The case against Social Security.

[Norbert L]

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.

There are two things here that I notice and I want to make a few comments about. Stating that predicting the future is not that hard and second, that a time limit is offered by "in the decade".

From my observation within a specific church that is always in the mode of "Christ will return soon, most likely our life time". One thing pastor's have learned to do is avoid giving a time frame. The reason should be obvious, if you're familiar with news in the last decade one name should sum it up, Harold Camping. Proclaiming such things certainly gives Christianity a bad reputation, however economists aren't treated with the same standard. Now my point isn't about whether or not they should be on the same level but in both cases it's a guessing game. Also if I am remembering correctly, only one economist out of the entire profession was credited on mainstream media with having predicted the 2008 catastrophe.

It's like picking out someone at a young age and telling them they're going to die and when they do die in their 90's, saying "Ahay, I was right!". There's far more at work in predicting the future than people think.

I would also add there is far more involved at the time SS was introduced. Prior to President Roosevelt, America was grappling with the moral issue on whether or not the government should grow, become bigger and be involved with charity work. Some people and politicians had the view that it should be the churches and small communities job of looking after the welfare of the poor, Roosevelt did not. Now given the state of Christianity today, the social structure and neighborhoods of many large cities today, I would say there is good reason to believe SS was the better practical course of action.

 

[OldWiseGuy]

Are you suggesting that the only reason the Greek system failed, was because magically all the Greeks suddenly didn't have confidence? Or Venezuela suddenly didn't have confidence?

No, neither are true. Particularly with Venezuela, where people had protests in support of the system that was failing, while it was failing.

What sustains an economy, or the value of money, is not confidence of the citizens. If that was the case, no system would ever fail.

What causes any system to fail, is mathematical facts. Facts don't care if you have confidence in the system or not.

In Greece, the government simply did not have the money to pay for the costs of their bloated social system. Didn't matter that the Greeks had confidence in the system, or not.

Similarly in Venezuela, it didn't matter if the people had faith in the money of Venezuela, or the governments ability to back that money, or not. The value of the money dropped because of math.

Venezuela Is Living a Hyperinflation Nightmare

Your ability to have confidence doesn't make the slightest difference. Nor the confidence of your neighbors, or fellow citizens.

If the government continues to over spend, and the debt becomes too much to pay off, nothing you have faith in, or confidence in, or believe in, or your IOUs will make any difference.

You will not get paid.

And saying that the money system will fail anyway, so we might as well roll with it.... is equal to saying we're all going to die, so why should I stop using heroin?

You are not speaking wisely.

The money system does not have to fail. We can choose to be smart, and stop blowing money on a doomed pension system. We can start to be fiscally smart, instead of fiscally suicidal, and not commit suicide.

We have the ability to move off the path of doom that Greece and Venezuela followed. But it involves people who are willing to stop making excuses, and foolish statements, who want to accept the facts, instead of ignoring them over political and ideological conveniences, and change to a better system.

Greece's economy is much more vulnerable than ours. Shipping and tourism are mainstays and if either declines the whole economy suffers. Happily for them tourism is showing a healthy rebound. Shipping probably will too as the global economy picks up.

I sense that you have a better system in mind. Care to share?

 

[OldWiseGuy]

Not according to the Bible. I'll take Godly wisdom over foolish arrogance any day. Don't think G-d will continue to bless this land, if the land is polluted with an attitude of arrogance.

I conduct my financial affairs in accordance with biblical principles. That's why more like me are needed.

God will bless this land until the fullness of the promised blessing is complete (which may have already happened).

 

[Mountainmanbob]

Soc Sec is not the best Program.
But, many (especially ones who didn't plan for a nice retirement) count on it to live.

This one it seems we need to keep going.

M-Bob

 

[OldWiseGuy]

The difference is, all of those IOUs, because they are in fact official legal tend, they have value on the open market. If I own stock in a company, and the company refuses to honor that stock, I can sue them in court. I have legal grounds, because it is a legally binding document.

