Quote:
Originally Posted by highcotton
The year 2037 is just a future date that has been talked about, which is a date that something 'might' happen. Nothing more, nothing less.
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That is incorrect and you have misled people.
Unlike you, I draw conclusions based on facts, rather than espouse beliefs based on emotion.
Here is a fact (page numbers are as they appear in Adobe Reader and not physical page numbers).
Quote:
Originally Posted by Page 11
The combined OASI and DI Trust Funds are projected to increase through 2022, and then to decline and become exhausted and unable to pay scheduled benefits in full on a timely basis in 2036. However, the DI Trust Fund is projected to become exhausted in 2018, so legislative action will be needed as soon as possible.
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I did only a cursory examination of the OADI Trust Fund data and projections, because time is better spent evaluating the OASI and HI Trust Funds. The reason your statement is incorrect, is because once the OADI Trust Fund is exhausted, then OADI is funded out of the OASI Trust Fund.
For that reason, the combined OASI/OADI Trust Funds are projected to become exhausted
in 2036, not 2037, which is exactly what the report says, and I quoted it above.
Will the OADI Trust Fund become exhausted in 2018? No, it will become exhausted far earlier. How much earlier? Again, I didn't evaluate it, but we can make some assumptions applying facts and logic.
Quote:
Recently, the director of the White House Council of Economic Advisers completed a study, and concluded just that: people seek benefits from Social Security Disability and related programs when their unemployment benefits begin to expire.
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Study: SSD applications increase when unemployment ends | Los Angeles Social Security Disability Attorney Blog
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According to statistics available from the U.S. Social Security Administration, the number of people applying for benefits has been steadily increasing lately. Before the recession started in September 2008, there was an average of less than 200,000 applicants each month. Moreover, from January 1985 until September 2008, there were only 14 times when there were more than 200,000 applications in a month. Conversely, from September 2008 to January 2011, there have only been five months in which there have been fewer than 200,000 applications.
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Increasing number of Social Security disability claims awarded | Columbus Workers' Compensation Attorney Blog
Not only have the number of benefit applications increased, but so have the number of people receiving benefits. That increase is far greater than what Social Security anticipated.
We can then logically conclude that the OADI Trust Fund will be exhausted in 2017 rather than 2018.
Some of the terms I use might be foreign or alien to people, and so to explain it in way that they might better understand it, in 2010 you had a certain number of people working. In 2011, the number of working Americans
decreased. In 2012, the number of working Americans will decrease further still.
In addition to a declining number of working Americans, they are also working for less money. Someone who was employed but is now underemployed is earning less. Someone who was working full-time is now working part-time and earning less. They may even be working 2 part-time jobs, yet they will still be earning less than what they made in 2008, 2009 or 2010.
Those two factors together result in reduced revenues for Social Security and Medicare. If fewer people are working, and they are also earning less, then how can Social Security or Medicare revenues increase?
They cannot increase. That's just simple math (not emotion).
Quote:
Originally Posted by Page 44 Intermediate Cost Assumptions
Table IV.A1.—Operations of the OASI Trust Fund, Calendar Years 2006-20
Net Payroll Tax Contributions
2011 . . 482.7
2012 . . 616.1
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Social Security was projected to receive $482.7 Billion in 2011 and $616.1 Billion in 2012.
616.1
482.7
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133.4 = Difference
133.4 / 482.7 = 27.63%
Social Security's revenues are going to increase 27.63% in 2012? Sorry, wrong answer. That is mathematically impossible unless your unemployment rate was 5.0% AND your labor participation rate was >66.5% as of January 1, 2012. It was not, and it won't be for this year.
Quote:
Originally Posted by Page 47 Intermediate Cost Assumptions
Table IV.A2.—Operations of the DI Trust Fund, Calendar Years 2006-20a
Intermediate:
2011. . . 82.0
2012. . . 104.6
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104.6
-82.0
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22.6 = Difference
22.6 / 82.0 = 27.56%
Again, I ask, will the tax revenues for OADI increase 27.56% in 2012? No, again that is not possible for the reasons previously stated.
