Ideal Budget

ludin · Sep 9, 2016

Gaea said:
Without Social Security Income, A Majority of U.S. Seniors Would Be Poor - Real Time Economics - WSJ

What a terrible program, lifting 23 million people out of poverty :roll:

The program isn't terrible how it was implemented is the terrible part and what is horrible.
it should be restructured in a different way to actually make it viable and cheaper for the government to operate.

ludin · Sep 9, 2016

Gaea said:
Social Security is just a government-mandated 401k retirement account.

No it isn't. 401k accounts are way better.

Moderate Right · Sep 9, 2016

Gaea said:
But what would that change in a practical sense?

Because now they are stealing FICA money to use on other government programs and to make the budget deficit look better than it really is.

Moderate Right · Sep 9, 2016

JohnfrmClevelan said:
Yes, it must all seem like a shell game to you. When you don't understand something, you feel like it's because you are being tricked. We're all in on this enormous ruse, except for you and Conservative.

If they collect FICA taxes and don't use them for Social Security and Medicare then yes, it is a shell game and if they use the FICA taxes collected to make the budget deficit look better than it really is then it is a shell game.

ludin · Sep 9, 2016

Moderate Right said:
If they collect FICA taxes and don't use them for Social Security and Medicare then yes, it is a shell game and if they use the FICA taxes collected to make the budget deficit look better than it really is then it is a shell game.

Actually what it does is create an un-needed liability on the government as it has to be paid back to SS.
This is how Clinton got his supposed surplus. It is an accounting trick a poor one at that.

JohnfrmClevelan · Sep 9, 2016

Moderate Right said:
If they collect FICA taxes and don't use them for Social Security and Medicare then yes, it is a shell game and if they use the FICA taxes collected to make the budget deficit look better than it really is then it is a shell game.

What's the difference if the government "borrows" from SS or "borrows" from the public? Total bonds outstanding are exactly the same. The only difference is that interest is paid (owed) to the SS fund, and not private investors.

Moderate Right · Sep 9, 2016

JohnfrmClevelan said:
What's the difference if the government "borrows" from SS or "borrows" from the public? Total bonds outstanding are exactly the same. The only difference is that interest is paid (owed) to the SS fund, and not private investors.

You're the devout MMT'r here who is fine with deficits. Why "borrow" money from SS at all if you can just run a bigger deficit or pick the money growing on the trees on the treasury's plantation?

ludin · Sep 9, 2016

JohnfrmClevelan said:
What's the difference if the government "borrows" from SS or "borrows" from the public? Total bonds outstanding are exactly the same. The only difference is that interest is paid (owed) to the SS fund, and not private investors.

Because the money should be going to sure up the SS fund not being borrowed and spent on other items.
Evidently the government is spending to much money.

JohnfrmClevelan · Sep 9, 2016

Moderate Right said:
You're the devout MMT'r here who is fine with deficits. Why "borrow" money from SS at all if you can just run a bigger deficit or pick the money growing on the trees on the treasury's plantation?

Deficits aren't the question at hand. The question is, what is the functional difference between the government "borrowing" money from SS and "borrowing" money from the private sector? Where is the trickery? Where is the shell game? Please, unravel this amazing enigma for us.

JohnfrmClevelan · Sep 9, 2016

ludin said:
Because the money should be going to sure up the SS fund not being borrowed and spent on other items.
Evidently the government is spending to much money.

You don't seem to get it either.

If the SS fund has U.S. bonds in hand - bearing interest, no less - why do they need "shoring up"? What do you think they would be holding otherwise?

ludin · Sep 9, 2016

JohnfrmClevelan said:
You don't seem to get it either.

If the SS fund has U.S. bonds in hand - bearing interest, no less - why do they need "shoring up"? What do you think they would be holding otherwise?

it is the reason that the SS fund is running low because they have been borrowing on it.
instead of letting the cash fund grow bigger. they borrow the excess.

the fund is set to run out by 2034 and then it will only pay 78% of what it is supposed to.
what a great stable system government invented. if only they hadn't setup it up like a ponzy scheme.

JohnfrmClevelan · Sep 9, 2016

ludin said:
it is the reason that the SS fund is running low because they have been borrowing on it.
instead of letting the cash fund grow bigger. they borrow the excess.

the fund is set to run out by 2034 and then it will only pay 78% of what it is supposed to.
what a great stable system government invented. if only they hadn't setup it up like a ponzy scheme.

The problem isn't with the way the SS fund holds its assets. To the government, bonds and dollars are the same thing - liabilities. If the SS fund has $100 billion worth of bonds and zero cash, they can write $100 billion worth of checks. They are not broke.