None of this is true of the "social security trust fund". None of it. The "Treasury Bonds" that are in the social security trust fund, are not real. They are not marketable. They are not official.

Using that logic a key stamped "do not copy" won't open the lock.

 

[OldWiseGuy]

Yeah, well you didn't shake anyone's hand at the government, and if you think they would honor a hand shake anyway, then you are not thinking wisely.

If push comes to shove, they'll dump you in a moment. If they have to choose between destruction of the country, or your pension, they'll toss your pension in a heartbeat. Again, there are dozens of examples of this around the world.

And lastly you are completely wrong about that fancy paper.

If there actually was a trust fund with real treasury bonds in them, then when the government is incapable of paying it's bills, the Social Security Administration could simply sell the marketable Treasury bonds on the open market. They could at least pay out social security from the treasury bonds.

But that isn't how it is. There are no bonds. Not real ones. Just bits of paper.

If the government can't pay it's bills, like back in 2011... and was running a real risk of going broke.... there is nothing that Social Security Administration can do, because there is no trust fund.

If the government doesn't have the money, there are no assets in Social Security to pay your checks with. And you want to tell me that is a better than having real assets?

You are not speaking with wisdom.

SS Trust Fund is safe from the "Wall Street casino", that's the beauty of non-marketable securities. It's the "lock box" that keeps these debts safe.

Regarding Treasury bills, if needed they can be sold to raise money to pay Social Security beneficiaries. It's all good.

Regarding (financial) wisdom, I'm doing alright.

 

[wing2000]

We are right now, doing exactly what Greece did. In the 1990s, people warned Greece over and over that they can't keep funding their pension system. They warned that taxes were too high, and people wouldn't pay them. They warned eventually their debts would get too high.

Everything they warned about for decades before, came to be. Everything.

The pension system crashed. The government when bankrupt. The government funded health care system crashed. The public transport system crashed. Over half a million people fled the country. The city was engulfed in smog, because no one could pay for natural gas, and were burning wood.

You follow the same path, and you will have the same result.

It seems you misunderstood. What course are you proposing we follow?

 

[Andrew77]

Social Security is a trust fund.

Well... using facts..... it is not. There is no trust fund. You can call it that, just like I can call myself president of the universe. Doesn't make it true.

 

[OldWiseGuy]

Well... using facts..... it is not. There is no trust fund. You can call it that, just like I can call myself president of the universe. Doesn't make it true.

And yet the checks keep coming (mine by 'direct deposit').

SS benefits are actually a 'temporary financial estate' as well. Once a beneficiary receives everything back that they have put in (with interest) the rest is unearned gravy. At 2 percent annual interest I would have to have interest bearing financial assets of nearly $1Million in order to receive what I get from SS annually. At 3 percent I would need nearly $700,000.

The only 'debt' incurred by the government by SS is the interest paid on the money borrowed from the Trust Fund. The principle amount is owed to those wage earners that will receive those retirement benefits. The government borrows the Trust Fund money for the benefit of the taxpayers (citizens) and so the taxpayers (citizens) must pay it back. The government is merely the 'collection agency'.

You do realize that a home mortgage is an "unfunded liability" of two to three times the current value of the house, with no guarantee that it's value will increase. Many whose home value is now "under water" learned this the hard way. So 'real' assets such as property aren't as secure as you might think.

During the real estate crisis and the recession people lost trillions in value. "Assets" in real estate, stocks and bonds, went into the tank. Through it all I prospered. While most fortunes were in decline mine was ascending. I must have been doing something "wise", eh?

 

[Andrew77]

In a sense that is correct. And there is no assurance that the sun will rise tomorrow.

But there is a return that is specified and has always been paid. That is different from other taxes.



