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I have a great plan for "saving" Social Security.
Today's average U.S. life expectancy is 78 years. Let's make the retirement age to collect Social Security 79.
Presto. The "system" is saved (or until life expectancy increases, at which point we can raise the retirement age again).
Pretty dumb? Sure. But if the goal is "saving" the system, nothing would work better.
Wait a minute you say. It's not about the "system" but about saving me, my children, my grandchildren, my neighbors. It's about making individuals better off.
But if the point is making individuals better off, why do we only hear assurances from most politicians that they will "save the system"?
The "solution" that I have proposed here is one extreme example how Social Security, if we insist on keeping it as it is today, can be "saved."
How about raising your taxes to get the same amount of payout at retirement?
How about leaving your taxes the same but requiring that you pay them for a longer period of time, raising the retirement age to collect?
Can you imagine getting a call from your bank that they have run out of money so to save your CD they have to cut the interest rate on it in half? Or that you can't cash in your one-year CD for another two years?
If you wouldn't tolerate this from your bank, why would you tolerate it from your government? Is it any sad wonder that the credit rating of our government bonds have been cut? You can't trust the people in charge.
So what about Texas Gov. Rick Perry's claim that Social Security is a "lie" and a "Ponzi scheme"?
He's right on both counts. Americans should be singing hallelujah that we have at least one politician not afraid to tell the truth.
This isn't about ideology. It's about arithmetic.
You can't hear too many times that, despite what many still think, Social Security isn't any kind of investment plan, and there is no account that you're paying into that is yours.
Social Security is simply about current workers paying a tax that is used to make payouts to current retirees.
Regardless of what you think about the idea, it was viable long ago when the size of the program was much smaller, the tax much lower, there were many more working Americans per retiree than today, and when life spans were much shorter.
When Social Security was enacted in 1935, the tax was 2 percent compared to 12.4 percent today; there were over 45 people working for every retiree compared to 3 to 1 today; and life expectancy then was 60 compared to 78 today.
Because of these changing realities, projections show that the system as it currently stands will be short some $20 trillion in meeting future obligations.
Any claim that Social Security will continue to work is simply a lie, as Rick Perry says. Seventy-six percent of Americans between 18 and 34 apparently agree, because they say they don't expect anything from the system when they retire.
Businesses survive in free markets because the world changes every day, and they constantly change and adjust. But government programs are frozen in time. It's why capitalism works and socialism doesn't.
Businesses in free markets also survive because they compete to deliver good products to consumers. Shouldn't Americans have a choice about where to put the 12.4 percent of their wages they pay in payroll taxes?
If Americans prefer getting negative returns on what they pay to save an unworkable government system, we deserve the mediocre, second-rate nation we are becoming.
But I don't think most want this. It's why we need politicians with the courage to tell the truth and citizens with the courage to be free.
September 12, 2011 @ 7:02 am
Social Security IS a Ponzi Scheme, was not always one, but became on once the Socialist Self-God political dispensers for the wealth of the earth took over Washington and turned it from a program of investment into one or Socialist wealth redistribution of others hard earned wealth. Those that got in at the beginning, or the top of the pyramid made out like bandits. Those who come in late in the game at the bottom of the pyramid of smoke and mirrors funding become the victims of the bandits.
Social Security contributions should NEVER have been allowed to go into the general fund because the minute it did, it became just one more lump of honest money to become corrupted by corrupt dishonest politicians for funding of more Socialist Liberal Experimentation at God-Play, by those who think they know better than you do how to spend your hard earned money and life blood, and divert power and free thinking decision making ability from your hand and mind into theirs.
Why save the system in its current form and continue the delusion and theft. Return the money to the people with an honest rate of return and let them decide how to invest it.
Had all these funds gone into IRA’s or 401K’s we would have funded the greatest leap of generational wealth building in the history of man. Instead all we got was more wealth and money CONSUMED by people, many of whom never earned a ***** of it in a Socialist economic nightmare of downward spiraling economic failure and debt. This is what happens when people actually believe the Socialists Progressive lies that there is such thing as a free lunch where nobody ever has to pay. We will all soon have to live to 105 retirement age eligibility, to be able to fund this boondoggle, all the while the Liberals just sit back and laugh at us and our naiveté. You all should not have listened to those Liberal Self-God abortionists who slew 45 million American taxpaying citizens to avoid paying the price of that immediate gratification, but that is JUST what Liberals Socialists Gods of the self always do. Spend and feel good now and let others pay the price. And you voted them into power over you? Just who is the real fool? The real Creator of all is laughing them and US to scorn, as we all reap the well earned poverty that is all to be gained by following the false secular Liberal Progressive God of SELF.This will never turn around until we;
LET THE AMERICAN EARNERS BE THE SPENDERS
September 12, 2011 @ 9:54 am
Thanks to the Progressive Democrats , Dan Rostenkowski (glad he is not around any more, another Illinois jail bird), Harry Reid, Nancy P. and you know or should know the rest of them by now. Destoyed the Social Security program.
September 12, 2011 @ 11:07 am
@ inluminatuo. I have to disagree. When established, SS taxes went into a supposidly “protected” fund intended to be invested and earn interest, thus growing the fund. That WAS NOT/IS NOT a Ponzi scheme.
