Why Social Secuity will be cut one way or another (real estate, creditor)

[Cletus Awreetus-Awrightus]

Originally Posted by Suncc49

Do you ride a unicorn to work?

no, i sold my unicorn when my unicorn insurance premiums increased.

now i ride a shetland pony to work, which is more economical.

[gwynedd1]

Originally Posted by Escort Rider

Yes, you're young, and also self-centered. Try to imagine a person who is too old to go back to work, say 80 years old, who paid the Social Security tax all his working life, say for 40 years, and who depends on that retirement benefit for most of his income. He did what he was supposed to do, and now you want to cut him off at the knees? He will just become dependant on public welfare, so where is the net savings to government?

His peers cut him off at the knees. That's the problem. The new generation can't pay. They owe on their college loans, they don't have jobs and the older generations want them to buy their bloated property. They cannot pay, so it won't be paid in anything but a nominal sum. It does certainly shift the retirement benefits to the wealthier classes, but whose battle was that to fight?

Sure he will go on public welfare, but it doesn't change the nature of the welfare which will be a vastly depleted benefit. So until the wealthy in the older generations cough up the loot, SS is bankrupt no matter what means of accounting are applied. The new generation cannot assemble the productive capital to make it work.

[gwynedd1]

Originally Posted by Cletus Awreetus-Awrightus

i'm in my late 20's; there's no reason to believe SS "won't be there" when i retire.

we already print money out of thin air to buy houses, and cars, and fund medicare, might as well do that for social security, too.

The nominal sum of money will always be there. However it will be paid from the real time conditions of the economy. SS isn't building robotic nurses; its a transfer payment. The problem is the transfer of funds now going to finance in educational and mortgage debt. The once a week blood transfusion is now more like a daily transfusion and its killing the donor. I have no problem with SS in it of its self, but it was not intended to sit along side the asset appreciation, wage deflation retirement program.

[Mircea]

Originally Posted by gwynedd1

It is certainly no ponzi scheme since it is not bought, sold, purchased on leverage again and resold to a greater fool.

Those are not the Elements of Proof for a Ponzi Scheme. Social Security is a Ponzi Scheme, because a Ponzi Scheme relies on increasing revenues in order to fund the scheme.

Originally Posted by gwynedd1

Maintaining a worker to retiree ratio seems simple enough rather than a fixed retirement age.They didn't push this ratio far enough.

That is impossible. There is a fixed number of jobs that are available. No matter what your population is, you'll never be able to have a sufficient number of workers to fund the system as it was designed.

Originally Posted by gwynedd1

Then they voted themselves cheap medication.

That has no bearing on Social Security. It does have an impact on Medicare, which is not the same thing.

Originally Posted by gwynedd1

However the real problem is the retiree is double dipping.

And why wouldn't they?

I get the impression you don't understand Social Security.

You might want to actually read FDR's statements and listen to his fireside chats.

Each person has an opportunity for a 3-tiered level of retirement.

The first tier is your pension/401(k) Plan.

The second tier is your personal retirement savings.

The third tier is Social Security.

Not everyone will have a pension/401(k) Plan or a retirement savings plan for any number of reasons.

Originally Posted by gwynedd1

They also bought up many of the resources embedded in stock market and have to buy into a post credit fueled stock market while many in the older generations sit on their gains since the 80s.

And you're going to ignore the recession in the late 1970s, early 1980s?

How biased can you get?

Originally Posted by gwynedd1

So then new workers being saddled with educational debt must also pay into the kitty at higher social security rates, and then finally again must pay more for a living space or in the opportunity cost and transportation cost of being forced into exurbia.

Um, the Boomers also paid the higher rates.

Educational debt is voluntary, so no one is "saddled" with it unless they want to be. I did not wish to be "saddled" so I paid my own way, by working full- and part-time and living frugally, sharing housing accommodations, and being clever.

The Army paid for one of my undergraduate degrees, but I paid for the other two, plus both graduate degrees without student loans. Anyone can do it, they just have to want to do it.

Originally Posted by gwynedd1

You killed and ate the milk cow because social security isn't saving. It comes from the productive class as a transfer payment.