The possible decline in payouts and "running out" of funds is a legal thing, not a should-have-held-cash thing. The danger isn't in the government not being willing and able to redeem those SS bonds, the danger is only in the legal strings put on the SS system. SS will only run out of money when they run out of bonds, and that's ONLY because of the way it is legally set up. At least with bonds they are earning interest.

Again - governments cannot "sock away" their own currency for future use. Sovereign governments are not limited in their ability to crank out as much of their own currency as they please, so there is zero danger in holding bonds, whether you are in the private sector or the government sector.

Gaea · Sep 9, 2016

ludin said:
it is the reason that the SS fund is running low because they have been borrowing on it.
instead of letting the cash fund grow bigger. they borrow the excess.

No, it's not. SSA makes a profit by lending its money to the federal government. In actuality, SSA's lending is the reason why the trust fund will last as long as 2034. It would run out sooner otherwise.

the fund is set to run out by 2034 and then it will only pay 78% of what it is supposed to.
what a great stable system government invented. if only they hadn't setup it up like a ponzy scheme.

The fund will run out in 2034 because a much larger fraction of the population will be eligible for benefits than any time in the past. This is in addition to the increase in life expectancy over time.

Gaea · Sep 9, 2016

ludin said:
No it isn't. 401k accounts are way better.

Objectively speaking, how are they better?

ludin · Sep 9, 2016

Gaea said:
No, it's not. SSA makes a profit by lending its money to the federal government. In actuality, SSA's lending is the reason why the trust fund will last as long as 2034. It would run out sooner otherwise.

The fund will run out in 2034 because a much larger fraction of the population will be eligible for benefits than any time in the past. This is in addition to the increase in life expectancy over time.

It would have been fine had th federal government not been pillaging it.
The federal government owes the SS fund 2.4 trillion dollars as of right now.

Gaea · Sep 9, 2016

ludin said:
It would have been fine had th federal government not been pillaging it.
The federal government owes the SS fund 2.4 trillion dollars as of right now.

You have an odd idea of what pillaging is.

I always thought pillaging was the act of robbing someone.
This isn't theft, it's borrowing.

By your logic, the US government is also robbing the US population, banks, and foreign nations by selling bonds.

ludin · Sep 9, 2016

Gaea said:
Objectively speaking, how are they better?

first off the money I put in is mine it doesn't belong to someone else.
2 I actually earn interest on the money I put in so that it actually grows bigger.
I am able to make intelligent decisions with the money that actually can earn me more money.

With SS the money I put in is not mine it is someone else's.
Also the money I pay doesn't earn me a single dime as SS payments are paid out according to what you make and there is a cap of 2.5k a month only if you make the maximum salary of 104k a year for the majority of your working life.

The average SS payment is about 1.1k a month that is barely 12k a year.
So unless you are a mega investor or have saved the majority of your life if you plan on just having SS you are screwed.

The idea was good the execution and implementation was horrible.

ludin · Sep 9, 2016

Gaea said:
You have an odd idea of what pillaging is.

I always thought pillaging was the act of robbing someone.
This isn't theft, it's borrowing.

By your logic, the US government is also robbing the US population, banks, and foreign nations by selling bonds.

They owe money and aren't paying it back or paying it off.
They blew the money on other things instead of suring up the fund or investing the money in better markets to earn
Better rates.

JohnfrmClevelan · Sep 9, 2016

ludin said:
It would have been fine had th federal government not been pillaging it.
The federal government owes the SS fund 2.4 trillion dollars as of right now.

So your working theory is that SS's $2.4 trillion in bonds isn't worth $2.4 trillion? How, exactly, has SS been "pillaged" if they can continue to spend all of the money they brought in (plus interest)?

ludin · Sep 9, 2016

JohnfrmClevelan said:
The problem isn't with the way the SS fund holds its assets. To the government, bonds and dollars are the same thing - liabilities. If the SS fund has $100 billion worth of bonds and zero cash, they can write $100 billion worth of checks. They are not broke.

That 100b has to come from somewhere they just can't print it.

The possible decline in payouts and "running out" of funds is a legal thing, not a should-have-held-cash thing. The danger isn't in the government not being willing and able to redeem those SS bonds, the danger is only in the legal strings put on the SS system. SS will only run out of money when they run out of bonds, and that's ONLY because of the way it is legally set up. At least with bonds they are earning interest.

The entire fund earns interest as it is. By borrowing at a lower rate they rob people that are paying into the fund.
If any other investor does what the federal government does with SS fund they would be thrown in jail.

You do realize that if you broker "borrows" your investment and spends it on something else without your permission
Then sends you an iOS he goes to jail right?

So why is the government above the law?

Again - governments cannot "sock away" their own currency for future use. Sovereign governments are not limited in their ability to crank out as much of their own currency as they please, so there is zero danger in holding bonds, whether you are in the private sector or the government sector.

ugg this garbage again.

