Social Security Fix

iamitter · Apr 7, 2011

sazerac said:
We get rid of all caps on social security and we start taxing all income, not just wages.

We start increasing taxes on anybody who uses our infrastucture to sell their goods and services. And that includes all media and satelite infrastructure. This is where we put our tax focus. Nobody should even pay taxes if they are low income because they are not getting any advantage of our infrastucture.

SS isn't a regular tax program. If you're going to pop the cap on wages, you have to do the same with benefits, or else it turns into welfare and not a retirement program.

sazerac · Apr 7, 2011

iamitter said:
SS isn't a regular tax program. If you're going to pop the cap on wages, you have to do the same with benefits, or else it turns into welfare and not a retirement program.

Oh no, I'd increase benefits with all the new revenue. It's an insurance program. I'd be very careful of disability claims but you would have good insurance if life throws you a curve ball and you are unable to work.

iamitter · Apr 7, 2011

sazerac said:
Oh no, I'd increase benefits with all the new revenue. It's an insurance program. I'd be very careful of disability claims but you would have good insurance if life throws you a curve ball and you are unable to work.

Insurance where some people pay more than others?
If you're going receive revenues on the order of 100k/year for people who earn >1 million, you can't only let them receive the same amount as someone who dishes in 5k/year.

cpwill · Apr 8, 2011

iamitter said:
SS isn't a regular tax program. If you're going to pop the cap on wages, you have to do the same with benefits, or else it turns into welfare and not a retirement program.

actually it is a tax program. thus sayeth the Supreme Court of the United States of America (and the FDR Administration when they put it into place)

cpwill · Apr 8, 2011

Dittohead not! said:
If every working person put 16% (8 from the paycheck, 8 from the employer, as per Social Security) into an IRA, there is no question that he/she would be far and away better off after 40 or 50 years than by putting the same amount into SS. That was the heart of your suggestion, I believe.

The problem is, we already have a majority of Americans who have been paying into SS, there is an increasing number reaching retirement age, and they will start drawing SS. So, if the people who still have 30 or 40 years of employment ahead of them quit funding SS, where is the money going to come from for the current retirees?

my proposal was that they put 10% away, their remaining 5% and change goes to pay for current benefits for those who stay in the system, and we pop the cap to make up the difference. as people flee the system but leave a portion of their income (for the rest of their working life) behind, Social Securities liabilities will drop much, much faster than it's income, which has the popped cap applying upward pressure. but we may have to push back retirement (as we will have to do anyway) to 68 or so to make it possible to survive the period you describe.

iamitter · Apr 8, 2011

cpwill said:
actually it is a tax program. thus sayeth the Supreme Court of the United States of America (and the FDR Administration when they put it into place)

It's not a regular program. It's not a general fund thing like other taxes. Benefits are tied to how much you pay in.

Dittohead not! · Apr 8, 2011

cpwill said:
my proposal was that they put 10% away, their remaining 5% and change goes to pay for current benefits for those who stay in the system, and we pop the cap to make up the difference. as people flee the system but leave a portion of their income (for the rest of their working life) behind, Social Securities liabilities will drop much, much faster than it's income, which has the popped cap applying upward pressure. but we may have to push back retirement (as we will have to do anyway) to 68 or so to make it possible to survive the period you describe.

That might work, if the cap is removed and retirement age increased, except that most of the people who opt to stay in the system will be the older people who already have a lot "invested" in SS.

Any way it's done, the bottom line is that those IOUs will have to be paid back. That will be the difficult part.

ricksfolly · Apr 9, 2011

sazerac said:
We get rid of all caps on social security and we start taxing all income, not just wages.

We start increasing taxes on anybody who uses our infrastucture to sell their goods and services. And that includes all media and satelite infrastructure. This is where we put our tax focus.

Why not toll booths? Make drivers pay for the damage they did to all our highways over the years. They can also get rid of income tax loop holes, deferments, and other arcane schemes, especially for corporate and the growing numbers of millionaires, last count, 720 million.

I would also raise the top income tax rate to 45 or 50 percent, make a ruling that all corporations share their earnings with their employees, static wages is not nearly enough compensation for their sweat and efforts. If they refuse, nationalize them like Teddy did and the way the UK is doing it.

ricksfolly

haymarket · Apr 9, 2011

For years I would dive into debates like this and defend SS from the zealots of the far right who hated it in the Thirties when it was proposed and still hate it today because it violates their precious belief system and ideology.

Now I simply take this position: I do not care what financial situation it is in. I do not care how you classify it as a program, entitlement or contract or not any of those. I do not care about your intellectual rationalization for what it has done to or for America.

Just try to get rid of it. Just stand up and run for office and say you are ending Social Security. Do that. Please.

All of the other stuff is simply mental masturbation.