And you have proof of that?

If there was no cap on the payroll tax, then you could argue it is a transfer of wealth, but that is not the case.

You seem to be under the misguided impression that everyone collects the same dollar amount in Social Security benefits. That is simply not true. Your benefit rate is determined by a formula:
PIA formula
For an individual who first becomes eligible for old-age insurance benefits or disability insurance benefits in 2012, or who dies in 2012 before becoming eligible for benefits, his/her PIA will be the sum of:
(a) 90 percent of the first $767 of his/her average indexed monthly earnings, plus (b) 32 percent of his/her average indexed monthly earnings over $767 and through $4,624, plus (c) 15 percent of his/her average indexed monthly earnings over $4,624.So, where exactly does the wealth transfer occur?

Originally Posted by gwynedd1

Since it has been recognized that this has led the economy into decline, the one benefit of social security is lost since few believe it has any real meaning.

Recognized by who? You? You aren't exactly knowledgeable in the matter.

Originally Posted by gwynedd1

So not only will housing come down in price, so will social security one way or another.

Housing was artificially over-inflated in price. The prices will be restored to their real levels as soon as your government gets the hell out of the way.

Originally Posted by gwynedd1

Also there really is no lock box.

Figure that out all by yourself? Pretty perceptive.

Originally Posted by gwynedd1

Being Gen-X I am a somewhat neutral party in this.

Neutral? No, you're incredibly biased. The phrase "sour grapes" comes to mind.

Originally Posted by a34dadsf

Well I'm young so I say just dump the entire system and liquidate it. Use the treasury bills to pay down the deficit. Stop collecting the social security tax and end all benefits checks.

Yes, of course, and when you end up in the streets, you'll be the first in line holding out your hand for a hand-out.

I notice a lot of people can talk the talk, but can't walk the walk when it comes down to it.

Originally Posted by Escort Rider

Yes, you're young, and also self-centered.

No doubt about that.

Originally Posted by Escort Rider

Try to imagine a person who is too old to go back to work, say 80 years old, who paid the Social Security tax all his working life, say for 40 years, and who depends on that retirement benefit for most of his income. He did what he was supposed to do, and now you want to cut him off at the knees? He will just become dependant on public welfare, so where is the net savings to government?

There is no net savings for government (which is the tax-payers).

I'm an ultra-conservative and in general opposed to any social welfare programs, and should such programs need to exist, they ought to be run by the several States and not by the federal government.

However, there are several realities.

Not everyone is going to be able to work for a company that offers a pension plan or a 401(k) Plan.

In a Perfect World, every person born is a future potential Wall Street Hot Shot, but it is not a Perfect World. It's absurd, if not obtuse to suggest that the average person is sufficiently knowledgeable and skilled to manipulate their 401(k) Plan or their personal savings and investments to generate a sufficient amount of retirement income.

There are many who for any number of legitimate reasons, in addition to not have a pension plan, will not be able to save an amount of money for their own retirement.

If left to their own devices, people will not willingly save, so as elitist as it might sound, you have to force people to save and Social Security is one such vehicle (although not the best).

Finally, if you do a Cost-Benefit Analysis, what is the cost of having a program like Social Security (but not necessarily the program everyone knows and loves) versus the cost of not having such a program?

Social Security is clearly a cheaper alternative to not having Social Security.

Originally Posted by las vegas drunk

The fair thing to do is to allow younger people like myself to opt out, while still providing benefits to the older people who paid in all their life. I am really quite disgusted to be forced to pay for a program that will not be there when I retire.

You can't let people opt out.

As I said, the reality is that if people were left to their own devices, they would not save money for their retirement. The only way to ensure that people have money for retirement, is to put a gun to their head and force them to save.

A better alternative to Social Security would be a government mandated payroll tax and the money is deposited directly into the financial institution of the employee's choice.

That does two things, first, and most importantly, the government can't touch it, and second, the employee can do nothing at all, or purchase Certificates of Deposit and roll them over continuously, or invest a portion in stocks, bonds, money market accounts etc. as they see fit.

One of the things you're ignoring are the other realities.

