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Prosopis, you are misinformed. Social Security Administration’s funds are only invested in United State’s debts and (despite Tea Party efforts) the U.S. government has never failed to pay both principle and interest of our debts upon their due date.
I have not questioned that. I do question their ability to do so in the long term future given the present path we take. My understanding is that Congress borrows from the trust fund when they feel the money is needed for other purposes. When the program runs an annual cash deficit - more is required in payouts than is collected in payroll deductions - that shortfall must be made up by Congress out of other tax revenue. Given that what is taken out is usually greater than what is made up - the bare minimum needed to cover the shortfall - the trust fund is slowly reduced over time.
The question of long term solvency vs. life expectancy and population is another question. If I felt that the program were honestly managed, I would not see a problem with making adjustments to address long term solvency.
Quote:
Originally Posted by Supposn
The Social Security Administration’s trust funds have never lost a penny of the funds entrusted to them. You’re questioning the SS Administration’s trust fund’s management. Unlike the managements’ of AIG, Lehman Brothers, Morgan Stanley and other financial entities failures to perform (if not their actual betrayals of) their financial duties, Social Security Administration trustees have never lost a penny from the funds they were entrusted to protect.
Never said they had lost any of it. I said the politicos had basically stolen it. They pay back what they need to when they need to, in order to keep the scheme running, but that is all. I am questioning the wisdom of allowing Congress to borrow money from the trust fund. If that is the same to you as questioning the management of the trust fund, well so be it.
How is my questioning the integrity of Congress in this matter taken to be an endorsement of any of those private comapanies' failures? You are attempting to put words in my mouth.
I do find that private investing better suits my needs and abilities than does reliance on Social Security. I do not claim that this will be the case for all people, and so I concede the need for the SSA - that should be beyond question. Now if we could just have managed it like a trust fund rather than a national paypal account for the last 70 odd years, it would be a wonderful program.
Social Security needs to be abolished and replaced with free market alternatives. The US government is far too broke to seriously pay for this monstrosity.
Replace Social Security for the generation of people that are starting to work now but not for people that are older who are relying on this benefit and have already paid into the system.
Leave it in the trust fund so that it is solvent in years of low revenue as well as high revenue. If the point is that it is safer in government care than in the hands of individuals, then it d*** ought to be left alone so that it is there to be paid out when needed. Seems that all that $$$ belonging to the peons is just too tempting though.
Why didn't you think so? Because you can't yourself you assume no one else can?
What would be the advantage of leaving the money in the Social Security Trust Fund? Why does it matter that the government borrows from itself? Would you prefer that the Social Security Administration invest the funds it collects? Where would you like them to invest the money?
Social Security paid for itself up until 2010. So it is now costing the government money. So do a lot of programs. I don't see an alternative to Social Security and I don't see it being discontinued. The fact is that many people are not intelligent and/or not able to save money for retirement. What do you suggest doing with these people?
There are plenty of reforms that can be done with Social Security to prevent it from running a deficit. Raising the retirement age, means-testing, removing the cap on the payroll tax and requiring all government employees to participate are some examples.
I have not questioned that. I do question their ability to do so in the long term future given the present path we take. My understanding is that Congress borrows from the trust fund when they feel the money is needed for other purposes. When the program runs an annual cash deficit - more is required in payouts than is collected in payroll deductions - that shortfall must be made up by Congress out of other tax revenue. Given that what is taken out is usually greater than what is made up - the bare minimum needed to cover the shortfall - the trust fund is slowly reduced over time.
The question of long term solvency vs. life expectancy and population is another question. If I felt that the program were honestly managed, I would not see a problem with making adjustments to address long term solvency.
Never said they had lost any of it. I said the politicos had basically stolen it. They pay back what they need to when they need to, in order to keep the scheme running, but that is all. I am questioning the wisdom of allowing Congress to borrow money from the trust fund. If that is the same to you as questioning the management of the trust fund, well so be it.
How is my questioning the integrity of Congress in this matter taken to be an endorsement of any of those private comapanies' failures? You are attempting to put words in my mouth.
I do find that private investing better suits my needs and abilities than does reliance on Social Security. I do not claim that this will be the case for all people, and so I concede the need for the SSA - that should be beyond question. Now if we could just have managed it like a trust fund rather than a national paypal account for the last 70 odd years, it would be a wonderful program.
Originally Posted by Supposn
Prosopis, you are misinformed. Social Security Administration’s funds are only invested in United States’ debts and (despite Tea Party efforts) the U.S. government has never failed to pay both principle and interest of our debts upon their due date.
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Furthermore Social Security Administration’s trust funds handle all their funds until the administration requires cash on demand for the administration’s daily financial transactions. Every single dollar earns interest for each day that dollar is under the control of the Social Security Administration. The trustees of the administration’s trust funds are mandated to invest the entirety of those funds.
The U.S. Congress does not determine, advise or in any manner influence the management of the Social Security Administration’s trust funds.
What would be the advantage of leaving the money in the Social Security Trust Fund? Why does it matter that the government borrows from itself? Would you prefer that the Social Security Administration invest the funds it collects? Where would you like them to invest the money?
The advantage to leaving it in the trust fund is that it is then there when needed to offset an annual shortfall. Why have the trust fund at all if we're going to let Congress borrow it to fund a popular new bill without unpopularly raising taxes to cover it? The purpose of the trust fund is to bridge lean years in SS payroll withholding, not to act as Congress's mad money fund.
In the current state of affairs I would not invest it at all. I would use it for the single purpose of making Social Security payments when the revenue from withholding is insufficient. If SSA were projected to run a surplus for years and years, I would then consider some kind of conservative investment for a portion of the trust fund - like treasury bonds or something. That again is just the government borrowing from itself, but it would be under such different circumstances that I would have little problem with it.