The problem is that while LBJ [Lyndon Baines Johnson, the biggest crook to come down the pike] was President, HE AND the CONGRESS TOOK [THEFT] ALL the funds and left NOTHING BUT IOUs.
Even that would have been OK IF they had quickly replaced the money, but they didn’t, AND EVERY CONGRESS SINCE then has CONTINUED TO ROB the SS fund leaving only worthless paper in the form of their rotten IOUs..
I don’t think SS was/is a Ponzi scheme, but CONGRESS’s THEFT of the funds WAS and IS a Ponzi scheme, and thus has made SS “look like” a Ponzi scheme.
Back in the late 70s, or early 80s [Ithink it was] the Texas Legislature wanting to spend more than they had, did the same thing, ROBBED the Texas state employees AND the Teacher’s RETIREMENT system funds [which by the way were totally viable, AND growing well on investment interest] and instead of IOUs, placed both retirement systems future payments to retirees for payment out of each year’s annual budget.
This created a Ponzi scheme also.
It will not be easy, and cannot be done in one quick action, BUT… IF the Social Security stolen funds are replaced in CASH, and properly invested, THEN the SS system WILL be in decent shape, and NOT on the verge of collapse.
Although the word “entitlement” has gotten, over the years, a very bad connotation, the word entitlement IS NOT all bad, especially where the SS system is concerned.
WE ALL have paid into it with the expectation that it would be there, and we are ALL ENTITILED to our SS system continuance, AND payments.
Who IS NOT “entitled” are the MILLIONS OF ILLEGAL ALIENS AND FRAUDULENT DISABILITY CLAIMANTS, who sap the life from the system, EVEN IF the fund were cash solvent.
This is where the corrections should be made to make SS solvent and prevent its total collapse.
DO NOT totally eleminate the SS system as many extreme conservatives and many members of the Tea PArty have PUBLICLY DEMANDED. Instead, “FIX” the deficencies, and SAVE the system. It CAN be done it we do the work, and not “cop out” by eleminating the SS system.
September 12, 2011 @ 11:55 am
Bushmaster:
The Ponzi scheme in essence IS the theft that took place which I believe was before the administration of Lyndon Johnson. Almost everything that happens within the government system is a scheme in one form or another, whether it be considered a literal Ponzi scheme or some other duplicitous machination. My point in labeling it a Ponzi scheme is the fact that all who were involved with the inception of this entitlement never seemed to have the forethought of considering the consequences of cataclysmic events, failing economies, another depression, and the results of a declining population regarding abortions.
Although, only possibilities in some administrations, but actual occurrences in others, leads me to come to the conclusion that it was a Ponzi scheme, as it doesn’t seem feasible to me that all of these people from beginning to end would be totally oblivious to any intuitiveness concerning unforeseen disasters and the inability to pay back what they stole.
September 12, 2011 @ 1:11 pm
Bushmaster, the reason BOTH parties are flooding the country with illegal aliens, is to replace the 45 million taxpayers that our Liberal friends encouraged us all to abort since Roe V Wade, which if they were alive today would be funding Social Security. The Ponzi Scheme would be in better shape or at least the inevitable bankruptcy postponed for 10 years. If we would not have danced with these devils and killed the innocent, the social experiment at playing God as far as social securitty would be in better shape. Those in even Better shape were the ones who relied not on the government, but on their God given talents to invest in themselves on their own knowing how unreliable provider the false God of Government really is.
September 12, 2011 @ 1:44 pm
I gotta go with the Bushmaster on this one, BUT no matter how you define it, or the governmental raids on it, IT’S STILL MY MONEY, and I want it back!
If it was a Ponzi scheme, then everyone in government that has had any association with it at all within the last 7 years (Federal Statutes of Limitation may be 10 years, I don’t know for sure) is guilty of Grand Larceny (a felony), and liable to arrest and imprisonment, and should be so charged and tried. If they were in office within the last seven years then they were guilty of Intent to Defraud, Election Fraud and numerous associated Fraud charges and should so be charged and tried. Associates who were aware of their co-workers’ fraudulent activities should be charged as Accomplices, tried and further charged as Intent to Defraud, etc….
In all of the above cases, those found guilty need to be removed from office under Federal Statutes as “anyone knowingly…..”
If it isn’t a Ponzi scheme, then all of the above should still be arrested, charged and tried for Theft of Public Property, to wit: The Social Security funds, along with Unauthorized and Fraudelent Access to the same.
If Social Security doesn’t fall under either definition, then we have all been illegally taxed, and there are charges for that too.
As you may have gathered, I’m more than a little pissed about this. :>(
September 12, 2011 @ 2:33 pm
It IS a ponzi scheme and it always was a ponzi scheme.
It has ALWAYS depended on more people paying IN than the number of people paying out.
Just like any good ponzi scheme that was just ducky when there 16 workers to every retiree. Now there are 3 workers for every retiree and soon there will be only 2.
Beyond that, a federal retirement program is unconstitutional but too many conservatives throw the Constitution right out the window when they start DEMANDING what they are ENTITLED to.
