, but most likely I will be wrong on either count. So then I say to myself, well to be safe, lets pretend that I will never die, and thus I have to have enough investments that I can live on the investment profit alone. Then, when I do realistic math, it's just not possible, shy of winning the lottery or TD writing me into his will, neither which are very likely. These days it's just not realistic to expect to earn anything over a couple of percent over the inflation rate on passive investments, and thats if you are a very wise investor. So if one desired $50k in income forever, they would have to have a minimum of $2.5 million in investments. If I saved/invested $1,000 a month at 2% over the inflation rate (that would be something like a 7% yeild rate today), it would take me 83 years to have enough to retire - I would personally be 130 before I could retire. So it's ludicris for the vast majority of our population to even attempt to retire soley on interest. We HAVE to tap into our principle, which me we HAVE to know when we will no longer need to live off our own money.

A true old age insurance policy would cure this. Not talking about a traditional annuity, but true insurance where we all pay a little into the system, then only those who are lucky/unlucky enough to survive beyond the average age of death would be rewarded by the insurance. At todays current average age of death, I am thinking the age for insurance should be about 80, and this should probably have to increase every decade or so as our lifespans tend to lengthen. the amount that we would have to be taxed to fund a true old age insurance plan would likely not have to be very much money, term life insurance can usually be purchased quite inexpensively. We are talking maybe 2% of our income at the most, and thats a tax that most of us can live with.

The other part of social social security would be a forced savings/retirement plan. As much as I hate the concept of the nanny state, I just know people to well to expect that most individuals would save on their own enough to retire from age 65 to age 80 (or more). While private charity could possibly fill this savings void, why should I feel like I have any obligation to donate money for people who didn't bother to save? Forced savings is sort of like the healthcare mandate, as much as we don't want to be told what to do, and regardless of if it is constitutional or not, we would all be better off if everyone purchased at least a minimum amount of health insurance (major medical only) and if we all saved at least enough to live at the poverty level. So maybe we still think that age 65 is appropriate for retirement, we would then need to figure then minimum that someone aged 65 would need to have in savings in order to live until the old age insurance kicked in. I'm guessing about $300k (assuming that we still had medicare), so we are looking in the neighborhood of 10% of income being taxed into a personal retirement acount (not that its really a tax, it's just a required savings). Then once someone had reached that $300k amount, they would be exempt from any more forced savings. Once they reach the age of 65 or older, the funds in the account would be divided by the number of years/month until the insurance kicks in, and they would recieve that amount each year (or month).

Total, we are looking at about the same in insurance/forced savings as we have today in social security, but each individual will have some ownership of their investment account, more or less like a 401K or a IRA.

 

[imagep]

My fault. The $0.40 projection comes from a Social Security Administration, and figure is the present value of projected future benefits, including the possibility that you die before collecting. A person who lives into retirement will get better than the $0.40 and someone who dies early will get 0. The $0.40 is a composite, what you are likely to get back for every dollar contributed.

You are correct that Social Security is insurance. This figure allows you to look at SS on an investment return basis.

Thanks JoeTheEconomist, most posters on this forum just tell me that I am stupid when I suggest that social security is insurance. Your a standup guy, and welcome to the DP forum.

 

[Neomalthusian]

Inherent to the problem that people don't save their money is that we don't allow them to be SOL for not doing so, hence the culture forgets the value in doing so. Save us from our own imprudence, government.

Forced savings is yet another idea that wipes away incentives and consequences and just seeks outcomes.

If your priority is that no one shall die penniless in old age (outcome-focused), you're going to come around to support the nanny state interventions.

If your priority is that individuals do what they find to be in their best interests and accept and/or take responsibility for their own outcomes (process-focused), you'll seek to minimize any nanny state interventions.

 

[imagep]

Inherent to the problem that people don't save their money is that we don't allow them to be SOL for not doing so, hence the culture forgets the value in doing so. Save us from our own imprudence, government.

Forced savings is yet another idea that wipes away incentives and consequences and just seeks outcomes.

If your priority is that no one shall die penniless in old age (outcome-focused), you're going to come around to support the nanny state interventions.

If your priority is that individuals do what they find to be in their best interests and accept and/or take responsibility for their own outcomes (process-focused), you'll seek to minimize any nanny state interventions.

Yup, every bit if that is true.