And they aren't guaranteed either. Just ask the former employees of many corporations that have gone bankrupt or otherwise failed to pay the pensions that had been negotiated. Sure, the employees can sue--as you said--and get 15 cents on the dollar or something like that. This is not what I would call a guaranteed return.

New Legislation Would Raise Retirement Age to 69

That legislation almost passed. The push to raise the retirement age will happen now or later.

Yeah, there has been a return that is specified, and has been paid. Again, all social works perfectly until you run out of money. The Greeks and the Venezuelans said the exact same thing, and what they said was true.... until it wasn't anymore.

And unlike the sun rising, this is a simple matter of math. The program is not sustainable.

And they aren't guaranteed either. Just ask the former employees of many corporations that have gone bankrupt or otherwise failed to pay the pensions that had been negotiated. Sure, the employees can sue--as you said--and get 15 cents on the dollar or something like that. This is not what I would call a guaranteed return.

I never suggested there is a guaranteed return.

Further, I oppose all pensions. When you talk about a pensions, you are talking about the exact same system that Social Security is.

A 401K or IRA, investment, is something that YOU OWN. It is an asset that is much owned by you, as purchasing a rental property.

This is what I advocate.

When you talk about company pensions, you are talking about something identical to Social Security. It's a ponzi scheme. Current working employees, are funding retired employees.

But when the money runs out, and the company and current employees, can no longer afford to pay the pension, then the system fails.

And all those employees of those pension systems that said "But there is a return that is specified and has always been paid." And then suddenly it wasn't paid.

My point to you is, your example is actually proof of my own position. Those pension systems that failed, and all the employees lost all their money... those system are identical to Social Security.

If not a single pension system failed, I would be more likely to have faith in Social Security, because they both operate exactly the same way. The fact that they have routinely failed, should make you worry about Social Security, because SS operates the same way.

 

[OldWiseGuy]

New Legislation Would Raise Retirement Age to 69

That legislation almost passed. The push to raise the retirement age will happen now or later.

Yeah, there has been a return that is specified, and has been paid. Again, all social works perfectly until you run out of money. The Greeks and the Venezuelans said the exact same thing, and what they said was true.... until it wasn't anymore.

And unlike the sun rising, this is a simple matter of math. The program is not sustainable.

And they aren't guaranteed either. Just ask the former employees of many corporations that have gone bankrupt or otherwise failed to pay the pensions that had been negotiated. Sure, the employees can sue--as you said--and get 15 cents on the dollar or something like that. This is not what I would call a guaranteed return.

I never suggested there is a guaranteed return.

Further, I oppose all pensions. When you talk about a pensions, you are talking about the exact same system that Social Security is.

A 401K or IRA, investment, is something that YOU OWN. It is an asset that is much owned by you, as purchasing a rental property.

This is what I advocate.

When you talk about company pensions, you are talking about something identical to Social Security. It's a ponzi scheme. Current working employees, are funding retired employees.

But when the money runs out, and the company and current employees, can no longer afford to pay the pension, then the system fails.

And all those employees of those pension systems that said "But there is a return that is specified and has always been paid." And then suddenly it wasn't paid.

My point to you is, your example is actually proof of my own position. Those pension systems that failed, and all the employees lost all their money... those system are identical to Social Security.

If not a single pension system failed, I would be more likely to have faith in Social Security, because they both operate exactly the same way. The fact that they have routinely failed, should make you worry about Social Security, because SS operates the same way.

Wrong. SS is guaranteed by the "full faith and credit of the U.S.", whereas pension funds are largely at the mercy of the market with no guarantees of security. The only real security they have is those pension funds that are invested in government securities.

 

[Albion]

New Legislation Would Raise Retirement Age to 69

That legislation almost passed. The push to raise the retirement age will happen now or later..

Could be, but at the same time, the benefits have been sweetened many times along the way, too.

 

[Andrew77]

There are two things here that I notice and I want to make a few comments about. Stating that predicting the future is not that hard and second, that a time limit is offered by "in the decade".