You wanna end SS. Stand up, run for office, take your idea to the people and say so.

That reality kicks the collective ass of any argument you want to mount against SS. Your ideology gets trumped by the people. And the last time I looked, this was a government of the people, by the people and for the people. And the freaking Cato institute can dwell on that.

cpwill · Apr 9, 2011

iamitter said:
It's not a regular program. It's not a general fund thing like other taxes. Benefits are tied to how much you pay in.

there's no reason for them to be. the Supreme Court also ruled that you do not have a right to social security "benefits".

sazerac · Apr 9, 2011

iamitter said:
Insurance where some people pay more than others?
If you're going receive revenues on the order of 100k/year for people who earn >1 million, you can't only let them receive the same amount as someone who dishes in 5k/year.

Insurance where people get bigger monthly checks than others, too. If you're making $250,000 a year and you fall off a building you still get a monthy income check that resembles your working salary.

cpwill · Apr 9, 2011

haymarket said:
For years I would dive into debates like this and defend SS from the zealots of the far right who hated it in the Thirties when it was proposed and still hate it today because it violates their precious belief system and ideology.

what?

Dude, I'm proposing that we save Social Security. My plan strengthens Social Security, and turns it into the greatest poverty reduction program in the history of our government. The alternative inevitably see's Social Security (and Medicare) ENDING as our creditors force us into severe Austerity a'la Greece (except we owe much, much more and it would thus be much, much worse).

You have some libertarians arguing that we should get rid of the entitlements, that's true. That's why Libertarians are split in this poll. But by and large Conservatives are trying to SAVE those programs by making them sustainable.

meanwhile, out of the party that claims to be the party of the working man, ONE person has voted in favor of letting that working man retire in a state of financial independence. and SEVEN have voted to keep him dependent on the government until the system CRASHES (which it will. Soon.)

cpwill · Apr 9, 2011

Dittohead not! said:
That might work, if the cap is removed and retirement age increased, except that most of the people who opt to stay in the system will be the older people who already have a lot "invested" in SS.

Any way it's done, the bottom line is that those IOUs will have to be paid back. That will be the difficult part.

dude. there's not enough money to pay back those IOU's. that is debt that is going to have to be restructured where we "pop the cap" or not.

Dittohead not! · Apr 10, 2011

cpwill said:
dude. there's not enough money to pay back those IOU's. that is debt that is going to have to be restructured where we "pop the cap" or not.

There may not be enough will to pay back those IOUs, but it could be done. The alternative is to allow SS to fail, and then tell people who were forced to pay into it for decades, "Sorry, Charlie. Your money is gone."

Any pol who suggests that needs to be run out of town on a rail.

upsideguy · Apr 10, 2011

cpwill said:
we can save a dollar for each dollar of cuts (in fact we probably net a little more due to increased growth rates); but raising taxes has been pretty solidly demonstrated to have a tenuous - you could make a good argument negative - effect on tax revenues..

Pray tell, show us this 'solidly demonstrated'.

cpwill · Apr 10, 2011

Dittohead not! said:
There may not be enough will to pay back those IOUs, but it could be done.

you have to reduce benefits and increase revenues. there is not enough to pay back some of those IOU's, and so some of those IOU's won't be paid back. That's not ideology, that's math.

The alternative is to allow SS to fail, and then tell people who were forced to pay into it for decades, "Sorry, Charlie. Your money is gone."

the money is gone. It was spent by congress years and decades ago on general stupidity of the type that Congress does so well.

THE MONEY IS GONE. THERE IS NO MONEY. why do i feel like this is such a hard point to get across?

Any pol who suggests that needs to be run out of town on a rail.

why, because they had the unique courage to tell us the truth? we want our leadership to lead us headfirst at 90mph into a brick wall?

cpwill · Apr 10, 2011

upsideguy said:
Pray tell, show us this 'solidly demonstrated'.

if you will look at our collection over the past few years

wsj-tax-revenue-chart-ed-ah556b_ranso_20080519194014.gif

you will note that while tax rates varied wildly, revenue rates did not; generally holding steady at 18-19% of GDP, irrespective of the tax rate. people seek to avoid exposure to taxes, and the higher the tax rates, the greater their incentive to do so. on the margin you depress the activity that is taxed. within the range of GDP that is collected, lower taxes seem to push it higher, but rather than simply assuming a direct (rather than indirect through increased GDP) effect, we should note that the period of greatest tax rate variation is the period of greatest revenue rate stability, and the period of greatest revenue rate variability occured during a time that was marked by fairly stable tax rates.

