The case against Social Security.

[DaisyDay]

The government's tax receipts are increasing, even as the tax burden on individuals is eased--or perhaps because of it.

Wow, it's magic!

 

[variant]

There is going to be an increase pushed for "privatization", especially if the stock market continues bearish.

Usually stock market privatization of social security talk only happens when the stock market is booming. Bush wanted to borrow trillions of dollars to privatize it before the housing crash so that everyone would be completely out of luck when that one happened.

Thankfully back then America wasn't so dumb as to do such a thing.

 

[rambot]

Our trade policy is more to blame for our financial problems than anything else. We have an annual trade deficit of about $600 Billion, $50Billion in drug money losses, and another $50Billion dollars sent away by immigrants. Thus we need to borrow this amount each year to supply enough money to maintain the domestic economy.

Americans buy too much stuff they,arguably, may not need. The middle and lower classes also have not seen sufficient increases in their wages to maintain the ability to save like the old folks

 

[Fantine]

Considering that the average Social Security senior has to draw benefits for 11 years before he gets back merely the taxes that he paid--no interest, no dividends, no capital gains--just the pennies he put aside--I find your assertion that Social Security is "welfare" to be offensive and insensitive.

I imagine your preferred politicians (the ones who will write you off if you become disabled, unemployed, or needy) are successfully redefining (i.e. lying about) this benefit.

 

[OldWiseGuy]

Considering that the average Social Security senior has to draw benefits for 11 years before he gets back merely the taxes that he paid--no interest, no dividends, no capital gains--just the pennies he put aside--I find your assertion that Social Security is "welfare" to be offensive and insensitive.

I imagine your preferred politicians (the ones who will write you off if you become disabled, unemployed, or needy) are successfully redefining (i.e. lying about) this benefit.

True. SS only becomes 'welfare' when funds from general revenues are needed to supplement benefits. As long as it's fully funded by payroll taxes and the Trust Fund it's not welfare.

 

[OldWiseGuy]

Americans buy too much stuff they,arguably, may not need. The middle and lower classes also have not seen sufficient increases in their wages to maintain the ability to save like the old folks

We buy too many imports. Domestic spending is still needed to maintain the 'velocity' of money. Of course domestically produced products cost more but they sustain a higher standard of living.

 

[Albion]

Usually stock market privatization of social security talk only happens when the stock market is booming. Bush wanted to borrow trillions of dollars to privatize it before the housing crash so that everyone would be completely out of luck when that one happened.

Thankfully back then America wasn't so dumb as to do such a thing.

He wanted to allow you to invest 2% of your contributions. The Democrats described that as "privatizing Social Security," but it wasn't really deserving of that term.

 

[DaisyDay]

Thankfully back then America wasn't so dumb as to do such a thing.

Or the market crashed before they could get it done. I just hope that America remembers this time around when presented with these arguments again: "Democrats think you are too dumb to manage your own money", "Nanny-state!".

He wanted to allow you to invest 2% of your contributions. The Democrats described that as "privatizing Social Security," but it wasn't really deserving of that term.

That is privatizing if only partial. All that does is take money out of the SS system and put it into the hands of private, commercial, profit-driven money managers. There is nothing preventing people from putting 2% of their own money into retirement accounts now. Why remove the contributions from SS?

Donald signed an EO which could rollback "the so-called fiduciary rule, which is slated to go into effect in [last] April and will likely now be delayed, requires advisers to put their clients' interests ahead of theirs." (Source) He wants you to put your retirement nest egg into the hands of people who do NOT have to put your interests above their own interest in generating fees for themselves because investors should have access to all advice, even bad, harmful advice contrary to their interests, evidently. So far, the Dept. of Labor has declined to follow through.

 

[variant]

He wanted to allow you to invest 2% of your contributions. The Democrats described that as "privatizing Social Security," but it wasn't really deserving of that term.

No not 2% of contributions, but 2% of your pay.

It was a third of your payroll tax 6.2 coming from you and 6.2 coming from your employer, which works out to the portion being 2% not of your contributions but of your take home pay, 4% when your employer contribution was taken into account.

Social security would have had to work with a third less money and borrow the difference for present retirees.

