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"Social Security is a contributory benefits system with dedicated revenue and dedicated expense. If you increase revenue, you automatically increase future expense."
No, you don't.
Bend Points
How can anyone possibly take you seriously, when you don't even understand the benefit formulas?
more blah, blah, blah...
Your ability to type exceeds my ability to correct.
This is just one example. Bend points slow the growth of benefits. They don't stop it. In your words: How can anyone possibly take you seriously, when you don't even understand the benefit formulas?
Your entire post is just like that. Factual errors one after the next expressed in the words of someone seeking validation from strangers.
You get the last word. You aren't here to discuss anything. You are here for the physical exercise of typing.
I am sure some fear "the Wizards of Wall Street" holding the power of privatized social security.
You shouldn't put too much weight in the words of people whose argument is expressed in fear-mongering terms like "Wizards of Wall Street".
Quote:
Originally Posted by mkpunk
The only way I can see that fear averted is if it is like the post office which wouldn't work for social security because the post office creates revenue from stamps, postage and packages. I don't see that for social security. I am open to ideas on that. Then again I look at the money that is taken from my paycheck to social security and realize that I will not be able to collect 40 years from now.
The problem with privatization is how do you pay existing retirees? The OASI Trust Fund according to the trustees has sufficient resources to pay about 3 1/2 years of benefits (that was a year-ago, though). Using that Trust Fund along with 12.4% of wages flowing into the system, it is scheduled to last 17 years (according to CBO). So your problem isn't that you won't collect in 40 years. The larger problem is how will your parents and grandparents collect in 18 years. Privatization means that you would divert some portion of the 12.4% away from Social Security. Whatever you remove only creates the problem of insolvency sooner.
The Wizards of Washington spin this problem by creating what they call 'transitional costs'. These are the costs that you will pay to keep checks flowing to retirees. Here is the difference. When you pay payroll taxes, the system creates future liabilities and even larger shortfalls. When you pay 'transitional costs', it is just a tax that creates no future benefits. You get something back when your $1 is a payroll tax. You get nothing back when your $1 is called a 'transitional cost'. That is how privatization would fix Social Security - by changing the name of the tax.
Adrian Dungan and Michael Parisi are economists with the Individual Returns Analysis Section. This article was prepared under the direction of Michael Strudler, Chief, Individual Returns Research Section, Internal Revenue Service.
Referring to Page 12 Table 1. Individual Income Tax Returns, Tax Year 2010 Preliminary Data: Selected Income and Tax Items, by Size of Adjusted Gross Income
We are examining Column 1 Items, specifically lines
#7Salaries and wages: Number of returns #8Amount
For AGI (Adjusted Gross Income) Number of Returns Filed
$100,000 under $200,000 = 2,793,003
$200,000 under $250,000 = 1,401,593
$250,000 or more = 2,435,348
The total number of returns filed for those groups is 16,629,944 returns.
For AGI (Adjusted Gross Income) Salaries and Wages
$100,000 under $200,000 = $1,454,682,235,000
$200,000 under $250,000 = $251,279,279,000
$250,000 or more = $982,361,511,000
The total salaries and wages are $2,688,323,025,000 ($2.688 TRILLION)
Eliminating the cap and taxing 100% of all wages/salaries would yield....
However, a portion of those wages/salaries are already taxed. For simple math, and to give you every possible benefit of doubt, we'll use $100,000 as the "cap." The total amount under the "cap" is....
16,629,944 * $100,000 = $1,662,994,400,000
The amount FICA payroll taxes already collected is...
$166,676,027,550 ($166 Billion)
$103,105,652,800 ($103 Billion) less
-----------------------
$63,570,374,750
So $63.5 Billion is the amount of additional FICA tax revenues raised by eliminating the cap.....in theory, because....
In particular, the calculation of the necessary tax rate assumes that an increase in payroll taxes results in a small shift of wages and salaries to forms of employee compensation that are not subject to the payroll tax.
...so say the Social Security Trustees (and they are correct).
As you can all see, eliminating the cap will not solve the problem. You will need to raise the FICA tax rate.
I guess I should point out that in November 2012, Social Security paid out $64.98 Billion in benefits.
Does that add a little perspective?
By 2025, Social Security will cost at least $1.7 TRILLION per year......or $4,657,534,246 --- $4.66 Billion per day.
In other words, eliminating the cap will pay for about 2 weeks of Social Security. You still have 50 other weeks to cover.