From my observation within a specific church that is always in the mode of "Christ will return soon, most likely our life time". One thing pastor's have learned to do is avoid giving a time frame. The reason should be obvious, if you're familiar with news in the last decade one name should sum it up, Harold Camping. Proclaiming such things certainly gives Christianity a bad reputation, however economists aren't treated with the same standard. Now my point isn't about whether or not they should be on the same level but in both cases it's a guessing game. Also if I am remembering correctly, only one economist out of the entire profession was credited on mainstream media with having predicted the 2008 catastrophe.

It's like picking out someone at a young age and telling them they're going to die and when they do die in their 90's, saying "Ahay, I was right!". There's far more at work in predicting the future than people think.

I would also add there is far more involved at the time SS was introduced. Prior to President Roosevelt, America was grappling with the moral issue on whether or not the government should grow, become bigger and be involved with charity work. Some people and politicians had the view that it should be the churches and small communities job of looking after the welfare of the poor, Roosevelt did not. Now given the state of Christianity today, the social structure and neighborhoods of many large cities today, I would say there is good reason to believe SS was the better practical course of action.

The media is garbage. I think we should all know this by now. There were actually dozens of people in the field of economics warning about the coming sub-prime crash, all the way back to 2004, 2006, and 2007. They were all ignored as freaks.

Obviously if Barny Frank (Democrat) had to stand up and dismiss the claims there was a housing bubble, then there were more than a enough people warning about it.

Beyond that, I would agree that we don't 'predict the future'.

If by future, you mean when Christ is going to return, well obvious the Bible itself says absolutely no one will know the day of his return. In fact, the moment anyone anywhere says "Jesus will return on X day" I make plans to be busy that day. I know it will be a calm day.

And I get what you mean about vague future predictions. A broken clock, is right twice a day.

I would argue that Social Security is entirely different from both of those, is specific way. We're not talking about random predictions, that are shots in the dark.

We're talking about high school level math. It's a mathematical fact. Not a vague prediction.

The amount of money that is coming into Social Security, is not enough to pay out the obligations Social Security has in the future.

If I have 10 apples, and I'm collecting 2 apples a year, and paying out 3 apples a year... it's not a vague prediction to claim I'll run out of Apples.

The only difference between that example, and social security, is that if the economy goes badly, I'll collect fewer apples, and I'll be required to payout more apples. If the economy goes well, I'll pay out fewer, and collect more.

But over the long term, the math is perfectly clear. Social Security WILL GO BUST. It's not a prediction... it's mathematical fact.

https://www.ssa.gov/finance/2017/Financial Position.pdf
Page 33 of the report.
--------------------------
Social Security’s financing is not projected to be sustainable over the long term with the tax rates and benefit levels scheduled in current law.

In present value terms, the 75-year shortfall is $12.5 trillion

Some of the possible reform alternatives being discussed – singularly or in combination with each other –are:
• Increasing payroll taxes;
• Slowing the growth in benefits;
• Finding other revenue sources (such as general revenues); or
• Increasing expected returns by investing the OASI and DI Trust Fund asset reserves, at least in part, in private securities.
--------------------------

What have I been saying this entire thread? In order to continue with Social Security, we would have to increase taxes or cut benefits.

First 3 things they offered as a solution, cut benefits, and increase taxes. Finding other revenue through general revenues, is essentially increase taxes.

The only other option, is ironically the same option I have been pushing this entire thread. Privatization.

This isn't a random prediction. This is a mathematical fact. Social Security, if we keep doing what we're doing, will destroy this country. It will not survive in its present form.

 

[Andrew77]

Wrong. SS is guaranteed by the "full faith and credit of the U.S.", whereas pension funds are largely at the mercy of the market with no guarantees of security. The only real security they have is those pension funds that are invested in government securities.

Do you know why the UK went into a full austerity program, and started cutting everything?

