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Social Security To Go Bust By 2030: CBO

With the banks loaning money at low rates of 3-5% what's to stop entities with high levels of assets and credit from borrowing in order to make a higher return rate on investing?

As long as your investment increases at a rate that is higher than your borrowing costs, you can make money.

Many Hedge Funds have steady high profits like Soros Fund Management generated more than 22% or Tepper at 42% and Recovery Fund posted net returns of 63%, Paulson Enhanced funds returned 33% and the Advantage funds generated net returns north of 26%. These guys are making money hand over fist.

Though, Social Security won't be able to give poor old people who paid into the system all their careers enough to live in poverty, while the Stock Market keeps raking in hundreds of billions. Something's wrong with that picture.
 
mtm1963 said:
62.8% of the population is working.

Bureau of Labor Statistics Data
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Interesting chart,

We now have according to your chart 62.8% working. However if you look at your chart going back to January of 2009 it was 65.7%. Which means under Obama from the day he took office the percentage of employed has dropped by 3%. Meaning no recover under Obama, just more lost jobs. In fact according to your chart the % employed had dropped each and every month under Obama from the date he took office. Am I reading this chart wrong?
 
rabbitcaebannog said:
Yeah, I lack faith in politicians too, but what exactly do you mean by voters willingness to do what is in the best interest of others?
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Social Security is a societal benefit. The terms are clear: you give today and someone might do the same in the future. I just saw a poll, and 73% of people 18-29 would replace Social Security with an optional personal account. 49% would replace it even if it meant that seniors would need to accept a benefit cut. These are the people on whom Social Security depends, and about 1/2 say forget the retirees we will just take the personal benefit. I understand where they are coming from. I think that many will be surprised that someone might not do the same.
 
tres borrachos said:
Of course SS is going to go bust. If you're a 22 year old woman who dies giving birth to a baby, and you've paid into SS a whopping 1 year, that child is entitled to your SS until it reaches 18, or stays a full time student until 22. That child will get substantially more out of SS than you ever paid in.

I always look at that thing I get from SSA in the mail that tells me what I will get out of SS at ages x and y, etc. I calculate what I will get in total if I live to me 85. I know what I've been paying into it since I was 22. I'll get my entire contribution back long long long before I die.
Click to expand...

The statistical likelihood of a 21 female year old dying is .... 0.0431% about 4 in 10,000
 
Lord of Planar said:
It won't go bust. It still has those trillions in IOU's to use up first.
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Please tell me you don't vote. You are part of the statistics. In 1988, 49% of people had confidence that Social Security would be there for them. Now it is roughly 54%. In 1988, the solvency of Social Security was projected to be 60 years. Now it is 16. Do you think that some people are in denial. It isn't the vacation spot that people tell you it is.
 
JoeTheEconomist said:
Please tell me you don't vote. You are part of the statistics. In 1988, 49% of people had confidence that Social Security would be there for them. Now it is roughly 54%. In 1988, the solvency of Social Security was projected to be 60 years. Now it is 16. Do you think that some people are in denial. It isn't the vacation spot that people tell you it is.
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I do understand the reality. US bonds are suppose to be a solid investment. Are you saying they aren't?

It doesn't matter when the bonds get all cashed in. SS will then run a deficit. The government will have to come up with the extra from tax payers.

I don't like it, but it's the reality.

The left always fights the option to allow people to put their SS deduction into personal accounts instead, so don't look at me.
 
JoeTheEconomist said:
Social Security is a societal benefit. The terms are clear: you give today and someone might do the same in the future. I just saw a poll, and 73% of people 18-29 would replace Social Security with an optional personal account. 49% would replace it even if it meant that seniors would need to accept a benefit cut. These are the people on whom Social Security depends, and about 1/2 say forget the retirees we will just take the personal benefit. I understand where they are coming from. I think that many will be surprised that someone might not do the same.
Click to expand...

This demonstrates these people are not wanting to do what is in the best interest of themselves. Personal accounts in other countries have not shown to do well. Also, why should seniors deserve a benefit cut? Not only did those people 20 years ago pay into the system for others (current retirees) but also were told they were paying toward a savings for themselves. Are you suggesting that was a lie by Reagan and Greenspan?
 