September 12, 2011 @ 7:42 am
The Social Security system is and always was a Ponzi scheme, one in which the American people were fooled into believing. People paid in to this government scheme all their hard earned money with the intentions of receiving back money during their retirement. In most cases the people did receive back the money they invested and them some, according to their length of days. However, over the years, this investment scheme became a pot of gold for politicians to dip into the till whenever they needed money for their pork barrel projects or anything else they deemed necessary. Social Security became the gold at the end of the rainbow for corrupt politicians and their ilk in the White House. Over the years the bulk of the money dried up and the “lock box” which they promised never to touch consisted of money that was coming in from those still working. Some claim that this so-called “lock box” is filled to the brim with IOU’s from Uncle Sam.
Governor Perry was right — there is no way that those young people or even the not so young, will ever be getting a monthly check when they retire, as it is totally inevitable that the entire system will eventually collapse in the not so far off future.
September 12, 2011 @ 9:23 am
Sorry for some of the mistakes, folks! As usual I was in a hurry, and haste makes waste so they say.
September 12, 2011 @ 8:46 am
Although Gov Perry is right, if he is the GOP nominee, the Dems will crucify him come the general election. All they have to do, is put out an AD with the clip of Gov Perry saying “it is a Ponzi Scheme” and the election will be over and Obama will secure another 4more years and will be a death sentence for this country. Gov Perry is back paddling alittle putting out an op-ed this morning but I think it is too late.
Remember, Obama political style was bred from Chicago. he knows how to play dirty and use fear as his political weapon for 2012. He has no record to speak off so 2012 will be the dirtest campaign we will see in our life time. His surrogates are already sprouting like mushrooms and lets not forget that the main stream media is behind him 200%
September 12, 2011 @ 9:28 am
If Perry wasn’t TEXAN then I’d be worried.
September 12, 2011 @ 9:33 am
Who really cares what the Dems will do. They will find something else to broadcast lies about.
Stand up to these jerks who think (bought and paid for) they are doing good for our country. They also think they are going to get a seat at the table: WRONG! They will get thrown under the bus like so many of this administration has experienced.
DON’T UNDERESTIMATE THIS ADMINISTRATION BUT WORK HARD TO GET VOTERS OUT TO THE POLLS.
I am from the Chicago Area and knew in 2005 what Obama was all about but the general public wasn’t listening.
STAND UP AND FIGHT DEMUNISM!
September 12, 2011 @ 10:10 am
Archangel,
I cant speak for anyone but myself. I do care what the Dems will do. Words do matter to some voters on all sides. Neither party can win by themselves without our independant friends. On top of this Obama has trickier, seductive words, ACORN etc on his side as well.
There are many who depend on SS and come election do you think they wont vote with their pocket books? What I care about at the moment is getting Obama out of the WH. We/this country cant afford 4 more Obama years. It will be doomed!
September 12, 2011 @ 10:12 am
ALso I meant to say, it will be one less ammunition for Obama and his co-horts to use against the GOP.
September 12, 2011 @ 9:10 am
Perry is so right. I was very disappointed in Romney’s response to “ponzi” in that he wanted to salvage S.S. Can’t be done: to late. Very similar to the abusive I.R.S. tax code.
Private S.S. accounts (remember this was a George Bush proposal) are the way to go
and Seniors have to understand that social security will not be hurt for those already receiving social security. Figure it out mathmetically.
Those opposed to Individual Private Social Security Accounts are against them largely because then they can’t get their hands on that money and RAID those coffers like they have been doing for years. I. O. U.’S are terribly dangerous to citizens of the U. S.
Always remember: Camels were originally Horses designed by a Committee.
September 12, 2011 @ 2:32 pm
I like the idea of privatization, but then who would/could hold/guarantee the funds? Nothing’s set in stone, no matter what. You just know there’s got to be a loophole somewhere, or all the lawyers could just kiss their butts goodbye…
September 12, 2011 @ 2:34 pm
Don’t you know that nothing in life is guaranteed but death and taxes? Life is a risk. Would you rather decide who manages your risk or have Obama do it?
September 12, 2011 @ 2:55 pm
Point taken and I’ve been very properly chastised. I’m REAL sure I’d rather do it. ;>)
September 12, 2011 @ 3:04 pm
I didn’t mean to chastize you. I guess I’m just frustrated by the liberal trolls posting in this thread but I will be more careful about letting that out to people who are honestly trying to figure this mess out. So am I.
September 12, 2011 @ 9:32 am
Most of FDR’s programs were meant to be temporary programs to help us out of the Depression. Never meant to be permanent. Once the Government got a hold of them, finding they could buy votes, then they were all doomed.
September 12, 2011 @ 9:47 am
Ok, Here are my thoughts. First off I’m a registered Republican and in my 42yrs of life have always voted Republican, I pay all my bills on time, I never take dime from anyone and l proudly pay my taxes. I also have perfect credit but when it comes to my retirement, I’m one of those folks that want social security. I’ve been paying into it since I was 18yrs old. I don’t have tons of $$ in the bank, My 401k is small and I have tons of bills like most normal people. To me, at least thats one form of income that I can count on if my retirement doesn’t go well. What bothers me most is, the people that want to get rid of social security are the folks that have tons of $$ in the bank and investments etc.. Most average Joe’s don’t have all this $$ to fall back on. You people think everyone is financially smart enough to manage their own retirements. Not true not everyone can do that. Alot of people make bad investments. Some people need a backup plan. If you want to get rid of social security then give me back all the $$ I put into it for the past 24yrs with interest.