Ok so please tell us why the US doesn't just print 100 trillion dollars and give it to very family in the US.
that would drop the poverty rate to 0. So why not print 500 trillion and do the same.
There are no consequences to doing it.

There are reasons that countries don't print unlimited amoun of dollars but I doubt you can tell me why.

JohnfrmClevelan · Sep 9, 2016

ludin said:
that 100b has to come from somewhere they just can't print it.

After all of our discussions, you should understand money creation by now.

ludin said:
The entire fund earns interest as it is. By borrowing at a lower rate they rob people that are paying into the fund.

What are you talking about? The fund doesn't just earn interest "as it is," it earns interest on the bonds it holds. And it only holds those bonds because the SS fund is loaning money to the government. Nobody is being robbed; in fact, people end up paying less into the SS fund, because the bonds' interest is added to the funds. Would you rather pay a private investor that interest out of your taxes?

ludin said:
If any other investor does what the federal government does with ss fund they would be thrown in jail.

What, invest in the safest investment on Earth, at above-market rates? I only wish I could invest in those SS bonds...

ludin said:
You do realize that if you broker "borrows" your investment and spends it on something else without your permission
then sends you an ios he goes to jail right?

Do you realize that if your broker loses a bunch of your money on bad investments, then charges you a fee for the transactions, that he won't go to jail? The U.S. govt. has never lost a penny when they invest in their own bonds, and they don't charge you transactions fees, either.

ludin said:
So why is the government above the law?

The government is the law. Did you know that the government has to give you permission to sue them? Which they often do - the government allows people to sue them, in their own courts, on many matters. Your problem here is that you are not the one who decides what the laws say.

ludin said:
ugg this garbage again.

Ok so please tell us why the US doesn't just print 100 trillion dollars and give it to very family in the US.
that would drop the poverty rate to 0. So why not print 500 trillion and do the same.
There are no consequences to doing it.

Ugh - this moronic question again. And it's not even relevant to the response this time! We were talking about how the government cannot, in any real sense of the word, save up it's own currency for future use, NOT "why doesn't the government just give everybody a trillion dollars?"

ludin said:
There are reasons that countries don't print unlimited amoun of dollars but I doubt you can tell me why.

Again, NOT THE QUESTION AT HAND. Plus, it has already been answered at length, many, many times. So many times that even you should be able to understand it by now. Apparently not, though...

Gaea · Sep 9, 2016

ludin said:
first off the money I put in is mine it doesn't belong to someone else.

You get back more from social security than you put into it.

2 I actually earn interest on the money I put in so that it actually grows bigger.

That's exactly what the social security trust fund does as well. Hence, the SS trust fund buys US government bonds (they pay interest).

I am able to make intelligent decisions with the money that actually can earn me more money.

There's no guarantee you'll get your 401k money back when you retire. If you put your money in the stock market, and it crashes when you retire, your retirement savings evaporate.

If you only invest in treasury notes with your 401k, you're doing the same thing as the Social Security trust fund (except they earn more interest on their bonds than you do).

With SS the money I put in is not mine it is someone else's.

The money you put in your 401k isn't yours either. It belongs to whoever you give it to. If you give it to Fidelity to invest for you, then it's theirs. If you invest it in bonds personally, then your money belongs to the seller of the bonds. If you invest it in stocks, your money belongs to whoever sold you the stock. And if you simply stick your 401k money in a bank, it belongs to the bank.

There is literally no scenario in which the money in your 401k belongs to you, since you cannot hold your 401k in cash.

Also the money I pay doesn't earn me a single dime as SS payments are paid out according to what you make and there is a cap of 2.5k a month only if you make the maximum salary of 104k a year for the majority of your working life.

This is not true, because the money you pay in payroll taxes is invested in bonds. And like a 401k, your employer matches your contribution into the social security trust fund (with a maximum matching total of $8200 per year).

The average SS payment is about 1.1k a month that is barely 12k a year.
So unless you are a mega investor or have saved the majority of your life if you plan on just having SS you are screwed.

Well, I agree with this. People who have no retirement money saved beyond social security are going to live in poverty unless they live with family or live in a home with low property taxes. But the government doesn't prevent you from having a 401k when it charges you payroll taxes.

The idea was good the execution and implementation was horrible.

And that's demonstrably false, given that it reduced the poverty of seniors by 25%.

Gaea · Sep 9, 2016

ludin said:
They owe money and aren't paying it back or paying it off.
They blew the money on other things instead of suring up the fund or investing the money in better markets to earn
Better rates.

The government isn't paying back its debts? :shock:

Nobody told me the US government had defaulted!

ludin · Sep 9, 2016

Gaea said:
You get back more from social security than you put into it.