Born Free said:
What is better deflation or inflation?
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a balanced economic system.

the present system did not get rid of deflation.

it did help to maintain liquidity but in the worst possibly way for "the people" meanwhile the banking cartels make huge profits in either direction.
 
rabbitcaebannog said:
This demonstrates these people are not wanting to do what is in the best interest of themselves. Personal accounts in other countries have not shown to do well. Also, why should seniors deserve a benefit cut? Not only did those people 20 years ago pay into the system for others (current retirees) but also were told they were paying toward a savings for themselves. Are you suggesting that was a lie by Reagan and Greenspan?
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anyone approaching 80 with sound mind will tell you that the government sold it to the people as an "insurance policy", despite when you read the actual legalese it is nothing of the sort.
 
KokomoJojo said:
anyone approaching 80 with sound mind will tell you that the government sold it to the people as an "insurance policy", despite when you read the actual legalese it is nothing of the sort.
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someone warned us to be vigilent in the defense of social security.

 
KokomoJojo said:
a balanced economic system.

the present system did not get rid of deflation.

it did help to maintain liquidity but in the worst possibly way for "the people" meanwhile the banking cartels make huge profits in either direction.
Click to expand...

Thank you for not answering the question. Now you say the present system did not get rid of deflation, yet before you were bitching about inflation. I give up.
 
KokomoJojo said:
anyone approaching 80 with sound mind will tell you that the government sold it to the people as an "insurance policy", despite when you read the actual legalese it is nothing of the sort.
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Social security is a good system. The problem is there is a vested interest with some to privatize it. They want to privatize all our social programs because there is money to be made from them. They want to try and destroy the program first and then educate the public on why we need to have our own individual accounts. It doesn't matter that Latin America has been the testing ground for such neoliberal policies for a few decades now with dismal results for the citizens..... not dismal results for making money off their backs.
 
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rabbitcaebannog said:
This demonstrates these people are not wanting to do what is in the best interest of themselves. Personal accounts in other countries have not shown to do well. Also, why should seniors deserve a benefit cut? Not only did those people 20 years ago pay into the system for others (current retirees) but also were told they were paying toward a savings for themselves. Are you suggesting that was a lie by Reagan and Greenspan?
Click to expand...

You will have to show me what Reagan and Greenspan said before I can tell you whether it was a lie. A lot of people seem to think that increasing payroll taxes pre-paid their benefits. Based on the data today, those people are foolishly mistaken. I cannot tell you that Reagan and Greenspan lied because I never heard either of them make such a promise.

The Boomer who say that the Social Security system was projected to be solvent until they were gone. This is what I will say. So it was your understanding that you could screwover your children, and now you are disappointed that it fell on you?
 
rabbitcaebannog said:
Social security is a good system. The problem is there is a vested interest with some to privatize it. They want to privatize all our social programs because there is money to be made from them. They want to try and destroy the program first and then educate the public on why we need to have our own individual accounts. It doesn't matter that Latin America has been the testing ground for such neoliberal policies for a few decades now with dismal results for the citizens..... not dismal results for making money off their backs.
Click to expand...

Some of this borders on crazytown. Social Security has a negative net worth of $23 trillion - where is the vested interest in privatizing a negative number. Specifically, where in Latin America has private accounts failed?

Privatization is largely a strawman created by America's left because they cannot articulate a mission which Social Security can serve. Privatization has little political resonance these days. My guess is that many of those younger Americans polled do not know that 'reduce' really means 'eliminate'. I have talked to hundreds of supporters, and virtually none want a private account. They simply want out. CPWill here is one exception. I have tried to dispel the belief that privatization makes Social Security more financially stable : The Risks of Privatizing Social Security : FedSmith.com

Just historical fact, Social Security had little resistance in DC until the 1990s ( which exactly coincided with the introduction of peak-rates). At that time, people started talking about privatizing the system. In 2005, GWB put forward a proposal which could not get out of a GOP controlled committee. Ryan put forward a concept called the Roadmap For America, which included private accounts in SS. The parts about privatizing Social Security were removed before Ryan proposed it as law. So there is very little evidence that anyone is doing anything about Social Security at all.

Charles Blahous, Public Trustee Of The Social Security Trust Funds, "If this all happens, and renders tomorrow’s Social Security benefits less secure than today’s, it would be a tragic irony: the outcome would have been brought about largely by supporters of Social Security having countenanced the tactics of delay to the point that the program’s unique political protections could no longer be preserved. Those who care about the Social Security program need to clearly understand the consequence of this ongoing neglect; that time for a realistic financing solution has nearly run out." He is talking about people such as yourself.



Is it Becoming Too Late to Fix Social Security's Finances? | e21 - Economic Policies for the 21st Century
 
Unitedwestand13 said:
someone warned us to be vigilent in the defense of social security.