Who wants to continue drinking the Wage Cap Kool-Aid?
This nonsense has been debunked repeatedly.
As usual, I don't expect either of you to actually challenge any of the facts presented, rather I expect you to carry on with your hallucinations.
Now, if either of you, or anyone else can present factual evidence, other than screaming "Simpson-Bowles" until you start frothing at the mouth and fall over back-words in your own feces, then let's see it.
Show us.
Also --- I erred in your favor ---- part of that money from the wage cap is being diverted to Obamacare, so you would need to subtract that from $63.5 Billion
In spite of your Göbbelizing, Social Security benefits have been reduced...that is what means-testing does...it reduces benefits.
In 2012, $27.5 Billion in benefits were reduced through means-testing.
Source: Table VI.C6.—Operations of the Combined OASI and DI Trust Funds, Fiscal Years 2008-22, page 171
But, hey...don't let facts stand in the way of your fantasy hallucinations.
Note that the $63.5 Billion is purely theoretical. In reality, it will be much less than that.
Right?
I'm a CEO of a private partnership in Blue Ash, Ohio manufacturing for export, trying to fight off the lame-tards who keep wanting to raise minimum wage and kill jobs, and my salary is $250,000 annually.
You attack me and remove the wage cap, I'll shift part of my salary to deferred compensation to avoid losing more money.
For those interested in understanding, let me give you a few pointers.....
1] revenues are based on a ratio of 3 workers to 1 beneficiary through 2035 at which point it will be 2 workers. For the last 6 years and through 2035, you will only have 2 workers. The tax revenues derived from that 3rd worker who isn't working is critical.
2] revenues are based on [real] wages continuing to increase at 2000-level rates. Your wages have effectively stagnated since the mid-1990s and they will continue to stagnate for decades, due to global competition and domestic competition created by Demand-pull Inflation and Cost-push Inflation. Those tax revenues from higher wages are crucial.
3] revenues and spending are based on a percentage of GDP which is assumed to increase at fantastical rates. As a modern post-Industrialized State, US GDP will not be increasing at 6+% per year....the average annual rate since 1961 is 2.89%. What that means is Social Security will always be an higher percentage of GDP than what is claimed.
From Simpson-Bowles (p. 49)....
Although the system’s revenues and expenditures are expected to return to balance temporarily in 2012, it will begin running deficits again in 2015.
It never "returned to balance."
It's pretty stupid to rely on information from an obsolete report with obsolete data.
Twerking....
Mircea
Um... you left out something pretty, pretty big in your calculations.
I have never understood the mindset of someone who expects to get their money back from Social Security. Statistically, people on average born 1950 and later will not get their money back. And that assumes that future generations are willing to pay higher level of taxes to support the system.
The extreme end of this mindset expects their money back even if Social Security is terminated. It makes me wonder if they understand the meaning of terminated. From where would the money come? Today the Trust Fund has 2.7 trillion. Without future payroll taxes, that is basically 2 cents on every promised dollar. Mind you, the promise is less than you contributed.
This is the type of response you get : "...and not just what I put into it; I'd also want the 45 years of interest it accrued, too, just like a rich, greedy banker would have to pay to use my money !!!..." Mind you the comments will get positive ratings of 10 to 1.
Seriously where do you think this money would come from?
What amazes me is that you would accept being told a lie for your entire working career and not demand the benefits you were promised.
Put it on a smaller scale. If I promise you that I will take a % of your earned income every week for the rest of your working life and then give you benefits to sustain you in your retirement, you would rightly expect me to do so, or you would be loading your shotgun.
Now multiply that by every working stiff in the country for decade upon decade, and you have what Gov Perry called it, a giant Ponzi scheme. If you or I did that, we'd go to jail.
So is it ok in your book for the federal government to fleese massive amounts of money from people over most of their life, then just be able to say, "my bad, the money is gone, but don't try to do anything about it"?
If the Fed annouced the end of SS, there would be riots and rightly so. Who is going to continue to pay into a Ponzi scheme once the curtain is pulled back?
Heck I feel angry when I hear people suggesting the term "means testing". All that term means is to legally steal from rich people against their will. I will never be that rich, but if I contributed into a fund my entire life with a federal government promise to get something in return, you are damn right I expect them to live up to the promise that was made. If I choose to give up my money/benefits, that is one thing, but don't try and steal it from me under a term which means more wealth redistribution.