September 12, 2011 @ 11:10 am
Sorry, the money you paid in has already been spent. The government doesn’t have the same accountability as a bank. The only way the government can give you back “your” money is by taking it from the rest of us who also have bills to pay. I am your age and I don’t believe I can count on Social Security to even partially fund my retirement. I may simply have to work until I no longer can and hope that my 401K will support me for whatever time I have left. The government is a lousy backup plan.
September 12, 2011 @ 2:13 pm
Lady, the government does have accountability, and we all need to use it. We must divest ourselves of these freewheeling spenders and elect some REAL representation. Frankly, I’m not real impressed by any of the GOP candidates, but Perry, Romney and Bachmann bother me the most. I have difficulty forgetting Perry’s support for Al Bore and his lunatic fringe, I have trouble with Romney because I just see another party hack whose roots have been firmly entrenched in the Gop since the days of George (the milquetoast loser and world class vacilator), and Bachmann’s starry-eyed love affair with the possibility of becoming (potentially) the most powerful being on the planet. Newt? Seems like noone has ever really taken him seriously, and the rest leave me with cold chills except maybe Dr. Paul, and I’m pretty sure a Republican Congress and he wouldn’t get along worth a damn (and he’s got a few off-the-wall ideas too).
That said, we still have to start somewhere, and the goal for that is kicking BO & Co. out of the White House because there’s no way we’ll have a recognizable country left after 8 years of BO.
BTW, I’ve been forced to pay into Soc. Sec. for 46 of my 60 years…
September 12, 2011 @ 10:12 am
Nobody is even suggesting, especially Perry, that we pull out the Social Security rug, from anyone’s feet. Everyone but everyone, including the pREZ knows that it is broken and needs to be overhauled.
It’s by everybody panicking, I paid my fair share, you can’t take that away that nothing even get’s discussed on how to fix it for the future so those starting out paying towards SS don’t get it pulled from under their feet, thru default since it will fall apart, be defunct with no fix available.
I’ve been paying into it since 1965 when I was making 78 cents an hour (my first military check was $40 for a month). But I know that SS is broke and will have to go up on jacks for a long needed overhaul, if’s either that or buy a whole brand new SS Car.
September 12, 2011 @ 10:19 am
SS is not a ponzi scheme. It will not run out of money. Such misinformation! Do you pay into all our federal govt programs? Will the DoD run out of money? Why not, there’s no FICA tax for it? The US govt can never run out of money, therefore SS can never run out of money. The only lie is that taxpayers need to “fund” SS. Why, the US can just create money to pay whatever amount we want to seniors. I’m not sure why we would choose instead to leave them on their own. Probably b/c most of those advocating such measures are not seniors themselves, somewhat along the lines of robr31′s comments.
I agree, 12.4% is too high, I think the FICA tax should just be abolished, and leave reitrement age at 65. We don’t have to worry about US affording it, it creates money. And that will give each worker a 6.2% raise, and employers 6.2% savings for each worker. I imagine quite a bump in our economic outlook with that nice chunk of change.
September 12, 2011 @ 2:37 pm
Go play somewhere else. You don’t have enough sense to post on this topic.
September 12, 2011 @ 2:50 pm
Social Security is in big trouble and you are living in fantasy land if you don’t believe it!
Obama’s Social Security “tax cut” only exacerbates the problem we are now facing as the millions of baby boomers retire.
The fact is that Obama and the Dems refuse to deal with the problem and it will get a lot worse the longer the can is kicked down the road.
September 12, 2011 @ 10:48 am
Many countries, like Chile, that had retirement systems like our Prussian/Bismarckian social security system, have been forced to abandon them, and have replaced them with individual retirement accounts invested in stocks and bonds. Search on [Chile social security]. So far, that is working well for them. The politically wiser course for reformers is not to just criticize Social Security, but propose the Chilean alternative, as Herman Cain has done, to his credit. However, while that would have been a wise policy if adopted 30 years ago when Chile did, it may be too late for such an alternative now. There are two main problems:
1. The Chilean system would be unconstitutional, because participation is mandatory, for the same reason the individual mandate of the PPACA (Obamacare) is unconstitutional. That may not matter to most people today, but it does matter for those of us who took an oath to preserve, protect, and defend the Constitution, as originally understood, and take our oaths seriously.
2. The Chilean system depends on a healthy, growing economy and nearly full employment. That is unlikely to continue.
For the last 30 years the central banks of most countries, not just our Federal Reserve, have been creating fiat currency backed only by debt, to inflate the holdings of investors and financial institutions. Initially that did not result in rampant hyperinflation in the rest of the market because it was only “monopoly money” among traders, but that money leaked into other sectors, like housing and construction, resulting in over-valuation of homes by about a factor of four, and putting too many people in too-large houses. The housing market is now adjusting to sustainable values, and it likely to take down most financial institutions with it when it does, along with most insurance companies and private pension funds. Governments may not technically default on their “sovereign debt”, but they will pay with devalued currency that will largely wipe out most investors.