Revenue, therefore, is mostly a function of GDP. if you want to increase revenue, take steps that would more rapidly increase GDP. if you want to depress revenue, take steps that would slow the growth (or reduce) GDP.

this isn't to say that tax cuts are or should be a one-stop-shop. I would argue at our current point we probably would gain more through tax code simplification. Currently we spend 330 Billion just complying with the Tax code; that's unconcionable. imagine the effect of just 2/3rds of that in savings every year; invested in the economy and compounded over time? reducing tax code complexity and the regulatory burden are two great non-tax methods of increasing GDP.

lpast · Apr 10, 2011

They average social security monthly payment is 1,177 a month. Who the hell can live off that ? answer no ONE can and how much can you cut from that for people who need it to survive and its their only income. Some folks on here act like if your collecting social security the govt is giving you the life of reilly, the truth is theres lots of people that work all their lives that dont make enough for necessities and some of my fellow conservatives keep harping they need to take care of themselves..HOW tell me how they do that. I understand I dont share the conservative view on social security as most conservatives and its because I know that they expect too much...they expect workers to work for whatever the employer wants to give them they arent entitled to any pensions or benefits...and you want them to buy their own health insurance and save for their own old age on top off all that...I know I keep saying this over and over but walmart is the biggest employer in the country and NO ONE working for walmart can do what some of my fellow conservatives believe they should do...and that is do it all on 10 bucks an hour...so they can pay no taxs at all

Average monthly Social Security benefit for a retired worker

Dittohead not! · Apr 11, 2011

cpwill said:
you have to reduce benefits and increase revenues. there is not enough to pay back some of those IOU's, and so some of those IOU's won't be paid back. That's not ideology, that's math.

the money is gone. It was spent by congress years and decades ago on general stupidity of the type that Congress does so well.

THE MONEY IS GONE. THERE IS NO MONEY. why do i feel like this is such a hard point to get across?

why, because they had the unique courage to tell us the truth? we want our leadership to lead us headfirst at 90mph into a brick wall?

Yes, the money is spent, along with money borrowed from China and other countries. Are we gong to default on those loans, too? Pay back the money borrowed from SS with interest (those IOUs are supposed to be treasury bonds, after all), and there will be plenty of money in the social security trust fund.

Oh, yes, and then let's make it a real trust fund.

Talk about borrowing from our grandchildren! We've already borrowed from our parents and grandparents, and now you're talking about defaulting on the loan.

I'd love to see you go into a bank you borrowed money from, and say "THE MONEY IS GONE. THERE IS NO MONEY. why do i feel like this is such a hard point to get across?" Good luck with that.

cpwill · Apr 11, 2011

lpast said:
They average social security monthly payment is 1,177 a month. Who the hell can live off that ? answer no ONE can and how much can you cut from that for people who need it to survive and its their only income. Some folks on here act like if your collecting social security the govt is giving you the life of reilly, the truth is theres lots of people that work all their lives that dont make enough for necessities and some of my fellow conservatives keep harping they need to take care of themselves..HOW tell me how they do that.

well, back when I was a young LCpl with a wife and a brand new bouncing baby and making enough to qualify for all the WIC, Food Stamps, etc. programs; I didn't take any of them and I still managed to save for retirement through an arcane dark magic known as "budgeting". Every month we "spent less than we made" (a couple of months we didn't succeed at this - which is where savings comes in), and as a result were able to save what was left. the fact that we chose to live debt free helped this tremendously, though it left us less entertained than our indebted neighbors with 48 inch plasmas.

but that's one of the benerfits of this plan; it turns the working poor into millionares without lowering their take-home pay by one red cent.

and it saves social security, and it boosts economic growth, yet people are still against it

though generally i fail to see what value they are placing above reducing poverty.

Mayor Snorkum · Apr 11, 2011

cpwill said:
THE MONEY IS GONE. THERE IS NO MONEY. why do i feel like this is such a hard point to get across?

Because you're talking to people who believe that money is paper.

They refuse to learn the lessons of the Weimar Republic and Zimbabwe. They want to pretend that the laws of economics will not apply where they live.

cpwill · Apr 11, 2011

Dittohead not! said:
Yes, the money is spent, along with money borrowed from China and other countries. Are we gong to default on those loans, too?

only if we want to wreck the world economy. more likely at that point we would will hyperinflate - which will hurt everyone else, but only really wreck us.

though it would be great to see the look on the Hu's face if we told them to get bent.

Pay back the money borrowed from SS with interest (those IOUs are supposed to be treasury bonds, after all), and there will be plenty of money in the social security trust fund.

:lamo with what money? it's all gone, man. we're running a 1.5 Trillion dollar deficit before we try to pay back the Social Security trust fund. there isn't - and will never be - enough money.

Talk about borrowing from our grandchildren! We've already borrowed from our parents and grandparents, and now you're talking about defaulting on the loan.

we wrote the boomers and those who came after a bad check. the bad check is bouncing. don't blame the teller at the bank, blame the guy who wrote the check. what i'm talking about doing is saving these programs for our children and grandchildren.

