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I generally dislike government mandated programs but I agree with this--at least in principle. It is generally the better paid half of the workforce that has retirement plans. Lower paid people generally don't get them. And even smaller businesses that have them often have to pay exorbitant fees (partly because of overly bureaucratic federal rules).
The only question I have is how are these funds invested? And how much do the investment managers charge?
I agree 3% isn't enough....but 3% saved and invested over a lifetime amounts to something. It's a lot more than a lot of people will have saved--which is nothing.
We can talk until we're blue in the face about how people should be more responsible and save for retirement on their own. And we absolutely should.
But here's the reality check: Even the best public relations campaign and incentives (such as auto enrollment for 401ks and less bureaucracy and lower administrative fees for 401ks for small businesses) will only move the needle so far.
Unfortunately, you have to force people to save for old age. Otherwise, the vast majority simply will not do it at all or will not do it anywhere near adequately. Then they will come back wanting a bailout from the taxpayers in one form or another.
There is supposed to be a "Trust Fund" to pay out the Boomers retirement, er, .... SS money, but it was spent by Reagan thru Bush II until SS became insolvent with Obama. Clinton's budget surpluses were only black numbers by including the SS "surplus."
Ok, not a tax. It's a mandate for a company to withhold money and submit it to the state that a company cannot avoid, for dubious purposes, in the face of something that is entirely unnecessary and already covered.
Better definition?
If it goes into an investment fund and the individual has a legal claim on what they've invested plus any gains, then it isn't a tax.
If they want a financially savvy populace, maybe they could try teaching an applied finance course in school first.
As much as I would applaud that--forget about it. If you want the population in semi-decent shape when they're booted out of the work force, you need something that's idiot proof. Even really smart and educated people can be financial idiots. Education is only going to move the needle at the margins. The real problem is human nature. People just naturally suck at managing money. Most people's brains, even really smart people's, just aren't wired for it.
There is nothing in your cite that contradicts what I wrote.
In the future, when you cite something, you need to include a snippet that supports your position. Otherwise, all you have done is given people a research project - which almost nobody will perform.
Your cite comes from the SSA and thus is self-serving and supports their jobs ( security ).
"This" above is simply correct. The money was spent and the trust fund is nothing but IOUs and will have to be paid back by future workers. This is the bad situation that you outlined so eloquently and correctly here:
Quote:
Originally Posted by mysticaltyger
Unfortunately, you have to force people to save for old age. Otherwise, the vast majority simply will not do it at all or will not do it anywhere near adequately. Then they will come back wanting a bailout from the taxpayers in one form or another.
The correctness of my post could be checked year-by-year when Clinton was in office and supposedly running budget surpluses. There was never a year when he was in office that the national debt didn't increase. There are a number of publications that run this number. The Wall Street Journal does weekly. It's so easy an idiot can check.
I don't blame any president for not knowing where the money they were spending came from. Their Budget Directors may understand, but that person who won the election isn't capable of understanding it. Not Reagan, not Bush(es), no one.
Bummer that we can't just draw from that "Trust Fund" now. We are paying ( right now ) out of current borrowings to make the Social Security checks for my mother and everyone else's mother, father, whatever. The can gets kicked.
There is nothing in your cite that contradicts what I wrote.
In the future, when you cite something, you need to include a snippet that supports your position. Otherwise, all you have done is given people a research project - which almost nobody will perform.
Your cite comes from the SSA and thus is self-serving and supports their jobs ( security ).
"This" above is simply correct. The money was spent and the trust fund is nothing but IOUs and will have to be paid back by future workers. This is the bad situation that you outlined so eloquently and correctly here:The correctness of my post could be checked year-by-year when Clinton was in office and supposedly running budget surpluses. There was never a year when he was in office that the national debt didn't increase. There are a number of publications that run this number. The Wall Street Journal does weekly. It's so easy an idiot can check.
I don't blame any president for not knowing where the money they were spending came from. Their Budget Directors may understand, but that person who won the election isn't capable of understanding it. Not Reagan, not Bush(es), no one.
Bummer that we can't just draw from that "Trust Fund" now. We are paying ( right now ) out of current borrowings to make the Social Security checks for my mother and everyone else's mother, father, whatever. The can gets kicked.
Nope, it isn't correct. I did find a better source to explain this, though.
Yet you were unable to select the correct button that does not quote every friggin' line in my post?Yeah. That's what I said.Right. That's what I said. I also said that the tax went up.
It's NOT an insult. It's merely an observation.
It WASN'T insolvent in 1983, it was heading there.
It didn't go insolvent until the Bush presidency and that' a fact. I never "blamed" Bush for it, I was merely referencing a time frame and an economic collapse that happened under his watch.
Going to go insolvent and actually being insolvent are two different things. It sounds like a memory problem to me.
I have to ignore you. Lots of nonsense as always. Not insulting. Just stating facts. The minute I hear Bush this and that I know that I don't need to read any further.
There is nothing in your cite that contradicts what I wrote.