When the economy of Argentina collapsed in 2001 there was no gradual reduction of government benefits to give people an opportunity to adjust. They were just cut off abruptly. The only reason things in that country were not even worse was that other countries didn’t collapse at the same time. When we go down we can expect the entire world to go down with us, with little prospect of recovery for at least a generation.
We may also see the replacement of our constitutional republics with fascist dictatorships.
In the words of Tom Lehrer:
“We will all go together when we go. Every Jew, Hottentot, and Eskimo. They’ll be complete participation, in that grand incineration. Oh we all will go together when we go.”
September 12, 2011 @ 2:28 pm
Whoa! Hold on there! The Chilean system would be unconstitutional because participation is MANDATORY? So all the payments I’ve made into SS HAVEN’T been mandatory? Leaping Jezus! So I’ve been lied to and misled for 46 years? Where’s my pistol? I might as well shoot myself now for peeing away all that money I could have saved. Balls. Mon face, eet ees red. Shoot me now.
September 12, 2011 @ 2:51 pm
The Constitutional difficulty could be taken care of with an Amendment. Sorry for the correction, what was meant to be said regarding the withholding was that for those of us who were forced to pay into SS because we didn’t have sufficient monies or the know-how and then later weren’t allowed to transfer our payments into private accounts, the remainder of the fund could be set up into Individual Private Accounts if someone crazy enough to administrate THAT nightmare could be found…
September 12, 2011 @ 3:45 pm
FICA (the SS tax) is mandated by statute, but not authorized by the Constitution. It is a tax on compensation for labor, which is not “income” as that term was defined when the “income tax amendment” was allegedly ratified. (In fact it was not ratified. Many states reported to have ratified it actually voted against it, or didn’t vote on it at all.) If it had been ratified, it would only apply to earnings on land or capital, such as rent, interest, dividends, and profits on sales. Needless to say you won’t get a court today to back that position, because they are all corrupt, but for constitutional purists that is what is correct.
September 12, 2011 @ 10:50 am
It’s very sad that Congress & the Senate didn’t fix SS when they had the chance years ago. Instead of fixing it they “BAILED OUT” & got their own . In essence they told all of us “screw” you.
September 12, 2011 @ 11:20 am
…and that should tell us all we need to know about our Social “Security” system. When our leaders abandoned it for something else (better…), we should have immediately woke up and demanded the system either be fixed or abandoned.
It can’t wait any longer, the next President and Congress is going to HAVE TO deal with it! I think most Americans now realize this; it’s no longer a “don’t touch” issue, especially with the current mood across our nation and the growing movement known as the Tea Party.
This is why Perry was right to open this can of worms, and call it what it is. We have to face this ugly mess now and fix it.
September 12, 2011 @ 2:39 pm
They do pay into Social Security. Look it up.
September 12, 2011 @ 11:21 am
Your plan Star..no..but since you did mention would we tolerate this from our Bank? How about, why then do we lock up some poor man for stealing a loaf of bread but hundreds of CRIMINAL POLITICIANS have stolen from OUR Social Security Funds and they are such criminal they flaunt it in our faces and pat each other on the back! Now, why in the hell are these scum not in prison for FRAUD. Let’s get real here, Bernie Madoff is locked up and if this country had some balls, there would be a lot of political cell mates for Bernie, starting with this Chicago Crime Boy.
September 12, 2011 @ 4:02 pm
I agree with you rickinnev. Why aren’t the Congress held accountable for Stealing the Taxpayers/SS & Medicare payers monies?
I have been paying into Medicare/SS & Taxes for the past 44 years and still have to work 20 more years before I am eligible to Draw Medicare/SS.
And it is sad to know that the monies won’t be there.
How can an average hardworking person discontinue to allow the Medicare/SS/Taxes from being taken from our paychecks?
September 12, 2011 @ 11:23 am
all things considered, social security more closely resembles a pyramid scheme, where many are needed to support others
September 12, 2011 @ 11:24 am
The bank analogy is not a good one, in fact, not even close. Banks do not create money, the US govt does. Comparing the two of them is only ignorance.
September 12, 2011 @ 3:51 pm
Actually, banks do create money. That is what fractional reserve banking is all about. They accept and hold deposits but issue loans for more than the amounts they hold, called their “reserves”. Those loans in effect become more money, on which the lenders earn interest, which is also created out of thin air.
If all money were gold or silver and banks had to maintain 100% reserves we wouldn’t have the mess we are in.
September 12, 2011 @ 11:43 am
I have not seen anyone here state the actual financial position of Social Security.
Ronald reagan and Tip Oneil led the reform of SS in 1982. The goal was to keep SS solvent for 50 years. (or until 2032). The SS Trustees report the position of SS at the end each year. Last year’s report projected that full benifits can be paid until 2037. this meets the goal of the reform. The trustees also reorted that the trust fund holds over 2.5 trillion dollars in short term treasurys. They also projecte that SS could pay 80% of the beneifit after 3037 for as long as the eye can see if no changes are made.
There have bin a number of fixes proposed. I believe that raising the payroll tax by 1/2 % and raise the taxable cap by $50,000 is the better fix to continue to pay 100% of benifits.