The UK government tried to sell bonds, and when they tried to sell them, the sale failed. People refused to buy UK bonds.

Why? Because the amount of UK debt was so high, relative to their tax income, that people refused to lend money to the UK government.

The UK government was on the verge of bankruptcy. They had no choice but to cut everything.

When you say that SS is guaranteed by the full faith and credit of the US... that literally has no meaning.

The Greek government had full faith and credit, up until the very month that they crashed. And instantly they had zero faith, and zero credit.

The UK government had full faith and credit, up until the day they failed to sell all their bonds, and then they have limited faith, and limited credit.

That 'full faith and credit' can change on a moments notice. Literally over night.

Now let me back up and say this.....

If the US government was running a surplus, and if we actually had money in the bank... like literally assets to sell, and cash in reserve.....

Then, I would agree with you. That's fairly safe to have full faith and credit in the US government, if we had trillions in reserve cash.

We don't.

The US debt right now, is $20 Trillion. The entire gross domestic product of this country, is $18.5 Trillion. If the US government could actually collect 100% taxes for a whole year, we would still owe trillions in debt.

What...... are you putting your faith into? You have faith in debt? You have faith in un-paid bills? You are not putting your faith into anything good.

 

[Andrew77]

Greece's economy is much more vulnerable than ours. Shipping and tourism are mainstays and if either declines the whole economy suffers. Happily for them tourism is showing a healthy rebound. Shipping probably will too as the global economy picks up.

I sense that you have a better system in mind. Care to share?

Well obviously any system that is smaller, is more vulnerable. The USSR was a very large system. As a result it required 70 years to fail. But the problem is, it still failed. Any system based on socialism will fail. It might take a short time like Venezuela, and it might take a long long time like the USSR.

But regardless, it will still fail.

The solution is easy. Let people opt-out of a bad system. Give the people control over their own money.

Obviously, if you and those like you, believe that Social Security is a trust fund, then there should be no problem letting the rest of us exit a system we don't want.

You believe that your social security check is being paid to you from the money you put in, right?

So let us exit the system. Let me put my Social Security money into a private account, in my own private investments. I'll retire a multi-millionaire, and you can collect your thousand a month.

Let us have the freedom to choose what happens with our money. That's the solution.

 

[Andrew77]

I conduct my financial affairs in accordance with biblical principles. That's why more like me are needed.

God will bless this land until the fullness of the promised blessing is complete (which may have already happened).

Really? You look at the corruption and waste of the Federal government.... $1 Million dollars designated for the National Women's Party, to have a private headquarters in Washington DC. Over $16 billion spent on pet projects and political pay-backs each year.

And you actually support giving these people your money? And then wonder why the government is going deeper into debt?

Proverbs 22:7 says that the borrower is slave to the lender. Your support of these government programs is making slaves of the entire country.

Luke 14:28-30 says that we should consider the costs of our projects, before we do them. Well the cost of social security is more than we can pay.

Proverbs 13:22 says a good man leaves an inheritance. Social Security are leaving nothing but debts to their children.

Luke 16:11 Says you have to use your money wisely, or you will never get true wealth. Giving your money to a bunch of politicians who blow it on political pay-backs and irresponsible spending, can not be considered wise.

I don't know what version of Christianity you subscribe to, but I don't know how you can read the Bible and support these wasteful and irresponsible government programs.

 

[Andrew77]

Soc Sec is not the best Program.
But, many (especially ones who didn't plan for a nice retirement) count on it to live.

This one it seems we need to keep going.

M-Bob

Part of the reason people don't plan for retirement is specifically because we have social security. We need to stop that. You are rewarding irresponsibile behavior.

If you reward your children every time they do something dumb, you are going to create a hellion.

Well we are doing that with society, and creating millions of hellions.

And regardless.... Social Security is going to fail. It's no a matter of I might, or might not, so we need to keep going with it.

It will fail. The Social Security administration itself says it will fail. And if we keep pushing this bad program, you'll end up like Greece or Venezuela. That's a bad plan.

