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The problem with your math is that Social Security is already cash flow negative. Money comes out of the general fund to cut Social Security checks. Today, the shortfall is categorized as "interest". They're borrowing money to cover the "interest" and will be borrowing further money to cover the larger shortfall as the program goes 30% cash flow negative in around a decade.
The Social Security trust fund balance is about 15.4% of the national debt or just shy of $3 trillion. The trust fund is projected to be exhausted in 2034 (from the 2014 report). Over the next 18 years, the Federal government is going to have to borrow that same 15.4% to cut Social Security checks. That's $3 trillion of additional borrowing over the next 18 years even if the rest of the budget is balanced.
That money has already been borrowed. Cashing in the T-bills and issuing new ones will not increase the national debt. At worst, it will force them to be a little more honest in their bookkeeping, since they don't like to admit that they owe money to the SS trust fund. I don't care that it's already cash flow negative. There is plenty of money there to pay for my SS benefits. They can pay for it the same way they are paying for the Reagan spending spree. If they ran a budget deficit to pay for invading Grenada they can run a budget deficit to reimburse the SS trust fund. They don't get to say, "Oops," when the bill comes due.
They don't get to say, "Oops," when the bill comes due.
Certain people in Congress are trying to say exactly that. That $3 trillion in the trust fund? Oops. Already spent. Sorry. Abolish that evil Socialist Social Security program.
It's all moot. Social Security isn't going away. More than half of retirees would starve without it. Taxes are going up in some way to keep the program cash flow neutral. Tax money is tax money whether it's payroll taxes, corporate income taxes, individual income taxes, VAT/GST, whatever. The Federal government has to write the checks. The debt to GDP ratio can't keep increasing. Medicare, Medicaid/CHIP, and Social Security are more than half the budget. Somebody's taxes are going up. If you're a Tea Partier, you slam the evil low income people who are escaping paying no Federal income tax at all. If you're Full Bernie, you soak the rich people and the corporations. Somebody's taxes are going up.
Long forgotten is that SS funds are required to be invested in Trasury securities. If they had been invested in a stock index funds over the last 50 years the system would be drowning in assets.
Long forgotten is that SS funds are required to be invested in Trasury securities. If they had been invested in a stock index funds over the last 50 years the system would be drowning in assets.
Our national debt would be about $3T lower. Would we the people rather have that $3T or so taken from the private sector?
Since SS is effectively the wage slave disposal tax (imposed on the wage slaves themselves), it is only fair if labor users would pay appropriate labor disposal fees. After all we are told that labor is just a dumb commodity and thus the bulk of the profits should go up to the people utilizing&supervising labor. Labor should be treated as a commodity all the way, including disposal.
Long forgotten is that SS funds are required to be invested in Trasury securities. If they had been invested in a stock index funds over the last 50 years the system would be drowning in assets.
That isn't how money works.
Real wealth is production and productivity. Funds that are allocated to returns on "investment" are extracted from the productive economy. In other words in comes out of the worker's hides one way or another.
There's a fine line that has to be walked: the system needs to be somewhat progressive
Respectfully, I disagree. Insurance should never be progressive, and FICA is most definitely insurance.
We all have automobile insurance, for example; imagine having a fender-bender and placing a claim only to discover the insurance company says, "You're a high income person, so we're going to reduce the amount we pay on your claim."
Defined benefit pension disbursements are taxed like any other income. So are interest payments and tax deferred savings disbursements. Do you mean levy a payroll tax on pensions? I think a surcharge on capital gains like the current Medicare surcharge would be a better solution.
Whoops -- yeah, I wasn't thinking clearly when I posted that. Yeah, I meant a payroll tax on government defined benefit pensions, but after thinking about it a bit, my idea on that was stupid. My bad.
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