It is the priority of this very rich country that we seek to minimize the number of people starving, and living in boxes, and dieing of treatable illness because we are a caring and compasionate people. So we either accomplish this by forcing people to save, or to purchase insurance, or to pay taxes (or any combination thereof). I understand why people call that the "nanny state", but personally I call it forcing personal responsibility onto everyone. The alternative is to not force people to be responsible, and then for those of us who are responsible to have to be responsible for not only ourselves, but our irresponsible peers.

We have to understand that this is a tradeoff. I'd much rather our gov force my neigbor to save his own money, than for our gov to take my money by force to give to my neighbor who didn't bother to save. I guess this is an example of me being more of a republican style conservative than a libertarian style conservative.

Also, being forced to do the responsible thing isn't a terrible burdon on those of us who act responsibly without force - in otherwords, it's not really force if were already going to do it. It's only force to those who would otherwise be irresponsible.

 

[Neomalthusian]

Yup, every bit if that is true.

It is the priority of this very rich country that we seek to minimize the number of people starving, and living in boxes, and dieing of treatable illness because we are a caring and compasionate people.

That's you generalizing your opinion onto the country as a whole.

I understand why people call that the "nanny state", but personally I call it forcing personal responsibility onto everyone.

Exactly the opposite. It removes the responsibility of deciding to save for later from the individual and hands it
over to whatever entity is forcing it to happen.

The alternative is to not force people to be responsible, and then for those of us who are responsible to have to be responsible for not only ourselves, but our irresponsible peers.

No. The idea is that we let people decide and learn what decisions are stupid, by facing the real consequences of stupidity. The smart cannot keep bailing out the stupid. The stupid have to get burned by their stupidity in order to learn from it. Success and failure are both necessary incentives to learn and grow.

We have to understand that this is a tradeoff. I'd much rather our gov force my neigbor to save his own money, than for our gov to take my money by force to give to my neighbor who didn't bother to save.

False dichotomy.

This is why welfare statism is thought to progress to oppressive communism. Eventually welfare programs start getting too heavy and so you have to start looking toward controlling people and making their decisions for them.

 

[imagep]

That's you generalizing your opinion onto the country as a whole.

Yup, but just because I am generalizeing doesn't mean my generalizing isn't true for the majority.

Exactly the opposite. It removes the responsibility of deciding to save for later from the individual and hands it
over to whatever entity is forcing it to happen.

No. The idea is that we let people decide and learn what decisions are stupid, by facing the real consequences of stupidity. The smart cannot keep bailing out the stupid. The stupid have to get burned by their stupidity in order to learn from it. Success and failure are both necessary incentives to learn and grow.

Sure, it removes negative consequenses for not being responsible, but thats only because it requires people to be responsible. I don't see how thats a bad thing. I think it is good for people to act responsible, regardless of their motivation, and I think that eleminating negative consequenses is also a good thing. Maybe thats because I like people and don't like suffering. I don't believe in any type of life after death. I don't think that we need to teach old people lessons, it's not like they will learn something and then become young again and avoid their origional mistakes. We only have one chance to do the right thing, there is certainly nothing wrong with being told what the right thing is if we can't figure it out on our own.

Seriously, think about it, if you lived your entire life, and never saved any money and didn't have to pay into the social security system, and then one day you woke up and realized that you were old and unemployable, what could would it do you that you may have learned something in the proccess? No good what-so-ever. It's not like you can go back to the beginning and do it all over again.

False dichotomy.

sorry, I don't know what "dichotomy" is. Regardless of what it means, I could probably say the same thing about your statement below.

This is why welfare statism is thought to progress to oppressive communism. Eventually welfare programs start getting too heavy and so you have to start looking toward controlling people and making their decisions for them.

Not really sure what that means either. Sounds to me that you are saying that the nanny state is an alternative to welfare. If thats what you are saying, then I will have to agree with you. Thats why I said it is a tradeoff.

We have the following choices:

1) We have redistribution of income
2) We require that citizens act responsibly and make responsible money management decisions
3) We allow people to live in cardboard boxes and to starve and to be denied needed medical care.

Even though I am not technically a "Christian", I do believe in Christian values, so option 3 is automatically elemenated for me. I see option 2 as being slightly preferable to option 1 to the extent that it is practical to be implementedm and I see option 1 as being to a modist degree neccesary to prevent the ultimate monopoly game style pooling of all wealth so that our economy can continue forever without having to have catistrophic resettings of wealth and income every generation or two.