What conclusion can we draw about the OADI Trust Fund and its date of exhaustion?
It will be earlier than 2018.
If Truth is fear-mongering, then so be it.
Back to the point, if the failure of the OADI Trust Fund in 2018 causes the OASI Trust Fund to fail in 2036 instead of 2037, then what impact will an earlier failure of the OADI Trust Fund have on the OASI Trust Fund? It will cause it to fail earlier as well.
Quote:
Originally Posted by highcotton
.. Mircea acted as though a change in SS benefits had already been made, or a definite future date for a change had been set. That is not true. There will be NO CHANGE for retirees that have already qualified for benefits (age 62), and in all likelihood there will be no change for anyone over the age of 50....now or 2-3 decades from now. Do NOT believe the untrue crap that some people spread, which only scares people that don't know better.
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Quote:
Originally Posted by Page 17
Beginning in 2023, trust fund assets will diminish until they become exhausted in 2036. Non-interest income is projected to be sufficient to support expenditures at a level of 77 percent of scheduled benefits after trust fund exhaustion in 2036, and then to decline to 74 percent of scheduled benefits in 2085.
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I just proved you wrong.
Specifically, it says "...77 percent of
scheduled benefits..." which is a 23% across the board reduction. It does not say "
77% for all new retirees."
According to the verbatim quote from Social Security, if you have 65 years today, then in the year 2036 when you have 89 years your benefits will be reduced 23%.
But as I proved earlier, OASI will be exhausted before 2036.
And if you eliminate the cap? There are negative consequences. For those between $100,000 and $250,000 you just pulled $23 Billion out of your economy. It doesn't sound like much, but note that is $23 Billion that cannot be spent at restaurants, sporting events, clothing stores, retailers etc, etc, etc. Taking the average State sales tax to be 7.5% that is also a loss of $1.7 Billion in sales tax revenues, and while that sounds like a lot, on a per State average that would be $34 Million.
I guess my question to all of you is can your State afford to lose ~$34 Million in sales tax revenues?
We're talking Cause & Effect here. How many services will be cut or reduced, or State, county, and city employees laid off permanently because of that?
"Trickle-Down" can be positive or negative. I'm not saying don't eliminate the cap, I'm just saying that it will not fix Social Security and that there are negative consequences to doing. I suppose spreading the pain around might help somewhat.
Might interest in Social Security stems from my mother. She was approaching retirement age, but as a neuro-psychologist, she can work well beyond that (and testifying as an expert witness in civil court cases is fun and profitable and often involves travel). So I've been following Social Security for some time now and advising her.
What you notice is that over the last 8 years as the number of people in your work force has steadily declined, and so have the revenues Social Security receives and that has resulted in the default date being moved up constantly. The Trust Fund will default far earlier than 2036, and when it does, there will be across the board cuts to benefits and no person will be exempted.
If people want to delude themselves into thinking their benefits will not be cut, then they can do so, but they're basing that on emotion, not facts. Just to be sure everyone understands, Social Security is saying that the combined OASI/OADI Trust Fund will be exhausted in 2036 and at that time, all benefits will be paid by tax revenues from workers. Social Security projects that the number of working Americans and their income will only fund 77% of benefits
Where will the other 23% come from, the General Fund? No. You'll need $1 TRILLION to pay for it, and you won't have that in the General Fund. Run a budget deficit? When your GDP is $18 TRILLION and your National Debt is $34 TRILLION you will no longer be running budget deficits, because there will be no one to buy your bonds. Eliminate the cap? Okay, your benefits only get cut 17%.
Now what? Raise the FICA tax to 16.4%? There are negative consequences to your economy for doing that.
In another thread I mentioned that a good thread topic might be "What will you have to sacrifice for a 16.4% FICA rate?" If you're earning $40,000 you would lose an additional $367/month. What changes to your life-style would you have to make without that $367? Note that someone earning $30,000 would lose $255/month. If you're already living paycheck-to-paycheck, how can you afford to lose $255/month?