Without a specific government program (preferably at the State level instead of the federal level), you are without certain protections.

Invariably, people would do what? Use that money as a collateral asset to get credit cards, to obtain personal loans, to buy cars, to use for the purchase of a home, and then what happens?

That money is subject to being seized by a court to pay debts on which you defaulted.

So there you are living in your glorious McMansion and you lose your job, default on your mortgage and federal law requires the lender to foreclose at 120 days.

And the bank seizes your retirement savings.

Now what?

And there are other issues. What about divorce? What about alimony? What about child support?

You thought you had a loving wife, and she's banging anything that moves, and then she moves out and your entire retirement savings end up in her bank account as settlement, alimony or child support.

While digging for gold with your finger stuck half way up your nose, you drifted left of center and struck an on-coming vehicle. Now those people have their attorney up your ass 24/7 and you're being sued for damages.

There goes your retirement savings.

Life can be complicated.

So your idea of people saving money on their own just isn't going to pan out. You need a pre-determined plan, that is government supported (and again by the States and not by the federal government) and that offers protections from life's inconveniences.

Originally Posted by lynxville

SS would not be the ponzi scheme it is now if the government didn't steal the tax payers money. Just because they pissed the tax money away doesn't make retirees the problem.

It is still a Ponzi Scheme and the fact that they spent the surplus doesn't really change anything, other than how to convert the special treasury securities into cash.

And it is your problem, because you sat there like a big dummy and watched them spend the money and said nothing.

So in some respects, retirees should have their benefits cut as punishment for being Stupid in a No-Stupid Zone and for shirking their duties as citizens and failing to be vigilant and taking the correct action when their government over-stepped its bounds.

All you had to do was call for a mass strike for 5 days and your government would never have touched a cent in the Trust Fund.

Originally Posted by Malloric

It's a bad situations. You can't do the fair thing and allow someone who doesn't want the government to take 15% of his income "for their own good" to do so.

It is for your own good. I just previously pointed out a fraction of the problems with thinking like that.

If you can prove to me that you will never be divorced, never have to pay alimony, never have to pay child support, never be sued for damages of any kind, never lose your job, never default on your mortgage or be evicted, and never suffer any severe health problems or injuries, and never use the money as collateral to be seized, then I'll wave the magic wand and let you save for your own retirement.

Originally Posted by Malloric

Social Security needs every dime it can take now just to meet current expenses, and once the boomers stop paying in and begin to collect, they will quickly drain the trust fund of everything it owns. Right now, that's projected to occur at 2037.

2036 for the combined OASI/OADI Trust Fund.

My calculations show 2028.

In other posts, I have proven the errors and fallacies in the actuarial methodology.

For example, SSA Claims that its revenues will increase by 28% in the year 2012 (see page 44 of the June 2011 Report).

That is impossible unless your unemployment rate becomes 5% with a labor participation rate of 66.4% by January 1, 2012, and that will not happen.

Anyone want to bet on that?

Didn't think so. You all are quite wise not to.

As another example, SSA claims under its High Cost Assumptions that the US GDP rate will grow by 6.4% annually. That is impossibility for a post-Industrialized nation (see page 74)

Still another example, SSA claims under its Low Cost Assumptions that the US GDP rate will grow by 4.1%. That is also impossible. I have already proven that from 1961 to 2010, the annual growth rate has averaged only 2.89%.

Accordingly, Social Security's projected date of Trust Fund exhaustion is based on bogus lies.

It is not 2036, it is 2028. Why? Because all of SSA's revenue assumptions are based on the bogus GDP rate assumptions, which are false.

SSA says (under the Low Cost Assumptions) that the GDP rate will increase by an average of 4.1% per year, and therefore, its revenues will increase by 7.2% per year.

Wrong, wrong, wrong, wrong. It doesn't work that way. In the first place, your GDP will not grow that fast (CBO is now on board with me -- I can only guess they come to C-D to read my posts). Your economy is flat and recessionary through the end of the decade. The unemployment rate will eventually be 5%, but the labor participation rate will not be 66.4% and if it is not, then you have fewer people working, and those who are working are making less money, so revenues will be flat or actually decline through the end of the decade, not increase.