What amazes me is that you would accept being told a lie for your entire working career and not demand the benefits you were promised.
Put it on a smaller scale. If I promise you that I will take a % of your earned income every week for the rest of your working life and then give you benefits to sustain you in your retirement, you would rightly expect me to do so, or you would be loading your shotgun.
Now multiply that by every working stiff in the country for decade upon decade, and you have what Gov Perry called it, a giant Ponzi scheme. If you or I did that, we'd go to jail.
So is it ok in your book for the federal government to fleese massive amounts of money from people over most of their life, then just be able to say, "my bad, the money is gone, but don't try to do anything about it"?
If the Fed annouced the end of SS, there would be riots and rightly so. Who is going to continue to pay into a Ponzi scheme once the curtain is pulled back?
Heck I feel angry when I hear people suggesting the term "means testing". All that term means is to legally steal from rich people against their will. I will never be that rich, but if I contributed into a fund my entire life with a federal government promise to get something in return, you are damn right I expect them to live up to the promise that was made. If I choose to give up my money/benefits, that is one thing, but don't try and steal it from me under a term which means more wealth redistribution.
I didn't suggest that you wouldn't be angry. I am simply surprised by the number of people who believe that even if it doesn't exist, they will get paid.
I will say that the terms of Social Security haven't changed over your working career. You contribute to pay for today's retirees and maybe a future generation will contribute to pay yours. Those have been the terms since 1960. If any future generation says no, you can't complain.
FYI, Social Security has been means-tested since 1984 with a test that reaches upto 1/3rd of retirees.
I didn't suggest that you wouldn't be angry. I am simply surprised by the number of people who believe that even if it doesn't exist, they will get paid.
I will say that the terms of Social Security haven't changed over your working career. You contribute to pay for today's retirees and maybe a future generation will contribute to pay yours. Those have been the terms since 1960. If any future generation says no, you can't complain.
FYI, Social Security has been means-tested since 1984 with a test that reaches upto 1/3rd of retirees.
I don't know if you mentioned it, but how exactly do you see SS disappearing?
I didn't suggest that you wouldn't be angry. I am simply surprised by the number of people who believe that even if it doesn't exist, they will get paid.
I will say that the terms of Social Security haven't changed over your working career. You contribute to pay for today's retirees and maybe a future generation will contribute to pay yours. Those have been the terms since 1960. If any future generation says no, you can't complain.
FYI, Social Security has been means-tested since 1984 with a test that reaches upto 1/3rd of retirees.
You and I both know that abuse of SS funds(i.e. people collecting who never contributed) not to mention outright pilfering of it has caused it to become insolvent in the not too distant future. There are other reasons of course, but none more vexing.
As to means testing, are you saying that if Brad Pitt tried to collect his contributions, he is out of luck?
If so, what is the current cut off level for legal theft today?
If not, then what do you mean when you say "means testing"?
I don't know if you mentioned it, but how exactly do you see SS disappearing?
You are right. The question isn't about SS going away, but rather the firmness in the belief of Americans that they will get it during their retirement. The extreme end of that view is the one which says I'm getting mine whether it is there or not.
In general, my worry is that as the tax burden grows on younger Americans to support the debt, they will be unwilling to pay more taxes to support retirees. Basically I do not believe that younger Americans will pay the taxes that we have been unwilling to pay. More than 50% of the country expects to retire after the Trust Fund is gone. I do not believe that politicians will ignore that audience forever.
This doesn't mean that it will go away, only that we will not recognize it as time goes on.
You and I both know that abuse of SS funds(i.e. people collecting who never contributed) not to mention outright pilfering of it has caused it to become insolvent in the not too distant future. There are other reasons of course, but none more vexing.
As to means testing, are you saying that if Brad Pitt tried to collect his contributions, he is out of luck?
If so, what is the current cut off level for legal theft today?
If not, then what do you mean when you say "means testing"?
Means testing means that you get a reduced amount of benefit because you have outside income. The government is very crafty about it, and does not advertise it much because of people like you. The IRS collects a clawback of benefits based on your outside income. The 'tax' revenue collected on the 1040 is returned to the Social Security system. In 2012, it was roughly 27 billion.
So no Brad Pitt when he retires would lose about 20% of his benefits in today's world.
Um... you left out something pretty, pretty big in your calculations.
No, I didn't.
Study federal minimum wage bills....you'll see.