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Which is why FDR veto'd changes to the system in 1940s. What we have today is exactly what FDR fought against. So let's not bring-out videos of FDR as though they support any case about Social Security today. If you want to be vigilant, you are going to have to hop into the car for a ride with Marty McFly
 
Lord of Planar said:
It doesn't matter when the bonds get all cashed in. SS will then run a deficit. The government will have to come up with the extra from tax payers.
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This is factually incorrect. When the bonds, or IOUs, get cashed in, SS benefits will be cut because SS cannot run a deficit. Do you need a link to the Trustees Report for a discussion about benefit cuts?

Lord of Planar said:
I don't like it, but it's the reality.

The left always fights the option to allow people to put their SS deduction into personal accounts instead, so don't look at me.
Click to expand...

Here is my article on the reality of personal accounts, The Risks of Privatizing Social Security : FedSmith.com . Long story short the nation can't afford them. The problem is that when money is diverted from SS to personal accounts it creates a bigger draw on the Trust Funds to cover existing benefits. So benefit cuts are moved forward in time.
 
JoeTheEconomist said:
This is factually incorrect. When the bonds, or IOUs, get cashed in, SS benefits will be cut because SS cannot run a deficit. Do you need a link to the Trustees Report for a discussion about benefit cuts?
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Assuming I am incorrect, there are other options besides cutting benefits. One would to be raise SS rates.

JoeTheEconomist said:
Here is my article on the reality of personal accounts, The Risks of Privatizing Social Security : FedSmith.com . Long story short the nation can't afford them. The problem is that when money is diverted from SS to personal accounts it creates a bigger draw on the Trust Funds to cover existing benefits. So benefit cuts are moved forward in time.
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One thought to consider.

Why not allow people who want to take part of the SS money and place it into a personal account? It seems to me that those of us who can afford to build such an account up live longer because of our finances as well. Am I wrong about that? When we collect SS, it's often into our 80's or longer, whereas poorer people, without the same level of medical care, simply don't live as long.

Am I wrong about that?

I wonder if there have been any studies regarding income vs. longevity vs. drain on SS.

Your wording sounds like you wrote the article. If that's true, maybe you have the data resources to test this idea?

I knew I would have a good work outlook since the 80's. I would have gladly, then, taken reduced or no SS for the ability to put part or some of that money into a personal retirement account.
 
Lord of Planar said:
Assuming I am incorrect, there are other options besides cutting benefits. One would to be raise SS rates.
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Rates might get raised, but you have to ask why will future voters increase taxes when we wont. It is a difficult sell to someone like me with kids. You are telling me that we are going to throw more money at a system that is completely broken. Today workers even if they get benefits in the future will lose money on the system. So you are suggesting that we increase the price of something that loses money.

Lord of Planar said:
One thought to consider.

Why not allow people who want to take part of the SS money and place it into a personal account? It seems to me that those of us who can afford to build such an account up live longer because of our finances as well. Am I wrong about that? When we collect SS, it's often into our 80's or longer, whereas poorer people, without the same level of medical care, simply don't live as long.

Am I wrong about that?
Click to expand...

It is a question that I posed to SSA. If you look at the moneys-worth studies, it tells you that low-wage workers get a better deal from Social Security. So I asked SSA whether the life expectancy used in the study tracked to past wages. They said that it didn't, but shorter life expectancies tend to have higher disability utilization. The email said that the increase is about 2 years and it wouldn't materially affect the outcome of the results. Understand, I am not a Congressman and the email may have been a way to get rid of my question. I really don't know.

Lord of Planar said:
I wonder if there have been any studies regarding income vs. longevity vs. drain on SS.
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There are two studies that are generally used. The moneys-worth studies from the SSA and the data from the Urban Institute. I think that the UI data is more widely used because it written in terms that is more easily understood. What you will find is that retirees from the 1940s into the 1990s completely mugged the system. They contributed little, and Congress rewarded them with substantial increases. Social Security was basically a campaign reelection fund which gave voters benefits at the expense of non-voters. The turn year is 2010, which is 1945 birth years. That was the last year in which a retiree expected to make money on Social Security. It is downhill there after.

The math isn't difficult to understand. Social Security is a paygo system, which does not generate income with which to pay profits to retirees. Retirees into the 1970s made a killing in profits. Those profits have to come from somewhere. The only place that profits can be created in a paygo system is based on reduced returns to future retirees. This consequence was explained to Congress in 1944 by the man who ran SS at the time.



Lord of Planar said:
Your wording sounds like you wrote the article. If that's true, maybe you have the data resources to test this idea?