Originally Posted by Malloric

Once the trust fund is gone, what then?

According to SSA, the only way to pay benefits to everyone is to cut their benefits by 23% so that they get 77% of their scheduled benefit.

My scheduled benefit in 2011 Dollars would be $1,183/month. 77% of that would be $910/month.

Originally Posted by Malloric

Will Congress step in and bail it out with general funds paid for by higher taxes and cuts?

I don't know.

In order to convert the Trust Fund to cash, either it has to be sold as public debt, or taxes have to be raised and earmarked for the Trust Fund, or the government will have to raid the budgets of different federal agencies and use it.

If taxes are earmarked, then leaving them in place might be a solution.

[Cletus Awreetus-Awrightus]

Originally Posted by gwynedd1

The nominal sum of money will always be there. However it will be paid from the real time conditions of the economy. SS isn't building robotic nurses; its a transfer payment. The problem is the transfer of funds now going to finance in educational and mortgage debt. The once a week blood transfusion is now more like a daily transfusion and its killing the donor. I have no problem with SS in it of its self, but it was not intended to sit along side the asset appreciation, wage deflation retirement program.

exactly. therefore it will not "run out" of SS funds due to the baby boomers, because social security never "saved" its contributions to begin with. As long as we can print dollars, we can meet our current SS obligations.

your previous post hit the nail on the head. Older folks have helped created an economic environment that is very difficult for young people. You've got one source of productive labor(working people), and in the coming years they will be expected to bear the brunt of high housing prices, and astronomical tuition rates, and on top of all that, taxes to fund generous retirement benefits boomers have promised themselves. This would be difficult even if we had a good labor market, and a monetary system that encouraged productive enterprise. (We don't, obviously)

[Cletus Awreetus-Awrightus]

Originally Posted by Mircea

Those are not the Elements of Proof for a Ponzi Scheme. Social Security is a Ponzi Scheme, because a Ponzi Scheme relies on increasing revenues in order to fund the scheme.

This is not true. Social security does not necessarily need increasing revenues. Social security simply needs future revenues.

If, for example, a retiring generation was much smaller than those before it, then social security could do fine on decreasing revenues.

Originally Posted by Mircea

Your benefit rate is determined by a formula:
PIA formula
For an individual who first becomes eligible for old-age insurance benefits or disability insurance benefits in 2012, or who dies in 2012 before becoming eligible for benefits, his/her PIA will be the sum of:
(a) 90 percent of the first $767 of his/her average indexed monthly earnings, plus (b) 32 percent of his/her average indexed monthly earnings over $767 and through $4,624, plus (c) 15 percent of his/her average indexed monthly earnings over $4,624.

So, where exactly does the wealth transfer occur?

The wealth transfer occurs in the payout. The payout formula itself is written in a way that is redistributive.

The fact that the payroll tax is capped just means that income over $106k is not subject to this redistribution, like a way of opting higher-earning people out of the welfare scheme for the "common person."

[CaptainNJ]

they should allow the social security administration to tap into people's 401k accounts. those people wont need them until they retire, so the government can use that money and just owe those people what they took from those accounts.

[Themanwithnoname]

Originally Posted by Mircea

Not everyone is going to be able to work for a company that offers a pension plan or a 401(k) Plan.

In a Perfect World, every person born is a future potential Wall Street Hot Shot, but it is not a Perfect World. It's absurd, if not obtuse to suggest that the average person is sufficiently knowledgeable and skilled to manipulate their 401(k) Plan or their personal savings and investments to generate a sufficient amount of retirement income.

There are many who for any number of legitimate reasons, in addition to not have a pension plan, will not be able to save an amount of money for their own retirement.

If left to their own devices, people will not willingly save, so as elitist as it might sound, you have to force people to save and Social Security is one such vehicle (although not the best).

Finally, if you do a Cost-Benefit Analysis, what is the cost of having a program like Social Security (but not necessarily the program everyone knows and loves) versus the cost of not having such a program?

Social Security is clearly a cheaper alternative to not having Social Security.



You can't let people opt out.