 

[OldWiseGuy]

Or the market crashed before they could get it done. I just hope that America remembers this time around when presented with these arguments again: "Democrats think you are too dumb to manage your own money", "Nanny-state!".

That is privatizing if only partial. All that does is take money out of the SS system and put it into the hands of private, commercial, profit-driven money managers. There is nothing preventing people from putting 2% of their own money into retirement accounts now. Why remove the contributions from SS?

Donald signed an EO which could rollback "the so-called fiduciary rule, which is slated to go into effect in [last] April and will likely now be delayed, requires advisers to put their clients' interests ahead of theirs." (Source) He wants you to put your retirement nest egg into the hands of people who do NOT have to put your interests above their own interest in generating fees for themselves because investors should have access to all advice, even bad, harmful advice contrary to their interests, evidently. So far, the Dept. of Labor has declined to follow through.

Trump's EO has it backwards. Home ownership and college are wealth builders, not the objects of such financial advice. How much financial advise does one need to save up the down payment for a house?

Also we have a financial advisor, who is a "fiduciary", who has a weekly radio show. As I listened to him over the months he gradually introduced and promoted the sales of the dreaded annuities, with their huge up-front commissions. Financial advice info-shows aimed at soon-to-be retirees are becoming more common as this group represents the greatest potential for earnings for these "advisors", be they fiduciaries or not.

 

[Albion]

That is privatizing if only partial.

Somewhat like being only partially pregnant? No, its a misuse of the term, in this case intentionally so.

 

[Andrew77]

When men predict the future, it's not a sure thing. I wouldn't disagree with what you're saying about SS, what it is and what it is not. What I would question is the idea that things would be economically better for a nation without SS.

Prior to it becoming law, America was also devastated even though that population understood they needed to save for their old age. There was no better place to immigrate to, no other place to escape from life's harsh realities. So prior to its' enactment, were people back then any better off or worse because they saved for retirement?

It's hard to predict the future especially a future that was rejected when SS turned into law. It's just as likely that today, without that decision and returning to the past, things could be a lot worse.

However I would also say that the educational system, media and politicians have not put enough emphasis on the idea of saving for the future. Nowadays the majority of the concern is placed on social injustice rather than being economically responsible.

There was no demand for SS before it existed. In fact there were a number of attempts to sue the government for taking people's wages, by the people.

Inherently SS is theft. It's stealing of my money to give to people who have not earned it. It's a ponzi scheme. That is literally what it is, and always has been.

I would argue that in fact they were better off. They were better off for several reasons. More people saved. Obviously if you know that if you save nothing, you'll have nothing, your motivation to save for yourself is higher than if you think government is going to steal from working people to pay for you.

The other reason, is that people had family, and social fabric. Some of that social fabric still exists, but is far diminished.
Moose International

Many of these clubs and organizations existed specifically as a social network of mutual support. Today these are far more rare, because everyone mindlessly depends on government theft, to support their old age.

It's not that hard to predict the future, if you assume current things being constant. At this rate in the next decade, Social Security will become increasingly unsupportable. Taxes will have to go up, and benefits will have to be cut. Both will be opposed from all sides of society, resulting in whoever makes the best promises in lying, will be elected. Eventually the only solution will be to hide the realty, with accounting shenanigans, which will eventually destroy the country when the debts exceed our ability to pay.

This is exactly what happened in Greece. Thus far, we are following their path in lock step.

Could we change direction? Sure. Bush wanted to allow partial privatization of SS. But it didn't happen. But if we do the exact same thing as Greece, and expect a different result, that's crazy. Right now, that's the current plan we're following.

 

[Andrew77]

.
Not really true. ...
When Will Social Security Run Out?

For the Social Security Trust Fund, since 1935 until recent years, its income from FICA taxes has always exceeded its payout to retirees, resulting in a surplus of about US$2.8 trillion in the SSTF today, or US$2,800 billion or US$2,800,000,000,000.
....... The scandal is that the US government has already spent this US$2.8 trillion and left US$2.8 trillion of US Treasury Bonds or IOUs in the SSTF. This debt is part of the US$20 trillion US Federal debt. ...
( The Real Owner of the U.S. Debt Will Surprise You )
So, if the US government goes bankrupt or insolvent or credit-default, so does the SSTF.

