Posted on 03/10/2005 4:21:50 PM PST by HankReardon
Social Security as it is today is not a fully funded savings and investment system. It is redistribution system, workers pay in, beneficiaries receive payments and the surplus is lent to the federal government and spent. My first question, What type of bond is held by the Social Security System for the money owed it by the federal government?
I think it was 1968 this started, almost 4 decades ago. Estimated SS contributions for the year 2005 are $575 billion, the estimated pay out is $515 billion, the $60 billion dollars will be lent to the federal goverment and spent. After 36 years of this borrowing how much is now owed the system? Including gained interest. I have heard estimates of over $1 trillion.
When Democrats say that the Social Security System is okay until 2043 are they using this money that was lent and spent by the federal government? We all know there is no actual money there, if it was to be paid back to the system it would have to be done with deficit spending.
When naysayers lament about how much it would cost to reform the SS system I would love to hear someone come back with, "The federal government owes the system over $1 trillion, how many billions do you thimk it will cost to reform the system?"
Anybody out there in the Public Employees Retirement System (risky scheme?)that would rather be in the Social Security System?
no...the surplus is invested in the us government...
You've been here on FR for ten days. Maybe you should read and get use to the anti-liberal messages here before you pipe up.
Okay, your "con" link seems to go on the premise of entirely privatizing Social Security instead of partial privatization. A common purposeful omission, mentioning privatization of the system without using the words "partial" and "voluntary". Socialist Democrat dishonesty, scaring the old people.
We all know why the Democrats are against the reform of the SS system:
1; They do not want good things to happen while a Republican is in office.
2; They do not want more and more people to become less and less dependant on government.
3; They want to have the issue of problems with Social Security to campaign on. Democrats do not want solutions to campaign issues they can use in the future.
Anyone else have any reasons why Democrats do not want Social security reform?
Especially when she pipes up crap.
Sorry, I based my remark on tonight's CBS news report which stated that 10% of salary was invested and an additional 1% tax was collected to cover the administrative fees. CBS news would never mislead me, right?
The article also stated that returns have been averaging slightly over 10%. Where did you get the 20% overhead figure?
The first thing that you have to do is acknowledge that as far as your pocketbook goes, there is no functional financial distinction between Social Security and the rest of the federal government. Social Security and the Treasury do not have an independent financial existence from each other or from the American taxpayer. To you, financially they represent simply different sets of accounts that comprise your collective federal tax obligations, together with those of all American taxpayers.
When Social Security receives more FICA taxes than it needs for current benefit payments, it returns that excess to the general accounts and the Treasury department writes an IOU that is placed in another Social Security account. The congress has that excess money to spend. It looks like a "loan" only when people use the fiction that Social Security is not simply another set of federal accounts.
When the FICA revenue can no longer cover the amount needed to pay Social Security benefits, in about 2018, they will take out some IOUs, hand them back to the Treasury who will then go hat-in-hand to the President and Congress and ask them if they will raise your general income taxes or go more into debt to cover those IOUs; because they are simply a debt we owe to ourselves. That is unless the President and Congress have not already raised your general income taxes in anticipation of this event. The accounting fiction of these IOUs does not represent "money in the bank".
Around about 2042, we simply don't have the fictional "assets" to deal with any more. That event will not increase or decrease the addditional revenue that will then be needed to cover the benefits that are projected for that time.
I insist that some form of raising your income taxes will be needed, because the declining ratio of workers to retirees will head down to something like two workers for each retiree. Then, we could not pay the future projected benefits with FICA taxes alone, unless FICA taxes were increased to 30% or more of income. Talk about a prescription for a generational revolt.
Even if they increase the starting age for full benefits to 68, adjust benefit increases to the price inflation rate, instead of the wage inflation rate, raise the maximum income that is taxable for FICA - now about 94,000, and make some small overall reduction in benefits, there will still be no way to pay for the baby boomer benefits with FICA taxes alone.
We will pay for the "surplus" twice. We paid for it since the FICA tax rates were raised in the 1980s, to create the "surplus" and we will start paying for it again as soon as we move the IOUs from one account to another.
The naysayers hide the truth about the "surplus" so that you do not realize that any "solution", even doing nothing is going to cost billions more than the taxes we now pay.
Any scheme, like Social Security - that has been in a projected future crisis during every decade of its existence and for which the solution has always been that you are not paying enough taxes for it - is fundamentally flawed at its heart.
Having made the promises to pay the current projected benefits, we have to honor as much of that promise as possible. But any solutions should contain the prospect of gradually phasing out the present system altogether and establishing retirement accounts based on investments that belong to you and which cannot be used in any way by the politicians, with all their "benevolent" intentions.
I was in Ohio's PERS because I worked for the University I attended(KSU) and made over the limit since I worked as many hours as they let me(50-80/week). For about 3 years, I paid into it and upon graduation, I filed and got EVERY penny back. Was a nice Graduation gift of almost 3 grand. During the time, I didn't pay SS, another gift! In hind sight, I probably should have left the money in, but just out of college and in debt(I paid most of my own tuition), that 3 grand helped alot.
I highly recommend anyone get into Ohio's PERS given the opportunity.
Within this framework the funds were transferred and do exist as a form of obligation between the funds and bear interest at the lowest possible rate.
Very well said.
Dittos.
Right. But the asset in the SS accounts is exactly balanced out by the debt at the Treasury. The net result is that there isn't any hint of the unfunded future obligation in current budgets.
I got a lot out of your post. How much is owed the system?
Bravo! Your cogent words should be printed on the reverse of all USA paper currency.
The present intention of Republicans, and which is surely supported by Democrats, is that solutions should not affect any current beneficiaries. Politically, I can't see how any majority vote in congress would over-ride that sentiment.
However, I think you will see some adjustments in how any programmed benefit increases are adjusted in the future.
GWB has also said he does not want anything to change for anyone that is currently age 45 or more. My reading of how that statement is made is that people that age will not have to do anything new. They will still get their benefits from the present Social Security formulas. However, most likely they could have slower cost-of-living increases and be taxed on part of the Social Security benefit, based on their total level of income. Those are some of the things under discussion.
Nothing is settled yet.
Instead of cash, the Trust Fund holds a large number of Treasury bonds. However, they are non-negotiable bonds, unlike regular Treasuries, and can only be used in self-dealing within the US government. They're just useless IOUs tossed in there when the cash is taken.
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