As I said, the reality is that if people were left to their own devices, they would not save money for their retirement. The only way to ensure that people have money for retirement, is to put a gun to their head and force them to save.

A better alternative to Social Security would be a government mandated payroll tax and the money is deposited directly into the financial institution of the employee's choice.

That does two things, first, and most importantly, the government can't touch it, and second, the employee can do nothing at all, or purchase Certificates of Deposit and roll them over continuously, or invest a portion in stocks, bonds, money market accounts etc. as they see fit.

One of the things you're ignoring are the other realities.

Without a specific government program (preferably at the State level instead of the federal level), you are without certain protections.

Invariably, people would do what? Use that money as a collateral asset to get credit cards, to obtain personal loans, to buy cars, to use for the purchase of a home, and then what happens?

That money is subject to being seized by a court to pay debts on which you defaulted.

So there you are living in your glorious McMansion and you lose your job, default on your mortgage and federal law requires the lender to foreclose at 120 days.

And the bank seizes your retirement savings.

Now what?

And there are other issues. What about divorce? What about alimony? What about child support?

You thought you had a loving wife, and she's banging anything that moves, and then she moves out and your entire retirement savings end up in her bank account as settlement, alimony or child support.

While digging for gold with your finger stuck half way up your nose, you drifted left of center and struck an on-coming vehicle. Now those people have their attorney up your ass 24/7 and you're being sued for damages.

There goes your retirement savings.

Life can be complicated.

So your idea of people saving money on their own just isn't going to pan out. You need a pre-determined plan, that is government supported (and again by the States and not by the federal government) and that offers protections from life's inconveniences.



It is still a Ponzi Scheme and the fact that they spent the surplus doesn't really change anything, other than how to convert the special treasury securities into cash.

And it is your problem, because you sat there like a big dummy and watched them spend the money and said nothing.

So in some respects, retirees should have their benefits cut as punishment for being Stupid in a No-Stupid Zone and for shirking their duties as citizens and failing to be vigilant and taking the correct action when their government over-stepped its bounds.

All you had to do was call for a mass strike for 5 days and your government would never have touched a cent in the Trust Fund.



It is for your own good. I just previously pointed out a fraction of the problems with thinking like that.

If you can prove to me that you will never be divorced, never have to pay alimony, never have to pay child support, never be sued for damages of any kind, never lose your job, never default on your mortgage or be evicted, and never suffer any severe health problems or injuries, and never use the money as collateral to be seized, then I'll wave the magic wand and let you save for your own retirement.

"LET ME"!!!


Since when is it any business of YOURS what I do with my money, or mine what you do with yours?

While these government thefts, and redistribution of wealth may be 'legal' they are not constitutional, and therefore (Lawfully... different than legal) are null in void. (If the Conn. wasn't ignored in this country)

So tell me... why is it anyone's business what people do?


The underlined portion I agree with, but THAT's never going to happen!

[gwynedd1]

Originally Posted by Mircea

T
Figure that out all by yourself? Pretty perceptive.

If you have to interlard you conversations with these weasel comments then I have no interest. Its too bad since you actually have good posts with micro economics. However because you retain a bean counting approach to macroeconomics, they are of little value. You seem genuinely confused between nominally defined legal contracts and the real economics behind them. A classic example is how you nominally declare your debt avoidance while ignoring opportunity costs, a classic bean counter blunder. The whole point of this thread is how the legalized enforcement of an economic contract is ignoring the economic realities. In other words, the problem is with the likes of you.

Anyway I am not interested in your posting style which is that of a bickering adolescent loaded with unprovoked insults.

[gwynedd1]

Originally Posted by Cletus Awreetus-Awrightus

This is not true. Social security does not necessarily need increasing revenues. Social security simply needs future revenues.

If, for example, a retiring generation was much smaller than those before it, then social security could do fine on decreasing revenues.

All they need to do is define a worker to retiree ratio. The impossible thing, which the other deluded poster suggested, is done routinely by insurance companies. Simply set the retirement age so that benefits are only available to a 1/5 ratio starting at 18. Thus if 80% of population above 18 is between 18-70, the retirement age is 70.