In the future, when you cite something, you need to include a snippet that supports your position. Otherwise, all you have done is given people a research project - which almost nobody will perform.
Your cite comes from the SSA and thus is self-serving and supports their jobs ( security ).
"This" above is simply correct. The money was spent and the trust fund is nothing but IOUs...
That's exactly how Social Security has operated from its inception.
Quote:
Originally Posted by IDtheftV
... and will have to be paid back by future workers.
That's not how it works.
I'll let the Treasury Department explain it:
Quote:
When the OASI and DI Trust Funds require redemption of these securities to make expenditures, the Government finances those expenditures out of accumulated cash balances, by raising taxes or other receipts, by borrowing from the public or repaying less debt, or by curtailing other expenditures. This is the same way that the Government finances all other expenditures.
The 1935 Social Security Act quite clearly states that any excess funds shall be converted to special treasury notes. In 1935, that was literally the 2nd [Series] Liberty Bonds. In other words the excess cash was handed over to the Treasury Secretary who issued special treasury securities in the name of the Social Security Administration and then put the cash in the General Fund. You can read that here...
TITLE II-FEDERAL OLD-AGE BENEFITS
OLD-AGE RESERVE ACCOUNT
Section 201. (a) There is hereby created an account in the Treasury of the United States to be known as the Old-Age Reserve Account hereinafter in this title called the Account. There is hereby authorized to be appropriated to the Account for each fiscal year, beginning with the fiscal year ending June 30, 1937, an amount sufficient as an annual premium to provide for the payments required under this title, such amount to be determined on a reserve basis in accordance with accepted actuarial principles, and based upon such tables of mortality as the Secretary of the Treasury shall from time to time adopt, and upon an interest rate of 3 per centum per annum compounded annually. The Secretary of the Treasury shall submit annually to the Bureau of the Budget an estimate of the appropriations to be made to the Account.
(b) It shall be the duty of the Secretary of the Treasury to invest such portion of the amounts credited to the Account as is not, in his judgment, required to meet current withdrawals. Such investment may be made only in interest-bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States. For such purpose such obligations may be acquired (1) on original issue at par, or (2) by purchase of outstanding obligations at the market price. The purposes for which obligations of the United States may be issued under the Second Liberty Bond Act, as amended, are hereby extended to authorize the issuance at par of special obligations exclusively to the Account. Such special obligations shall bear interest at the rate of 3 per centum per annum. Obligations other than such special obligations may be acquired for the Account only on such terms as to provide an investment yield of not less than 3 per centum per annum.
(c) Any obligations acquired by the Account (except special obligations issued exclusively to the Account) may be sold at the market price, and such special obligations may be redeemed at par plus accrued interest.
(d) The interest on, and the proceeds from the sale or redemption of, any obligations held in the Account shall be credited to and form a part of the Account.
(e) All amounts credited to the Account shall be available for making payments required under this title.
(f) The Secretary of the Treasury shall include in his annual report the actuarial status of the Account.
Since you find the Social Security Administration to be "self-serving" you can choose from one of these three sources:
Yes it is. SS is always paid for by the current worker. - - The trust fund is just an IOU to ourselves.
The effect of having spent it and had it not been spent is really the same. Current taxpayers will have to either make up the shortfall or pay for the bonds in the fund.
The trust fund is conceptually the same as if I went on vacation ( spending $5k ) and wrote on a piece of paper "I owe me $5,000" and put it in a box and counted it the same as my IRA.
You can't owe money to yourself and that's what all that stuff you cited is.
Norway can take money and buy stuff outside of the country and have it count as an asset in their Sovereign Wealth Fund. That's because Norway is smaller than Atlanta. There is simply nothing the US government can do to invest a similar proportion to the GNP in anything and their own bonds don't count.
You and your cites might think so, but it doesn't represent an asset. It's just not.
It IS how it works. The ONLY funding it has comes from current US taxpayers.
Note that I'm not dissing the SS System. I'm totally on board with the concepts I referenced from mysticaltyger. At least, the people who won't save for themselves have something to live on - even if it is miserable an inadequate. Those people are supported in their old age by current workers who don't save for themselves which keeps those retired people from being able to directly take money from my IRA accounts.
It's just that the US OASDI in effected by demographic waves and there is no way to save in times of plenty ( the 1980s thru 2000s ) to provide funding when the system becomes insolvent.
The original OASDI tax was 1.45% and it's on track to exceed 10% in the near future if it is to be brought back to solvency.
BTW, Congress has the authority to just cut benefits to make the system solvent, but that's not going to happen. They will do a little of "this" and a little of "that" to cut benefits by taxing and reducing COLA increases, but the main thing that's going to happen is that they will tax all wages no matter how high and raise the FICA rate. They might make the employer "matching" exceed the withholdings.
There are a jillion solutions, but one of them is NOT tapping any trust fund. It's just an accounting trick. It's a fictional asset. The fact that you can't see that doesn't mean that isn't "How it works."
Last edited by IDtheftV; 01-31-2017 at 11:28 AM..
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