Replace Social Security for the generation of people that are starting to work now but not for people that are older who are relying on this benefit and have already paid into the system.
Chava61, the first Social Security Act was passed by the U.S. Congress was signed by the president in 1935 when there was actual wide spread and severe national poverty. We could not de1lay enactment until we accumulated the fund to pay for a future generation of elderly.
The U.S. Congress then determined that managing Social Security retirement as a conventional annuity plan would not suit our nation’s needs. That’s how it came about that each retired generation is paid with the taxes collected from the currently working generation.
If we terminated tax payments from the current working generation, we would have to SIGNIFICANTLY INCREASE our current federal debt. Have you considered the economic consequences of such a debt increase?
For 40% of retirees, their SS benefits are what enable beneficiaries to stay above the poverty income levels. This is of significant financial benefit to retirees and their families. Additionally this is of net significant economic benefit to our nation.
I suppose you have considered the detriment to our economy if we terminate the SS retirement program; (refer to N Cole1’s post #3).
I’m opposed to your proposal.
Respectfully, Supposn
The advantage to leaving it in the trust fund is that it is then there when needed to offset an annual shortfall. Why have the trust fund at all if we're going to let Congress borrow it to fund a popular new bill without unpopularly raising taxes to cover it? The purpose of the trust fund is to bridge lean years in SS payroll withholding, not to act as Congress's mad money fund.
In the current state of affairs I would not invest it at all. I would use it for the single purpose of making Social Security payments when the revenue from withholding is insufficient. If SSA were projected to run a surplus for years and years, I would then consider some kind of conservative investment for a portion of the trust fund - like treasury bonds or something. That again is just the government borrowing from itself, but it would be under such different circumstances that I would have little problem with it.
Prosopis, do you realize that the manner of Social Security trust fund management you’re proposing is precisely the manner that the trust funds have been managed since their conception?
I’m supposing you’re a Republican because you cannot accept “yes” as an answer.
Prosopis, do you realize that the manner of Social Security trust fund management you’re proposing is precisely the manner that the trust funds have been managed since their conception?
I’m supposing you’re a Republican because you cannot accept “yes” as an answer.
In fact, I am of the opinion that this question should be above politics. Candidate Al Gore advocated putting SS funds in a "lock box", roughly as I claim is necessary.
This article was penned by a former Democratic Senator and published just a few years ago in what you will agree is not exactly a bastion of Tea Party propaganda:
Quoting from this article:
"Another argument made by Social Security opponents to raise fear about the national debt is how much our government has borrowed from China. They never mention how much our government has borrowed from Social Security. In fact, the government has borrowed more from the Social Security surplus than it has from any other source in the world, including China. As a result, Social Security now "owns" nearly 18 percent of the federal debt, making it the largest single holder of US debt. The government owes almost twice as much to Social Security as it does to China and Hong Kong."
Now you may argue that this is the same as what I said about investing it in Treasury bonds. But the mistake is that I said I would only do that if I felt there was an adequate reserve in the trust fund - which I do not think is currently true.
One reason I do not think it is true is that when the debt ceiling fights come up, the first thing the debt ceiling raising side says is that SS checks may not go out. That is either true, or it is a cheap scare tactic. If the SS Trust Funds are flush, then it is a cheap scare tactic. If the funds are essentially empty (ALL the money invested in Government debt already, with no reserve cash) then it is true.
Now you may argue that conservatives are splitting hairs here, with the debt ceiling point. But I don't think so. It has to do with the idea that a trust fund must be able to meet its immediate obligations in order to be a trust fund. If it has to borrow money to pay out monthly because all it's funds are tied up and not liquid, then I say it is mismanaged.
EDIT:
I should clarify, before assumptions are made, that I am not advocating for SSA dissolution or private SS accounts - I believe that need is already well met by IRA accounts and 401K's. I'm advocating running it honestly, as both Clinton and Gore advocated, and many conservatives now advocate. When you see both political sides arguing the same thing at different times (to suit their political ends) - the objective voter can conclude that there is a problem.
Social Security's main objective is that is forces persons to do what they might otherwise not, save for their retirement and have healthcare as seniors. It also ensures wives and minor children will have benefits that cannot be spent or chucked away by a husband (or vice versa).
The rather low savings rates of Americans and the large numbers heading into their retirement vastly unprepared financially strengthens this argument.
How many times in an old film or play would you see a husband invest a family's life savings on some hair brained scheme that went bust. Or a spinster fall for a "love em and leave em" type that seduces and abandons leaving her totally broke.
SS may not be much but it is supposed to provide something to keep the wolf from a senior's door.
No insurance or financial institution has ever offered such an annuity plan because they couldn’t approach the lesser federal expenditures that fund what’s effectively the SS retirement’s lifetime annuity which retains benefits purchasing powers.
Life insurance. I already debunked all of your disinformation on another thread.
Quote:
Originally Posted by Supposn
Unless almost our entire population purchased such a private policy, replacing our SS program with a privately delivered program would be significantly detrimental to our economy. Without federal government reinsurance of benefits for private entities clients, such an annuity offered by private financial organizations couldn’t even possibly attract sufficient purchasers.
That is an unqualified statement bordering on bigoted beliefs not substantiated by any facts.
Please elaborate in detail why a minimum wage worker would prefer to pay $96/month in FICA payroll taxes for $793/month in benefits, when they can spend $21/month and get $1,600 in benefits and leave the balance to named beneficiaries upon death?
Challenging...
Mircea
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