SS has been a great plan tha thelps people live better in retirement and does not cost the gov. a cent or add anything to the deficit.
September 12, 2011 @ 12:15 pm
There is no trust fund. The so called treasury bills are Intergovernmental bonds. The are called non marketable for a reason. They cannot be sold. They are unreal. They are only a record of what Social Security has paid the treasury. IOU’s. They are a promise to pay from the Treasury to Social Security. To “cash in” these bonds the treasury writes a check to Social Security for balance owed. Where does the treasury get the money? From current taxes, which of course is providing only 60% of the money and 40% from issuing new treasury bonds -new debt. In this case they are transferring the debt from Intergovernmental bonds to marketable treasury bonds. IT IS STILL DEBT! There is no trust fund.
According to the OMB, there are only four sources that money can be drawn from. Congress could repay the money by raising other taxes. It could also authorize the Treasury to just borrow the needed funds issuing actual real marketable Treasury bonds. Another alternative would be for Congress to reduce other federal programs and to use the money that was to have been spent for them to redeem Social Security bonds. Finally, Congress could reduce Social Security benefits. As you can readily see, none of those options include selling the “bond” in the nonexistent “IOU market” for purchase by investors, because there is none. There are immediate cash needs when the taxes are insufficient to cover payouts and the funds must immediately be obtained by issuing additional public debt, raising taxes, or cutting other budget items. If the IFG is already in deficit, the FICA shortfall will ADD to the deficit.
To make Social Security balance out where there isn’t any new debt, they must raise taxes on the rising generation. So the next generation of workers must pay a higher percentage of taxes to get the same amount of benefits. The taxes will have to be raised yet again and again as demographics continue to change. it continues to be more unfair to rising generations. It is unfair to raise retirement age, it is unfair to lower benefits. No matter what happens next— it will be unfair, grossly unfair to someone. This is happening because politicians long ago did not account for a aging and decreasing birthrate. They thought they could spend the “trust” on the current budget with little chance of pain. They made promises to get Social Security enacted that were ponzi in nature. Then they slowly increased taxes 40 times from 2% to the current 12.4% and yet more will be required. When ever there was a nice surplus, they used it for getting reelected.
Remember as we enter into the next SS political battles that it isn’t the retirees fault for wanting their money as promised and it isn’t the young workers greed who will face the increased taxes. Don’t destroy the victims. Focus on the political class who constantly enacts huge programs promised to help you, to save you from yourself, and protect you from all those greedy people. The political class never delivers. Look to yourself, your family, and your community (last to your community because they operate with in the battles of politics). Nothing is perfect and nothing is always safe but you have a better chance with these 3.
September 12, 2011 @ 12:15 pm
Ms Parker — You are right that it is a Ponzi scheme. Yet you still seem to imply that the payroll tax should continue, with the only question being “where to put the 12.4 percent of … wages they pay in payroll taxes?”
I can’t understand why you and others seem to want to do “something” in terms of the benefits (such as raise the age) or in terms of the funding (such as privatization), but you are not willing to simply end social security.
There is a clean and actually fair way to end social security if that is what the goal is.
(1) Pick an end date. Let’s say 12/31/2012.
(2) As of that date, you have an accrued benefit — the amount you would receive under current law if you stopped working on that date. For people already on Social Security, it is their current benefit. Even for young people, this is some amount that can be calculated and would be paid under current law.
(3) The US Government guarantees that accrued benefit to each person as a “Full Faith and Credit” obligation.
(4) The bonds that the US Government currently owes the Social Security trust fund are canceled.
(5) No more payroll taxes after that end date.
So, the guaranteed accrued benefits give people the benefit of what they already paid in to social security. This is fair. After the cutoff date, people are on their own to provide for (or to add to) their own security, but this is more affordable because they are not paying any payroll tax.
I do not understand why no politicians support this or even talk about this. I suspect they want to keep the payroll taxes flowing in, even if they do not want to admit that.
September 12, 2011 @ 1:13 pm
Here’s the deal, and it’s really a horrible scenario. I have only been able to accept it as true through much study and thought:
1) Government likes “trust funds” (SS, Medicare, the highway gas tax, etc.) because once they are established, they can be changed to allow Congresscritters to raid the funds in years of surplus (which are supposed to be reserved for future years of expenditures), & replace them with worthless intergovernmental IOUs. It gives them lots of spending money without putting it on budget, and hides the real state of the deficit.
2) These funds appear to be fine as long as they have surpluses, and the voters that fund them are the politicians’ darlings (so that the funding/borrowing/vote buying can continue).
3) However, once the contributors change status to become consumers of those anticipated funds, not contributors to them, they are no longer of any benefit to the politicians, and therefore become “useless eaters”, and must be done away with. (See Obamamcare death panels, health care rationing, eliminating SS).
4) The pols have to move on to new “voter groups”, and will need that SS money to pay for those new votes. They can ingratiate themselves with younger voters by relieving them of payroll taxes (sounds familiar, is this another Obama set-up?).
5) Taxpayers are just trust-fund fodder the machine, our concerns as taxpayers are irrelevant, our needs are irrelevant, all that matters is to keep the funding flowing, and keep politician access to it to buy constituencies. OUR CONCERNS ARE NOT THEIR CONCERNS, NO MATTER HOW MUCH THEY SAY IT IS. We have outlived out usefulness.