 

[JoeTheEconomist]

Total, we are looking at about the same in insurance/forced savings as we have today in social security, but each individual will have some ownership of their investment account, more or less like a 401K or a IRA.

First, your fantasy world is well thought. One of the biggest problems that SS has is that it is a one-size fits all nature. Re-focusing it to let people tailor SS to their needs would make it infinitely more effective. Pure-insurance encourages people to retiree too soon. Your world would reduce the insurance component of SS such that they would work longer.

The problem that both you and Neomalthusian have is that Social Security is not forced savings. It is a paygo system which in reality is forced consumption. Money is taken from the young, and used to pay-off promises made to earlier workers now retired. The excess has been invested in government bonds which was used to finance tax cuts (for everyone). Nothing was really saved. Poverty is not cured. It is transferred to the young.

SS problem is that the first 30 years of retirees had a free ride. I base this statement on the 1944 testimony from the man who ran SS before the Ways And Means Committee. He said that payroll taxes needed to be more than tripled in order for Social Security to be actuarily sound. Instead of raising taxes, Congress raised benefits increased coverage and created new benefits. SS became a campaign reelection fund in which our grandparents voted to give themselves dollars for dimes - where future workers would make up the difference. Congress raised benefits every election year between 1950 and 1966. This system went insolvent in 1983.

In 1983, we didn't vote to cut benefits on people who hadn't paid for them. We raised taxes primarily on non-voters. Those people can now vote, and they are pissed. The debate about Social Security Reform today isn't about how to fix the system. It is about how to spread-out the loss in the system. Most of the politicians are telling us that we should do to our children what the voters of 1983 did. Push the cost onto non-voters.

 

[imagep]

First, your fantasy world is well thought. One of the biggest problems that SS has is that it is a one-size fits all nature. Re-focusing it to let people tailor SS to their needs would make it infinitely more effective. Pure-insurance encourages people to retiree too soon. Your world would reduce the insurance component of SS such that they would work longer.

The problem that both you and Neomalthusian have is that Social Security is not forced savings. It is a paygo system which in reality is forced consumption. Money is taken from the young, and used to pay-off promises made to earlier workers now retired. The excess has been invested in government bonds which was used to finance tax cuts (for everyone). Nothing was really saved. Poverty is not cured. It is transferred to the young.

SS problem is that the first 30 years of retirees had a free ride. I base this statement on the 1944 testimony from the man who ran SS before the Ways And Means Committee. He said that payroll taxes needed to be more than tripled in order for Social Security to be actuarily sound. Instead of raising taxes, Congress raised benefits increased coverage and created new benefits. SS became a campaign reelection fund in which our grandparents voted to give themselves dollars for dimes - where future workers would make up the difference. Congress raised benefits every election year between 1950 and 1966. This system went insolvent in 1983.

In 1983, we didn't vote to cut benefits on people who hadn't paid for them. We raised taxes primarily on non-voters. Those people can now vote, and they are pissed. The debate about Social Security Reform today isn't about how to fix the system. It is about how to spread-out the loss in the system. Most of the politicians are telling us that we should do to our children what the voters of 1983 did. Push the cost onto non-voters.

I can tell I am gonna like you already.

 

[JoeTheEconomist]

Thanks, take a look at our site, Fix Social Security NOW. Our goal is to bring honesty into the debate. I don't care how the debate takes shape so long as it is honest. Our FB community is : Fix Social Security Now | Facebook.

We are approaching the problem differently. Instead of pushing a specific solution, we show all of the Alternatives in down to earth terms without all of the polarizing rethoric. Again, we are different in that we listen to feedback. Tell us where we are wrong, or better yet tell us how to make the site or the FB community more compelling. In total, we need to create something that people want to talk about.

Here is the about us. If it doesn't answer your questions, just ask...

Fix Social Security NOW - About Us

 

[sawyerloggingon]

Thanks, take a look at our site, Fix Social Security NOW. Our goal is to bring honesty into the debate. I don't care how the debate takes shape so long as it is honest. Our FB community is : Fix Social Security Now | Facebook.

We are approaching the problem differently. Instead of pushing a specific solution, we show all of the Alternatives in down to earth terms without all of the polarizing rethoric. Again, we are different in that we listen to feedback. Tell us where we are wrong, or better yet tell us how to make the site or the FB community more compelling. In total, we need to create something that people want to talk about.
Here is the about us. If it doesn't answer your questions, just ask...

Fix Social Security NOW - About Us

Very interesting site, I may join up.