Shouldn't make assumptions, but it doesn't really matter anyway (which was the whole point of the exercise).
Quote:
Originally Posted by JoeTheEconomist
You shouldn't put too much weight in the words of people whose argument is expressed in fear-mongering terms like "Wizards of Wall Street".
It's not "fear-mongering" it's sarcastic witticism.
Quote:
Originally Posted by JoeTheEconomist
The problem with privatization is how do you pay existing retirees?
You're an "economist" and you can't figure it out?
Quote:
Originally Posted by JoeTheEconomist
Your ability to type exceeds my ability to correct.
This is just one example. Bend points slow the growth of benefits. They don't stop it. In your words: How can anyone possibly take you seriously, when you don't even understand the benefit formulas?
Your entire post is just like that. Factual errors one after the next expressed in the words of someone seeking validation from strangers.
You get the last word. You aren't here to discuss anything. You are here for the physical exercise of typing.
You said....
Quote:
Originally Posted by JoeTheEconomist
If you increase revenue, you automatically increase future expense.
Social Security benefits are not based on contributions.
Wow.....what a massive fail for you.
Not only do you not understand Bend Points, you don't even understand that FICA increased revenues have bearing on future payouts.
The amount of money you pay into Social Security is of no consequence....it is irrelevant...it has no bearing on your benefits.....they don't even look at how much you paid, except to verify that you have 40 qualifying quarters.
Your benefits are determine entirely by your average annual earned income, and the Bend Points.
That's it.
Whether the FICA payroll tax is 3% or 5.15% or 6.2% or 9.2% or 12.4% makes no difference in the amount you receive as a benefit.
Increasing the FICA payroll tax will increase revenues for Social Security, but it will not increase future expenses, contrary to what Simple-Minded Stupid People say.
For those who are interested....
Suppose someone had life-time earnings of $168,044 ---- divide that by 35........
$168,044 / 35 = $4,801 ....Now we take $4,801 and divide by 12 to get $400.10 rounded down to $400.
The Formula (for Social Security --- not the film starting Marlon Brando and George C. Scott) is this...
1] You get 90% of the 1st Bend Point up to $767......the average monthly income was $400 so 90% of $400 is $360
2] You get 32% of the amount greater than the 1st Bend Point of $767, but less than the 2nd Bend Point of $4,624 so....
$0 * 32% = $0
Add that to your 1st Bend Point: $360 + $0 = $360
3] You get 15% in excess of the 2nd Bend Point of $4,624 so...
$0 * 15% = $0
Add that to the 1st and 2nd Bend Points.....$360 + $0 = $360
And so there's your monthly Social Security benefit: $360/month.....party on.
Suppose someone worked for 20 years. You still divide by 35 because you are averaging the highest 35 years including the years they don't work, regardless of the reason they do not work (excepting those on Social Security Disability). So we divide by 35 and come up with $1,000.
1] you get 90% up to the first bend point of $767, or......$717.30
2] you get 32% of the amount over $767, but less than the 2nd bend point of $4,624.
$1,000 - $767 = $233 * 32% = $74.56 + $717.30 = $792 per month as a benefit.
Note that someone who has never earned more than minimum wage, and worked 40 hours per week for 35 years will receive $763/month at present.
Let's say someone had average monthly earnings of $4,000 per month.....
1] you get 90% up to the first bend point of $767, or......$717.30
2] you get 32% of the amount over $767, but less than the 2nd bend point of $4,624.
The maximum monthly benefit is $2,513. Just eye-balling it, you might possibly make an argument that people earning more than $85,000 per year are subsidizing low rent people.
As everyone can plainly see...the amount of FICA payroll taxes you paid is not even taken into consideration...
...um, but then Social Security is an insurance program and not a pension plan.
Quote:
Originally Posted by mkpunk
I am sure some fear "the Wizards of Wall Street" holding the power of privatized social security.
Social Security is an insurance plan.
If you want a pension plan, then find a freaking job that offers pension plans.
If you want a savings plan, then save.
If you want a retirement investment plan, then go find an investment adviser, or play JoetheMcTrader yourself.
The whole purpose of having social security insurance, is in the event your personal savings or your employer pension plan, or your 401(k) plan collapses, disappears, is destroyed or never materializes in the first place.
Obviously people don't see the futility of having a 401(k) plan as a hedge against a 401(k) plan.
Trying to eradicate stupidity....
Mircea
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