I'd love to see you go into a bank you borrowed money from, and say "THE MONEY IS GONE. THERE IS NO MONEY

people do this all the time. it is called "bankruptcy", and that is roughly the point at which we very nearly are right now.

drz-400 · Apr 11, 2011

cpwill said:
well, back when I was a young LCpl with a wife and a brand new bouncing baby and making enough to qualify for all the WIC, Food Stamps, etc. programs; I didn't take any of them and I still managed to save for retirement through an arcane dark magic known as "budgeting". Every month we "spent less than we made" (a couple of months we didn't succeed at this - which is where savings comes in), and as a result were able to save what was left. the fact that we chose to live debt free helped this tremendously, though it left us less entertained than our indebted neighbors with 48 inch plasmas.

but that's one of the benerfits of this plan; it turns the working poor into millionares without lowering their take-home pay by one red cent.

yet people are still against it though generally i fail to see what value they are placing above reducing poverty.

Let me try to explain. Right now all of the money collected by FICA for SS is spent for people who are currently on the system. Considering in a few short years, the amount of money going into the system through tax revenues will not be able to keep up with the amount going out to beneficiaries, the amount of money currently being accrued will be insufficient to meet all of the current benefits. Thus, as in your plan, if we reduce the amount of money paying to the current beneficiaries to about 5-6% as in your plan, there is NO WAY IN HELL we can attempt pay for those currently on or very soon to leave the system while we transition to your plan of a partially funded system. It has nothing to do with liabilities, your plan fails at the level of cash flows. For your plan to work we would need to maintain the levels of taxes seen now (actually this would probably be inadequate, I think the actuarial gap is a few % of payroll taxes) just to pay for the current beneficiaries, in addition we would have to ADD the tax for private accounts on top of this. IMO your plan sounds great because it is too good to be true.

Mayor Snorkum · Apr 11, 2011

Dittohead not! said:
I'd love to see you go into a bank you borrowed money from, and say "THE MONEY IS GONE. THERE IS NO MONEY. why do i feel like this is such a hard point to get across?" Good luck with that.

PEOPLE do exactly that, all the time. It's called "bankruptcy".

Nations can't do that. What nations do when the money is all gone is they pretend paper is money and they make more money. The Chinese and the Japanese and every single American with a 401(k) savings plan is going to LOOOOVE that.

Mayor Snorkum Says:

The nation's first Trillion Dollar federal reserve note should have FDR's picture on it.

cpwill · Apr 11, 2011

drz-400 said:
Let me try to explain. Right now all of the money collected by FICA for SS is spent for people who are currently on the system. Considering in a few short years, the amount of money going into the system through tax revenues will not be able to keep up with the amount going out to beneficiaries, the amount of money currently being accrued will be insufficient to meet all of the current benefits.

incorrect. your concept is right, but your timing is off. It will be touch-and-go for a while, but it has already started:

Social Security Runs Deficit: Will Pay Out $45B More Than It Collects:

January 28, 2011

A new report says that social security is in more trouble than we thought … instead of posting a surplus this year like planned, it’s now running a deficit. The Congressional Budget Office says the system will pay out $45 billion more than it collects in taxes. Now, the same report says that the U.S. is on track to run a $1.5 trillion deficit this year...

Thus, as in your plan, if we reduce the amount of money paying to the current beneficiaries to about 5-6% as in your plan, there is NO WAY IN HELL we can attempt pay for those currently on or very soon to leave the system while we transition to your plan of a partially funded system

which is why we pop the cap in my plan. as upper income earners will now be recieving a larger chunk of their pay back in the form of tax-free investment than they are losing to FICA, this will give them a net benefit up to $604,000, and thus keep them from engaging in tax-avoidance schemes that tend to depress revenue collection in the face of rising rates. so you get the actual benefit of a real, statically scored, tax hike (this usually never happens).

however, you are probably right that in addition we will have to hike the retirement age a couple of years and/or tie benefits to inflation. which is why i gave the figures in inflation-adjusted terms and provided those alternate retirement dates in my OP

we may still yet face a temporary reverse-flow from the general fund to social security, which would necessitate spending cuts in other areas (Paul Ryan's 2012 budget is a great place to start), but that is the position we find ourselves in already. All this does is shorten, lighten, and then mitigate the effects of that negative flow. It would also quickly (well, after a decade or so - but we are talking about a long-term plan) be reversed as people began to retire for whom there was no liability at all. that's what makes this thing sustainiable in perpetuity.

Social Security Fix

Your Identity and For/Against this SS Reform model

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Libertarian and Against

Liberarian and For

I am for it, but with a particular modification (explain)

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