Not that I am ready to retire, but if something is not done before 2035 the fund will only start to pay out 78% of your benefit.
Not only that there is no guarantee that you will get more than what you pay in. the way the fund is setup now it is not possible
to do that and keep it going hence the problem they are running into.

That's exactly what the social security trust fund does as well. Hence, the SS trust fund buys US government bonds (they pay interest).

Only on the excess. my money is not earning interest it is being used to pay someone else.

There's no guarantee you'll get your 401k money back when you retire. If you put your money in the stock market, and it crashes when you retire, your retirement savings evaporate.

The money will be there and will be invested safely as I get older. less interest earned but better safety.

If you only invest in treasury notes with your 401k, you're doing the same thing as the Social Security trust fund (except they earn more interest on their bonds than you do).

In 2013 the SS fund earned 3.8% interest. I can do better than that.

The money you put in your 401k isn't yours either. It belongs to whoever you give it to. If you give it to Fidelity to invest for you, then it's theirs. If you invest it in bonds personally, then your money belongs to the seller of the bonds. If you invest it in stocks, your money belongs to whoever sold you the stock. And if you simply stick your 401k money in a bank, it belongs to the bank.

Actually you are wrong it is mine. At any time I can call fidelity or whoever else and move my money into something else.
In fact I did that just recently. I exited a fund that was losing me money at this point in time I am up but not as much as I would like.

There is literally no scenario in which the money in your 401k belongs to you, since you cannot hold your 401k in cash.

again the money is mine and I can tell who is holding it what to do with it. interesting how that works.

This is not true, because the money you pay in payroll taxes is invested in bonds. And like a 401k, your employer matches your contribution into the social security trust fund (with a maximum matching total of $8200 per year).

It is 100% true.
Then Social Security calculates your average
indexed monthly earnings during the 35 years
in which you earned the most. We apply a
formula to these earnings and arrive at your
basic benefit, or “primary insurance amount.”
This is how much you would receive at your
full retirement age — 65 or older, depending on
your date of birth.

What is the maximum I can receive from my Social Security retirement benefit? | Investopedia

And that's demonstrably false, given that it reduced the poverty of seniors by 25%.

[/QUOTE]

That is why the fund is going broke and the government is running out of other peoples money to spend.
when SS was first started there were 49 people paying in for every 1 person pulling out.

How Many Workers Support One Social Security Retiree? | Mercatus

this lists 2010 as 2.9. 6 years later it is down to about 2 from what I have seen.

ludin · Sep 9, 2016

JohnfrmClevelan said:
After all of our discussions, you should understand money creation by now.

We know you don't understand it has been pointed out by more than one poster.

What are you talking about? The fund doesn't just earn interest "as it is," it earns interest on the bonds it holds. And it only holds those bonds because the SS fund is loaning money to the government. Nobody is being robbed; in fact, people end up paying less into the SS fund, because the bonds' interest is added to the funds. Would you rather pay a private investor that interest out of your taxes?

the excess is taken by the government that is how Clinton ended up with his so called surplus.

What, invest in the safest investment on Earth, at above-market rates? I only wish I could invest in those SS bonds...

no smart or sound invest considers any investment safe.

Do you realize that if your broker loses a bunch of your money on bad investments, then charges you a fee for the transactions, that he won't go to jail? The U.S. govt. has never lost a penny when they invest in their own bonds, and they don't charge you transactions fees, either.

WHy can't you address the argument instead of strawmaning?

The government is the law. Did you know that the government has to give you permission to sue them? Which they often do - the government allows people to sue them, in their own courts, on many matters. Your problem here is that you are not the one who decides what the laws say.

actually no it isn't. The constitution is the law and the government is only derives it's power from the consent of the governed. this is pretty much any 2nd grade history book.

Ugh - this moronic question again. And it's not even relevant to the response this time! We were talking about how the government cannot, in any real sense of the word, save up it's own currency for future use, NOT "why doesn't the government just give everybody a trillion dollars?"

Your the one with the continued argument of we can just print money. So if we can just print money why not do it and print 500 trillion dollars. pay off the nation debt and reduce the poverty level to 0.
I mean after all we can just print as much money as we want. it doesn't matter.

Again, NOT THE QUESTION AT HAND. Plus, it has already been answered at length, many, many times. So many times that even you should be able to understand it by now. Apparently not, though...

actually it is because you are the one that continue spouting that we can just print money.
any country that can issue it's own currency can just print money. just print money.

so why is it that no country on earth does that? you never answer the question because you know for a fact what the answer is and it destroys your MMT nonsense.
So either you know more than every single economic person and central bank in the entire world or what you are saying is what we all know to be nonsense.

According to you there is no need for taxes. There is no need to borrow money from anyone. The government can just print money and pay for everything that it wants.
so why dont' we do that Mr. MMT?

answer the question for a change instead of your typical dodge or ad hominem.