I knew I would have a good work outlook since the 80's. I would have gladly, then, taken reduced or no SS for the ability to put part or some of that money into a personal retirement account.
Click to expand...

I wrote the article. The process is simple. If you divert resources from SS to a private account, the system will have to take more cushion from the Trust Fund. The Trust Fund will be liquidated sooner, and benefits will be cut sooner. What data source do you need?
 
JoeTheEconomist said:
Some of this borders on crazytown. Social Security has a negative net worth of $23 trillion - where is the vested interest in privatizing a negative number. Specifically, where in Latin America has private accounts failed?

Privatization is largely a strawman created by America's left because they cannot articulate a mission which Social Security can serve. Privatization has little political resonance these days. My guess is that many of those younger Americans polled do not know that 'reduce' really means 'eliminate'. I have talked to hundreds of supporters, and virtually none want a private account. They simply want out. CPWill here is one exception. I have tried to dispel the belief that privatization makes Social Security more financially stable : The Risks of Privatizing Social Security : FedSmith.com

Just historical fact, Social Security had little resistance in DC until the 1990s ( which exactly coincided with the introduction of peak-rates). At that time, people started talking about privatizing the system. In 2005, GWB put forward a proposal which could not get out of a GOP controlled committee. Ryan put forward a concept called the Roadmap For America, which included private accounts in SS. The parts about privatizing Social Security were removed before Ryan proposed it as law. So there is very little evidence that anyone is doing anything about Social Security at all.

Charles Blahous, Public Trustee Of The Social Security Trust Funds, "If this all happens, and renders tomorrow’s Social Security benefits less secure than today’s, it would be a tragic irony: the outcome would have been brought about largely by supporters of Social Security having countenanced the tactics of delay to the point that the program’s unique political protections could no longer be preserved. Those who care about the Social Security program need to clearly understand the consequence of this ongoing neglect; that time for a realistic financing solution has nearly run out." He is talking about people such as yourself.



Is it Becoming Too Late to Fix Social Security's Finances? | e21 - Economic Policies for the 21st Century
Click to expand...

It's ironic you even mention Blahous' name in the privatization discussion. After all, he was Bush's point man when he brought forth the subject to privatizing the system. He is an ideologue who works for the Hoover Institute. Many of these same privatized schemes came from these US conservative/libertarian think tanks that changed the social security programs in Latin America. Such a surprise you know little about this since the Cato Institute and Heritage Foundation are still pushing private accounts. The people who fund them have a vested interest in private accounts. It's not just poster such as CPwill that believe in them. But, your point is correct that the American people for the most part aren't buying into them. I suppose it could be re-packaged into another name. Time will tell.
 
JoeTheEconomist said:
You will have to show me what Reagan and Greenspan said before I can tell you whether it was a lie. A lot of people seem to think that increasing payroll taxes pre-paid their benefits. Based on the data today, those people are foolishly mistaken. I cannot tell you that Reagan and Greenspan lied because I never heard either of them make such a promise.

The Boomer who say that the Social Security system was projected to be solvent until they were gone. This is what I will say. So it was your understanding that you could screwover your children, and now you are disappointed that it fell on you?
Click to expand...

Here is this guy's POV. What are your thoughts? Ronald Reagan and The Great Social Security Heist : FedSmith.com

The accounts need to be continuously updated. Things change over time like demographics, the economy, etc....nothing is static. The only way we will screw our children is by abandoning a system set up to migrate some of the risk away from individuals, and giving them one that gives them all the risks. It's a horrible thing to do. So many risk have been migrated away from institutions already and placed on individuals. People have got to be crazy to think they can handle all things the market brings on their own. It's a line perpetuated by the very institutions that realized instead of adding an extra layer of protection, they could simply migrate the risks on to us and some can even make money off us instead.
 
JoeTheEconomist said:
Rates might get raised, but you have to ask why will future voters increase taxes when we wont.
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I wasn't aware such a thing was up to a pubic vote.

Link please?

Congress passes laws all the time that the public doesn't get to vote on.

JoeTheEconomist said:
It is a difficult sell to someone like me with kids. You are telling me that we are going to throw more money at a system that is completely broken.
Click to expand...
We do that all the time.

JoeTheEconomist said:
Today workers even if they get benefits in the future will lose money on the system.
Click to expand...
That's normal.

It happens all the time where people with more money pay mor in taxes than the benofits they get in society, and poor people pay nothing, and get money redistributed to them

I guess we should stop all social subsidies.

JoeTheEconomist said:
So you are suggesting that we increase the price of something that loses money.
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For the elderly, yes.