In recent years, the payouts by the SSTF has exceeded its income from FICA taxes, resulting in the drawing down of the US$2.8 trillion surplus because more workers have retired, especially baby-boomers. If nothing is done, it is expected the US$2.8 trillion surplus in the SSTF will be zero or gone in 2035.
....... This drawing down of the SSTF will also put a heavy strain on the US government's Federal budget. Hence, there are proposals to increase the FICA taxes, the retirement age and the number of contributors.

Again, go back to the book I mentioned before.

The High Cost of Good Intentions: A History of U.S. Federal Entitlement Programs

There is no SSTF. There never was. There has never been surplus. Social Security Tax, is simply an income tax, like any other income tax.

All the money goes to the same place.

All those taxes go to the same goverenment account. The medicare tax does not go to medicare. It goes to the federal government accounts. The social security tax, does not go to the social security trust fund. There is no trust fund. It goes to the same account with all the rest of the income taxes.

There is no trust fund. All the money goes to the Federal government and is spent.

And listen.... THERE NEVER WAS. Social Security has operated the same way since it was created in the 1930s.

They are not 'drawing down' the SSTF, because there is no trust fund. There are no assets. There are no Treasury Bonds. There are no assets to "draw down". Never were. Never will be. All money is collected and spent. Period. Always been that way, since the 1930s.

Yes, there are "IOU"s. Which literally means bits of paper that say "IOU" on them. Literally. They are not real bonds. Not real assets. They are literally papers that say the government, owes the government, money.

Now when the government is borrowing money year over year, what real value do IOUs have? None. The government has no ability to pay itself money. The only value they have is on the ability of the government to borrow.

Why do you think Obama said that if the government didn't increase the debt limit, that Social Security would be cut? Because the "Social Security Trust Fund" has zero money. There is no Trust fund. It is a ponzi scheme. The only money the "trust fund" has, is money it borrows or steals from working people. There is no assets. It's all a ponzi scheme.

And it ALWAYS WAS. That's how the system has operated since the 1930s.

 

[Andrew77]

"But that same person who is paying $600 a month into social security, if they instead put that money into a private retirement in good growth stock mutual funds, would end up with $5 Million by retirement."

Nobody who makes 50K a year is paying $600 social security tax. Your numbers are way off there.

Current Social Security tax is 12.4%. If you make $50,000 a year, you are paying $6,200 a year into Social Security. That works out to be $512 a month.

So I was off using quick and dirty math, by $85 a month.

Ok, You are right. So lets look at the numbers again.

If you put $512 a month into a good growth stock mutual fund from age 25 to 67, you'll end up with $2 Million dollars at retirement.

That assumes a respectable 8% return on investment in a somewhat conservative mutual fund.

Why you would do that is beyond me. My mutual fund is returning 12.8%. You would end up with $8 Million.

Or you can leave your money in Social Security, and end up with $1,300 at retirement. Nearly poverty.

Even if you put your money into a terrible investment, returning just 6% a year. That's $1.2 Million at retirement.

Which of the 3 private investment examples I provided, is worse than Social Security?

 

[Theodoric]

Current Social Security tax is 12.4%. If you make $50,000 a year, you are paying $6,200 a year into Social Security. That works out to be $512 a month.

So I was off using quick and dirty math, by $85 a month.

Ok, You are right. So lets look at the numbers again.

If you put $512 a month into a good growth stock mutual fund from age 25 to 67, you'll end up with $2 Million dollars at retirement.

That assumes a respectable 8% return on investment in a somewhat conservative mutual fund.

Why you would do that is beyond me. My mutual fund is returning 12.8%. You would end up with $8 Million.

Or you can leave your money in Social Security, and end up with $1,300 at retirement. Nearly poverty.

Even if you put your money into a terrible investment, returning just 6% a year. That's $1.2 Million at retirement.

Which of the 3 private investment examples I provided, is worse than Social Security?

Are you self-employed? I believe your employer pays half of that tax.

 

[Albion]

There was no demand for SS before it existed. In fact there were a number of attempts to sue the government for taking people's wages, by the people.