 

[Andrew77]

Using that logic a key stamped "do not copy" won't open the lock.

Using what logic? I'm just telling you the flat out truth. What 'logic' are you referring to?

 

[Andrew77]

Could be, but at the same time, the benefits have been sweetened many times along the way, too.

True, and that's part of the problem.

In a democracy, if you get 51% of the voters to want something, then they get it, even if it results in destruction later.

Social Security started off as a 1% tax. Now it is 12.4% tax.

So the costs have gone up. Have the payouts gone up too? Sure.

Social Security: Many pay more in taxes than they'll get in benefits

Nevertheless, at this point you are lucky to get back what you pay in.

Do you realize how pathetic and sad that is? Name any other investment, any real investment, where you get back less than... or even the same amount, that you put in? That's assuming you live long enough. If you die, all the money you put in, is lost. When I die, all the money I put into my retirement goes to my family, or a charity I wish.

I was sitting here wondering what is the absolute worst retirement investment I could put my money into, as an alternative to Social Security.

I hunted down the list of investments over at American Funds, and one mutual fund caught my eye....

U.S. Government Securities Fund ROI 3% over the last 10 years.

Now think about this.... if I put all money retirement money into this bond fund, and you put your money into social security, we are both effectively putting our money in the same place. The US government.

The difference is, if both of us work the same jobs, and put in the same amount of money, earning about $50,000 a year.... when both of us reach 67 year of age, you'll get $1,300 a month and live in poverty until you die, and barely get out of Social Security, how much you put in.

Me, I'll have over half a million dollars, and have doubled my money.

How pathetic is that? You put your money in social security, and barely get back what you pay in. I put my money into US government bonds, outside social security, and end up with half a million. Same government for both.

And then I realize how it was even more crazy.

Let me ask you something. Assuming both of us have our entire retirement with the US government, you through social security, and me through buying government bonds outside social security.

If by chance the government ends up in a fiscal crisis, and by a downturn in the economy, or some other problem, ends up unable to pay both bond holders and Social Security recipients, so that the government must choose who to pay, and who not to pay.....

Let me ask you.... who do you think the government is going to pay, you in social security, or me a bond holder? Who do you think is going to get paid first, if there isn't enough money to go around?

Let me answer that for you. Me. I'm going to get my money, before you do.

There are two reasons for this.

First, legally I have rights. You don't. Again, you have no right to social security. Social Security is a welfare program, and they can cut it like they can ObamaPhones, Food stamps, and SNAP. You have no legal rights.

I, having a US Bond, have legal rights. If they refuse to pay, I can legally sue the US Government, and force them to pay. When Argentina tried to refuse to pay back it's bonds, they were sued, and lost, in international court. Same with Venezuela when they confiscated land, and refused to pay value. Same with Greece.

I have legal rights to the bonds I purchase, and I can sue the government for payment. So between you and me, you'll be the one not getting paid.

Second, fiscal ramifications. If the government refuses to pay back bonds, then people will stop buying US bonds. This is what happened in Greece. The moment the Greek government even considered not paying back bonds, the people stopped buying Greek bonds.

This is exactly why Greece continued to pay back bonds, and instead cut Pensioners off.

Point being, again if there is a fiscal problem in the US government, you'll be cut off, before I will, even if we're both putting our retirement into the US government.

This is how bad Social Security is. Even if I invest into US government just like Social Security, I'll end up with more money.... I won't lose the money if I die.... and if there is a fiscal problem, I'll be paid before you will. I have more security, than you do in Social Security.

 

[Mountainmanbob]

We need to remember that some poor souls on their own would save nothing for their retirement.
Social Security kind of takes care of these ones.
I'm not one -- I paid much money over many years into two excellent retirement plans.
I wanted a job with good benefits and looked and applied until I got one -- 32 years later -- retirement.
M-Bob