6) They can’t just come out and say “go away, you are a drag on us now”, and they won’t make the political decision openly, so this is where the SuperCongress comes in.. it relieves them of the responsibility for voting, and gives them the cuts in benefits with minimal accountability. The SC will do the dirty hatchet job instead. This was a PRIME motive for creating it, with both Dims and Pubbies complicit.
7) Therefore, no solution that involves political control over taxpayer-paid money can work. Politicians can’t be trusted to keep their hands off the money. They are addicted to it, they don’t care about us, only themselves. They are utterly and irremediably corrupt. They will kill the oldsters to get them out of the way (I know this sounds harsh, but it’s true)
SO… any workable solution has to come from the citizenry and have minimal involvement from government. I don’t know what that solution is, but it has to come, and I think a good start is the separation of SSI from the SS funds. ALL SS taxes will go ONLY to the old age part of the program. Repeal the Unified Budget that allows the pols to take the money out, no further IOUs allowed, replace all current IOUs in the program with REAL bonds that are marketable in the open market, and copy of the Chilean model for younger people. It’s a start.
September 12, 2011 @ 12:26 pm
This is another Star Parker right on article. Plus, it hasn’t helped Social Security’s “sustainability” that previous Congresses have raided the fund to pay for other things, but that’s fodder for an entirely separate article.
First, let’s find a way to restore those misappropriated funds to the Social Security fund, say, by doing away with the federal DOE and/or NEA, and then devise a way for future retirees to pay that 12.4 percent tax into a retirement fund that does have their individual names on it, so the we-know-better-than-you Congressionals can’t mess with it.
September 12, 2011 @ 1:00 pm
If the U.S. government “creates” money (presumably this means printing more of it, or saying it’s there) it does not good; it only creates runaway inflation. NO GOVERNMENT ON EARTH HAS EVER CREATED MONEY. Money is created by productivity. YOU and I create the money by our work — whether we make a good, grow food or provide a service. This country was the first to coin that phrase, because we had people who worked their butts off to make life better for their families. Governments DO NOT create money — they only redistribute it.
Scrapping Social Security as a system might be necessary IF we have enough vitality in the economy to allow personal investments to earn interest. Before we did that, we would need a viable plan to allow for those who currently are on or are eligible for the fund, and who will become eligible in the next 5-10 years or so. Not everyone whose disability is “invisible” is “cheating” — it is extremely hard, even for a disabled veteran to get social security disability.
Whether the government or private sectors maintain an old-age pension plan, the political name-calling and cheap bickering seen here and in Washington must be set aside. Everyone is so busy pointing fingers and placing blame that to listen to a REASONABLE and workable compromise is lambasted as “selling out”.
A NATION DIVIDED AGAINST ITSELF CANNOT STAND. We have not been in such danger since the Civil War/War Between the States.
September 12, 2011 @ 1:10 pm
I do agree w/the reaction to reasonable statements.
But I don’t agree that govts do not create money. Of course they do, it says so right on the money itself. Our work could go on w/o any money at all, its called barter system. Or I could just sustain myself by making everything I need to survive. Money makes it easier to interact with others. And its created by govt, specifically, in the US. The dollar bill in your pocket was created by the govt. Your work earned it, but did not create it.
September 12, 2011 @ 1:19 pm
Our biggest problem is that too many Americans now believe that the government “owes” us the Social Security program; that we have some “right” to retire! Our Founding Fathers would LAUGH OUT LOUD (LOL) at that assumption!
We the people have GOT TO start taking care of ourselves; getting ourselves out of debt and saving for our own retirement, if we want to retire. Who ever said someone owes you or me “retirement”? That’s not in our founding documents! The Founders believed – and built our government upon – the responsibility and freedom of the individual to take care of himself/herself and their own family.
If there are persons who have real physical needs, we have charitible organizations and churches who can step up and address those needs. These organizations are also much more likely (than the Federal welfare programs) to expect persons receiving relief to attend self-help programs that will not just “give them a fish” but also “teach them how to fish” in order to make them self-reliant when possible.
Obviously we’ve drifted far from these founding priniciples. It’s what people and governments do when they stop paying attention; they drift. It’s time for we the people, and the leaders we elect, to rediscover the principles upon which this nation was founded.
September 12, 2011 @ 1:34 pm
What is wrong with a person saving part of each paycheck and insuring a retirement payout. This savings has resulted in a a SS Trust Fund of over $2.5 trillion dollars. enough to pay full benefits until 2037.
The government does not pay any of the SS benifit payout.
It cuts the potential welfare costs for people who have not been able to save. SS forces them to save and not spend those savings in other than a payout during their retirement years.
September 12, 2011 @ 1:48 pm
How about we STOP paying all the EX congressmen and senators since they no longer serve the public, and put those wages into the Social Security fund. This way they will be re-paying the fund they stole from under the fase term of “borrowing”. I don’t hear of any of our elected officials “sharing the pain” and working together with the rest of us by taking a pay cut in these hard times…that they are responsible for through the stupid laws and regulations THEY put in place!
Government is NOT the answer…it is the PROBLEM!