Take the money away from subsidies we give able bodied people who do not work.

JoeTheEconomist said:
It is a question that I posed to SSA. If you look at the moneys-worth studies, it tells you that low-wage workers get a better deal from Social Security. So I asked SSA whether the life expectancy used in the study tracked to past wages. They said that it didn't, but shorter life expectancies tend to have higher disability utilization. The email said that the increase is about 2 years and it wouldn't materially affect the outcome of the results. Understand, I am not a Congressman and the email may have been a way to get rid of my question. I really don't know.
Click to expand...
I agree.

Two years isn't much. I was thinking it would be more.

JoeTheEconomist said:
I wrote the article. The process is simple. If you divert resources from SS to a private account, the system will have to take more cushion from the Trust Fund. The Trust Fund will be liquidated sooner, and benefits will be cut sooner. What data source do you need?
Click to expand...
This may be true. My understanding of such systems proposed is that those opting out could take their share of the SS and put in in the private account. Not the employer share.

The law can be changed, and the feds can bail out SS just like anything else.

Should the elderly get bailed out over banks?
 
rabbitcaebannog said:
It's ironic you even mention Blahous' name in the privatization discussion. After all, he was Bush's point man when he brought forth the subject to privatizing the system. He is an ideologue who works for the Hoover Institute. Many of these same privatized schemes came from these US conservative/libertarian think tanks that changed the social security programs in Latin America. Such a surprise you know little about this since the Cato Institute and Heritage Foundation are still pushing private accounts. The people who fund them have a vested interest in private accounts. It's not just poster such as CPwill that believe in them. But, your point is correct that the American people for the most part aren't buying into them. I suppose it could be re-packaged into another name. Time will tell.
Click to expand...

That is ironic, and very surprising considering the most material that I have read from him is very sensible. The Bush Plan was very unsensible, and I have to admit that I haven't spent time researching the source of the bad ideas.

The Heritage Foundation does not support private accounts. It recommends forced savings accounts to supplement Social Security, which it would turn into a welfare program.

Private accounts are simply unaffordable.
 
rabbitcaebannog said:
Here is this guy's POV. What are your thoughts? Ronald Reagan and The Great Social Security Heist : FedSmith.com

The accounts need to be continuously updated. Things change over time like demographics, the economy, etc....nothing is static. The only way we will screw our children is by abandoning a system set up to migrate some of the risk away from individuals, and giving them one that gives them all the risks. It's a horrible thing to do. So many risk have been migrated away from institutions already and placed on individuals. People have got to be crazy to think they can handle all things the market brings on their own. It's a line perpetuated by the very institutions that realized instead of adding an extra layer of protection, they could simply migrate the risks on to us and some can even make money off us instead.
Click to expand...

The Social Security debate draws in all kinds of people Dr. Smith is not someone on whom I rely for quotes. He manages to get published in a number of venues though.

The problem in Social Security is the systemic underfunding of the system. We paid retirees of the 1960s $8 of benefits for every $1 of contribution. We paid those benefits by paying retirees of 1985 about $3 of benefits to every $1 of contribution. You can understand why the system was insolvent in 1983. The Trustees have told you that the system isn't working. The promises in the system exceed what the system expects to generate in revenue by 23 trillion dollars. That number is roughly 50% higher than it was five years ago. You can ignore the number but it will come at a stiff price for retirees who are around when the working generation gives up on it.

The number by itself tells you that something is horribly wrong.
 
Lord of Planar said:
I wasn't aware such a thing was up to a pubic vote.

Link please?


We do that all the time.


That's normal.

It happens all the time where people with more money pay mor in taxes than the benofits they get in society, and poor people pay nothing, and get money redistributed to them

I guess we should stop all social subsidies.


For the elderly, yes.

Take the money away from subsidies we give able bodied people who do not work.


I agree.

Two years isn't much. I was thinking it would be more.


This may be true. My understanding of such systems proposed is that those opting out could take their share of the SS and put in in the private account. Not the employer share.

The law can be changed, and the feds can bail out SS just like anything else.

Should the elderly get bailed out over banks?
Click to expand...

The public votes for Congress every two years. In the future, the discussion of Social Security will hinge around the people voted into Congress. My guess is that people will take the issue more seriously as the costs of it come home.

Social Security is not a social program. It is a contributory benefits system. The reason that the system hasn't had a major reform is because people have contributed to the system, and believe that they are owed money by the system. This isn't a system which protects people from poverty. Once it is welfare as you describe, the system is toast. Social Security does not pay a penny of benefit based on need. It is a formula that weights past contributions.
 
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