And as I mentioned, a State like Ohio would lose $5 Billion to $7 Billion in sales tax revenues. Ohio's annual budget is $26 Billion. The losses would make that $19 Billion to $21 Billion. What cuts to schools, services, programs etc would Ohio have to make? I would also mention that Ohio's State, county and city pension plans are in trouble.
I mention that only because you have a systemic problem as a society that is not resolvable based on your present courses of action. You owe more money in private, public and government pensions, and Social Security and Medicare than you can possibly pay for. To attempt to pay for it will cause extreme financial hardships. That is not fear-monger that is economics.
Nothing more, nothing less...
Mircea
Quote:
Originally Posted by Escort Rider
I do not agree that Social Security is a Ponzi scheme. True, it has one of the features, namely that pay-outs to those already participating come from newer contributors. However, there are two main reasons why I think it's misleading and inaccurate to call Soc. Sec. a Ponzi scheme:
1) A Ponzi scheme is a con game designed to separate people from their money, and as such its true nature remains carefully hidden for as long as possible. Social Security is, by contrast, totally transparent.
2) A Ponzi scheme, by definition, will collapse when it runs out of new investors. Under Soc. Sec., there will always be a pool of workers paying in; that number will never fall to zero or anywhere close to zero. Having said that, I recognize that the root of the problem with Soc. Sec. is demographics; there is a growing imbalance in the ratio of younger workers to retirees. But there will always be a pie to divide up, even if retirees eventually get a slice which is 23% smaller.
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Legally, I only need to show that Social Security will fail without new entrants to the program in order to prove that it is a Ponzi Scheme, so in the strictest sense of the definition, Social Security is a Ponzi Scheme. If tomorrow we said that no one age 18 or under will pay into Social Security, then the system would collapse, because it is not self-sustaining.
That is the crux of the issue with a Ponzi Scheme. A normal investment scheme will work regardless of the number of investors. There have been transparent Ponzi Schemes in the past. While investors are often lied to, and fraudulent claims are often made involving Ponzi Schemes, those are simply characteristics of the scheme. Even if you never lied and you were totally transparent, if your investment scheme relies on new entrants or investors, then it is a Ponzi Scheme.
This...
2) A Ponzi scheme, by definition, will collapse when it runs out of new investors. Under Soc. Sec., there will always be a pool of workers paying in; that number will never fall to zero or anywhere close to zero.
...is inherently contradictory, and in fact proves that Social Security is Ponzi Scheme.
I could threaten and coerce new investors into my scheme so they there will
always be a pool of investors, but it would still be a Ponzi Scheme nonetheless.
You claim there will always be a pool of workers paying in to Social Security. Okay, what if that pool is only 50 workers. Will Social Security collapse or survive?
In the bible it mentions a "plague of the first-born." What if there was plague of the under-35?
A few years ago, your labor force was 147 Million. As of January 31 it is 139 Million and you cannot pay for Social Security with only 139 Million workers. What if 5 years from now your labor force is 135 Million? And 10 years from now it is 130 Million?
How will you be able to pay for Social Security? Well, you won't be able to do that,
unless you get more workers paying in. Okay, you can still pay benefits, but only if you reduce the amount of benefits.
Perhaps if the government invested the money, it would get a greater return, but what if the government invested in Blockbuster? Or K-Mart? Or Solyndra?
Oooops.
We don't want to go there for obvious reasons.
In spite of the fact that Social Security is a Ponzi Scheme, I still support it. Could it be administered and operated better? Certainly. Part of the problem stems from the fact that the program was never fully funded. The law should have had a built-in mechanism that required regular increases in the FICA tax rate to ensure its viability, as well as protections to prevent Congress using the funds for anything other than their intended purpose.
As I said, based on the previous recommendations by presidential commissions, the FICA tax rate should be in the 9%-10% range right now, but it isn't. If it was, you'd have wonder how that would have affected your economy over the last 15 years or so.
Contrarily...
Mircea