This system can't be reformed, it has been thoroughly looted, and there's nothing there to reform. A government IOU to itself is completely worthless, the money has to come from somewhere, it DID come from somewhere, and it has been completely spent. To cover the eventual shortfalls the government will need to take money out of other revenues, meaning that we're going to pay for it a second time whether we like it or not.
People are going to have to make their own arrangements for old-age survival. The generations that actually saw/will see money out of Social Security have basically stolen it from everyone else.
My question is about the SSDI [disablaity program]? Are they going to reform this one too? My son [he has Down Syndrome] & I recieve this.
The shame of all of this is that, if something along the lines of what is being proposed now had been undertaken say 20 or 25 years ago the transition would have been much, much smoother and the private Accounts would be very much ahead of the game. (Check out the annualized return of the S & P 500 Index over the past 20-25 years)
Unfortunately, despite the fact that, even at that point in time, SS was widely recognized as a financial bomb waiting to go off, it was also described as the 'Third Rail' of Politics and the Interest Groups united to quash any efforts to correct this deeply flawed scheme.
In the intervening years, the Gov't has borrowed the surpluses from the fund and essentially wasted them. So now we find ourselves like the irresponsible Credit Card user who went on shopping binges and purchased junk. We have the Debt but nothing at all to show for it. A mess but one that, IMO, was completely predictable and was in fact predicted to end this way by many.
SS is but 1 of them...& the only 1 where the inflow/outflow can be directly ID'd.
Insolvency by 2042 , etc ??? what BS.
If the Fed needs money, they can sell something, or not build something.
All this "reform" discussion, to what end ?
You mean the money isn't in a lock box?!
I believe that the debt is closer to $3 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.
Or by raising taxes.
Anybody out there in the Public Employees Retirement System (risky scheme?)that would rather be in the Social Security System?
I have heard that the Galveston, TX city government opted out of the SS system in 1980 and went to private accounts. Retirement checks of people on SS average less than $1000/mo compared to the Galveston employees who average almost $5,000 per month. I seriously doubt that there are any City of Galveston retirees who are unhappy about it.
Do some research. Here's a start:
http://www.ssa.gov/pressoffice/pr/trustee04-pr.htm
http://www.ssa.gov/qa.htm
http://www.ssa.gov/pubs/10055.html
http://www.ncpa.org/pub/st/st272/
http://advanced-stock-selection.com/SocialSecurityDraft.htm#FWI
http://www.advanced-stock-selection.com/social-security-II.htm
http://www.ssa.gov/OACT/TR/TR00/lr2F20.html
The above are pro's. This one is a "con". It makes assumptions that fix the outcome of the analysis IMHO, but you need to look at both sides.
http://www.safehaven.com/showarticle.cfm?id=2357&pv=1
Given my references, you can guess where I'm at.
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.
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.
Here is a definition of a pyramid scheme:
"An illegal investment scheme in which investors are promised impossibly high returns on their investments. These are scams in which money from later investors is used to pay earlier investors. The creators of the scheme get most of the profits while those who come later are left with nothing because there are eventually an insufficient number of new investors to pay the existing ones. These scams inevitably collapse because they require exponential growth in the number of participants at each step, which is impossible. Letters or emails that encourage the recipient to send money and then pass the message along to a certain number of new targets are a type of pyramid scheme."
Change pyramid to Social Security, and "impossibly high returns on investment" into guaranteed pension, and "creators of scheme" into the government and you can see the similarity.
Unfortunately, Social Security is considerably worse, as unlike a pyramid scheme, you can't get out of the scam once you realize you have been burned, your contributions are taken before you even see them, and new recruits are conscripted from their first paycheck. Add to that the possibility that the government can change the rules on a whim, and the payback isn't even good enough to dupe a five year old, and you are looking at indentured servitude to the government.
Galveston is a prime example of what should have been done 30 or 40 years ago. Nobody in that system is looking on the Social Security recipient with envy, and nobody is complaining, with the exception of one woman who is bitching about her reduced benefit without mentioning that she took out $40 grand for her husband's medical care (under the allowable rules of the system).
Here is the best part: the Galveston system was done with extremely conservative investments, and still yields several times the return that SS recipients get (average 6.5% vs. about 2%)! Yes, my reading of the system shows that they completely avoided the "risky" stock market in trade for security of the investment. If the managers of the system had used the stock market, even partially, the payouts would have been substantially larger.
Bottom line: if the government really gave a tinker's damn about the retirement welfare (sorry) of Americans, they would drop SS in a heartbeat and copy the Galveston system.
And the best indicator that the Galveston system works like a charm and blows every objection of the liberals out of the water? The fact that they NEVER bring it up. If it were a failure, you can bet they would be shouting it from the rooftops. But they are silent.
And Chile, a comparatively less advanced country than the U.S., can privatize, but we can't.
The President needs to hammer the Galveston plan home to the public, and the liberals have to stop lying about the "success" of the current system.
The first thing that will happen is that the surplus, the amount of $ that FICA brings in less the payout, will start to decrease. Since that money is being spent, and offsets some of the deficit, the deficit will balloon. Then, the surplus will vanish -- the good thing about that is we would finally find out how big the deficit really is. Once it vanishes, it will go negative, a net outflow, and add to the deficit.
It was called the 6.5% solution, basicly if someone want in to the system they sign something saying they dont want any of their SS paymants, then the 6.5% of what they normally put in to SS goes into the new Acct. Then the matching part from the employer goes toward the transition costs.
Sound perfect for me, I would waive that $1500/month for a shot a $4000/mo at retirement.
They are "Special" Treasury Bonds, which are non-negotiable, i.e. they are not sold to to public. All of the trust funds, like the federal civilian and military pension funds are "invested" in these bonds.
After 36 years of this borrowing how much is now owed the system? Including gained interest. I have heard estimates of over $1 trillion.
It's currently about $1.7 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.
Yes, they are. They are assuming that somehow the government will come up with the cash, which, by the time that it is needed, will amount to about $6 trillion.
By the way, if the cap was lifted on earnings above $90K, all of the increased FICA would go into the Trust Fund and be spent. It would thus add to the $6 trillion unfunded liability needed after 2018.
As for the questions about SSDI, SSDI is totally separate (again, in theory) from the Social Security retirement benefit. 10.6% of the 12.4% payroll/employer contribution goes for retirement, and 1.8% of the contribution goes to SSDI. SSI is not funded from Social Security funds, it is funded from income taxes.
More at: http://www.mysocialsecurity.org/quickfacts/faq.html