September 12, 2011 @ 2:01 pm
Strictly speaking, federal reserve notes are not yours. They belong to the Federal Reserve, backed only by an implied promise not to create more of them faster than the economy grows. You only get to use some of them as currency as long as people accept them as currency. If you want to own money, get gold or silver coins, and trade in them. However, if you claim they are money, the government may prosecute you for counterfeiting, as they did in the Liberty Dollar case, or seize all private holdings of gold or silver and forbid people to own them, as happened with gold in 1933.
If you are foolish enough to accept fiat currency in payment for anything, then you have no grounds for complaint when the fiat currency stops coming.
See http://www.constitution.org/cs_money.htm and http://obitur-dictum.blogspot.com/2011/09/return-to-gold.html
September 12, 2011 @ 2:55 pm
The payroll tax cut helps working people. The gov. pays the amount of the payroll tax cut to the SS Trust Fund so it is not penalized. The payroll tax cut is paid by the taxpayers not SS
September 12, 2011 @ 3:43 pm
Are you not aware that government earns nothing, has no money to pay for anything except what it takes from one group to give to another. Government has been stealing from Social Security for years to pay for pet projects and leaving IOUs. With Obama you will be guaranteed higher taxes to come and will be working longer.
Obama is merely going to cause Social Security to go bankrupt sooner.
September 12, 2011 @ 4:52 pm
Social Security is NOT a ponzi scheme any more than the stock market is.
Contributions to Social Security have been invested in government bonds. Is anyone saying the returns on government bonds to Social Security WILL NOT be paid while the Chinese holders of US debt WILL be paid? No, Of course, not. In fact, social security owns almost 20% of the US debt, much more than China.
Social Security contributions being invested in government bonds is essentially the government borrowing from it’s own piggy bank, you say. True enough. What would you trust more as an investment? What is more secure than US goverment bonds? Would you rather a large stack of $100 bills were kept in a safety deposit box? $100 that would be worth less when withdrawn than when they were stored? Should ‘Social Security’ consist of barrels of salt pork and giant cheese wheels stored in a cool cave somewhere in Arkansas? Would that make more sense?
What is the real problem? Is it the demographic bulge called the baby boom, that was followed by the ‘baby bust’? So people say. Even if Social Security as we know it were ended for people under 55 years old, the bulk of the baby boomers would still qualify for Social Security as we know it, so all the solutions proposed so far are really no solution.
As it stands, Social Security contributions are only taken from the first $106,800 of income. That means a person with an annual income of $15 million pays the same into the social security fund as a person with an annual income of $106,800. All income over $106,800 is currently NOT subject to Social Security tax. Simply eliminate this income cap on contributions, and social security is not only funded indefinitely into the future, but it will continue to be a fund the US government can borrow against.
September 12, 2011 @ 4:52 pm
We are now at the point where the SS benefits paid out to retirees equal the payroll taxes collected from working Americans each year, a true pay as you go situation. This amounts to about 650 billion dollars per year going both ways. This, however, must be considered a tipping point in the Ponzi scheme because from now on the number of workers supporting one retiree will be dropping below three and sometimes around 2035? the number will be below two. Since we cannot simply increase the payroll taxes on our children, there will not be enough money available in the future to transfer from working people to retirees. This is the first part of the Ponzi scheme we are talking about. The other part of the Ponzi scheme is the excess payroll tax money that supposedly has been “saved in the trust fund in form of non-marketable government bonds or IOUs” . This money, however was immediately deposited in the general funds where it was spent by Congress. It now shows up in our National Debt. Everybody is becoming aware of this horrendous debt and fewer and fewer people, except for Mr. Krugman, believe that this money will be available when it is needed.
My solution is to stop the Ponzi scheme now, write off the uncollectible trust fund savings, and FIX the ratio of people paying payroll taxes to retirees at the present number of THREE. I make the reasonable assumption that the present situation of three-for-one is acceptable but cannot be reduced any further. The obvious consequence will be a gradual increase in the SS retirement age. This would be fair because people are healthier and live so much longer than in 1937 when SS was created, and can provide for their needs over a longer period of time. By using mortality tables, the actuaries can easily calculate this slow and gradual increase in SS retirement age. This would keep SS benefits unchanged indefinitely, beginning at the new SS payout age. If retirement is desired at a younger age, people could save for it with 401k plans or similar private saving plans. This would amount to a slow and painless phase-in of partial privatization.
This proposal would be very fair to both the young and the retired, because the younger workers would not be required to pay for ever increasing retirement spans lasting perhaps longer than their own working years.
September 12, 2011 @ 5:06 pm
So the US treasury bills will simply not be paid? Not be paid to Social Security, but WILL be paid to China? Over my dead body. And yours, too. If you’re so worried about your kids, why do you advocate policies to cut back on the education while increasing military spending? Or is a military life the future you have in mind for the children you supposedly love so much?
September 12, 2011 @ 7:01 pm
All one needs to know about Social Security is the 1960 Supreme Court Case Fleming vs Nestor The Supreme Court ruled that Congress can change the law at any time, in other words we have no fiduciary right to the money! Why else can Congress at a whim change the law. Which brings me to another point, how can the Democrats bind future Congresses to the language of Obama Care?