Inherently SS is theft. It's stealing of my money to give to people who have not earned it. It's a ponzi scheme. That is literally what it is, and always has been..

Well, you are speaking of a tax, so that's true to the extent that it applies to all taxes. On the other hand, there is a guaranteed return, often more than the taxpayer paid in, and that's different from other taxes.

 

[Andrew77]

Correct, SS is not an individual account, but so what?



Sure, that's why everyone was fine when the Great Depression happened. Free market capitalism saved the day.

The great depression was due to socialism. Hoover was a massive interventionist. In fact, nearly all the programs that FDR put in place, were originally pioneered by Hoover. Massive socialism. The original 'make work' programs were all Hoover. FDR just did them with greater scope, which resulted if you remember, in driving the economy back down into recession, inside the great depression.

If you want to look at how free-market capitalism works, look at the recession in the early 1920s. The government cut taxes, and cut government spending. Resulting in the roaring 20s.

That's how it really works.

When Hoover got into power, his first act was to kill international trade, and when the recession came, he increased taxes and spending. The recession became a depression. FDR did the same, and dragged out the depression for over a decade.

By the way, history repeated itself. In early 2000s, we had a recession. Bush largely just cut taxes, and did little else. The economy recovered.

In 2007, Bush and then Obama, both increased spending massively, and increased regulations. Resulting in the longest and worst recovery from a recession in US history.

 

[Andrew77]

Are you self-employed? I believe your employer pays half of that tax.

Where do you think the employer gets the money to pay half the tax? From paying YOU less. You are paying all the taxes, whether it shows up on your pay stub or not.

All employers pay wages based on the total cost of employment. This is well documented.

If the employer is paying $14,000 in taxes and ObamaCare benefits, then your wage is cut down to $30,000. You are paid less.... for every dollar the employer pays on your behalf. All employers do this.

 

[Andrew77]

Well, you are speaking of a tax, so that's true to the extent that it applies to all taxes. On the other hand, there is a guaranteed return, often more than the taxpayer paid in, and that's different from other taxes.

First off, there is no guaranteed return.
Flemming v. Nestor - Wikipedia

The court ruling against Nestor, was over this very issue. He demanded compensation from Social Security because he paid into it for decades. The court ruled he has no legal right to social security.

Social Security is a welfare program.

You as an American citizen, paying taxes to government, have no more of a right to social security benefits, than you do paying taxes to the government have a right to food stamps and welfare checks.

Make no mistake. If the people of this country refuse to pay out money for social security, you won't get anything. This is what happened with Greece. The taxes were so high, that people simply refused to pay them. The pension system failed, and people were left with nothing.

Equally if we vote for people who promise to reduce taxes by eliminating or reducing social security, you will be cut off.

I promise you. The court of this county made this clear. You have no right, or guarantee, to anything.

By the way, this is why real retirement programs are entirely different. I have a legal right to the shares I own. If they don't pay out, I can sue them for the value of the assets I have purchased.

You.... can't.

 

[Andrew77]

Be prepared for more attacks on Social Security and Medicare as the national debt rises because of the Republican tax law change. The money is going to have to come from somewhere.

That's the problem. Stealing people's money is inherently evil. It's just flat out wrong, and evil.

And we've seen how these systems go. All throughout Europe, they are having problems. All throughout south America, they are having problem. Greece is a perfect example of how your system fails.

Eventually people simply refuse to pay the tax. You can make the tax whatever you want, but at some point people simply refuse to pay.

How Big Is the Underground Economy in America?

Do you know what the Shadow economy is? It's the underground economy, of people working who simply refuse to pay taxes.

The last estimates, which are now over a decade old, suggest the Shadow economy is $2 Trillion.

That's people working, and paying zero into social security.

I had a lady where I worked, tell me her husband was a back yard auto mechanic. She said this to me, openly. They had two sets of books. The legal books, and the black books. More than half their business was shadow. So they'll collect social security, but they are not paying very much into it.

This is the reality you need to deal with. People are not going to keep endlessly paying whatever you want, to fund all your programs. You can blame republicans, but we're the ones facing reality.