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Old 12-12-2018, 06:50 PM
 
26,172 posts, read 21,428,069 times
Reputation: 22766

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Quote:
Originally Posted by maat55 View Post
Actually, SS gave the government a slush fund of money to spend that it was not raising on its own. To us, that is a credit card. Problem is that this credit card interest is going to be a thorn to future generations, especially if interest rates increase. Again, a private system would have eliminated the slush fund. Now, we and future generations are stuck with a system that either continues to grow deficits, requires higher payroll taxes or just plain implementation of forced redistribution. All of which are moral hazards.

Doesn’t change anything I said.
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Old 12-12-2018, 07:36 PM
 
Location: Ohio
24,623 posts, read 19,070,582 times
Reputation: 21738
Quote:
Originally Posted by NewbieHere View Post
I’ve read that the jobs growth and high wages is how Trump want to solve SS problem.
That won't do it.

You need 11 Million jobs STAT.

To understand that, it means all 5.5 Million currently unemployed would have to get jobs by 8:00 AM tomorrow, and then you'd have to sent the military to foreign countries tonight, kidnap 5.5 Million people, bring them back to the US and have them start work by 8:00 AM on the morrow.

And from that point on, your UE Rate would have to be 0% for the next 90 years.

If you did that, you wouldn't have to do anything at all and the program would be solvent in perpetuity.

How likely is that to happen?

It's not going to happen. Ever.

Even if you managed to find jobs for all 5.5 Million unemployed and keep the UE Rate at 0% for the next 90 years, you'd still have to increase the FICA payroll taxes to cover the losses.

It's a simple formula:

Revenues = # of Workers * Wages * FICA Tax

That's just 6th Grade Math.

To increase Revenues, you need to increase the number of workers, except in this instance the increase has to be substantial -- 11 Million workers -- and you simply cannot do that.

So, your other option is to increase Wages to offset the Revenues that would be generated by the 11 Million additional workers, if they would be working.

I would not consider the Wage increase to be "massive" or "substantial" by any stretch of the imagination, but it would need to be 7% to 12% and it would have to be annually.

There are a number of problems there, including Wage Inflation.

Most people are ignorant of the fact that only a tiny 3% of US businesses are publicly-traded corporations and the employ a small fraction of the work-force, 5.8% or about 9 Million workers.

The other 148 Million workers work for the 97% of businesses that are general, limited and limited liability partnerships, limited liability companies and sub-chapter S-Corps.

Those 97% of businesses are not sitting on piles of cash, because, well, they don't have to, since there's no possible way they can be part of a hostile take-over, leveraged buy-out or forced merger/acquisition. Most of them are well-capitalized and they can absorb some shock over the short-term, but not the long-term.

However, the only way they could give 7%-12% annual pay raises is by raising the prices of the goods and services they offer. That would be the Wage Inflation I mentioned.

For those that are 100% Domestic, they might be able to get by, but for those that rely in whole or in part on foreign sales revenues, higher prices means they are less competitive globally, and that means lost revenues, which results in lost jobs, and you're right back to Square #1.

Worse than that, the Primary Insurance Amount is based on the average wage, so as the average wage increases annually, the Primary Insurance Amount increases annually, too, and that means you end up paying more in Social Security benefits, which means the cost to operate Social Security increases, so you don't really gain anything by raising wages.

So, the only feasible common sense alternative is to raise the FICA payroll tax.

A 28% increase in the FICA payroll tax is not the end of the world, since the Boomers had a 42% increase and the Silent Generation had a 520% increase, and they all managed to survive it, without the US burning down, falling over and sinking into a swamp.

And, a 28% increase would only happen if Congress waits until the last possible second to do something.

If Congress acts now, they can step-increment the increase 0.2% per year until reaching the maximum necessary, and it would only amount to a 22% increase in total.

If Congress waits, incremental step-increases aren't possible. Increasing the FICA tax 0.2%-0.5% is not going to off-set the losses. It will have to be one large increase.

And, you won't see a huge Trust Fund ever again. If Congress waits to the last second and increases it 28%, then by 2042, you might have $250 Billion in the OASI Trust Fund. After that, it should rise to somewhere between $500 Billion and $750 Billion, but you won't see a Trust Fund with $1+ TRILLION in it ever again.

Note that the Trustees never factor in recessions.

You're likely to have a recession 2019 or 2020, and probably another before 2028, so the Trust Fund will fail far earlier than they project, not to mention their revenue projections are all wrong.
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Old 12-12-2018, 07:50 PM
 
Location: Oklahoma
2,186 posts, read 1,163,363 times
Reputation: 1015
Quote:
Originally Posted by Lowexpectations View Post
Doesn’t change anything I said.
You don’t see growing deficits and interest costs as a problem?
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Old 12-12-2018, 07:56 PM
 
Location: Oklahoma
2,186 posts, read 1,163,363 times
Reputation: 1015
Quote:
Originally Posted by Mircea View Post
That won't do it.

You need 11 Million jobs STAT.

To understand that, it means all 5.5 Million currently unemployed would have to get jobs by 8:00 AM tomorrow, and then you'd have to sent the military to foreign countries tonight, kidnap 5.5 Million people, bring them back to the US and have them start work by 8:00 AM on the morrow.

And from that point on, your UE Rate would have to be 0% for the next 90 years.

If you did that, you wouldn't have to do anything at all and the program would be solvent in perpetuity.

How likely is that to happen?

It's not going to happen. Ever.

Even if you managed to find jobs for all 5.5 Million unemployed and keep the UE Rate at 0% for the next 90 years, you'd still have to increase the FICA payroll taxes to cover the losses.

It's a simple formula:

Revenues = # of Workers * Wages * FICA Tax

That's just 6th Grade Math.

To increase Revenues, you need to increase the number of workers, except in this instance the increase has to be substantial -- 11 Million workers -- and you simply cannot do that.

So, your other option is to increase Wages to offset the Revenues that would be generated by the 11 Million additional workers, if they would be working.

I would not consider the Wage increase to be "massive" or "substantial" by any stretch of the imagination, but it would need to be 7% to 12% and it would have to be annually.

There are a number of problems there, including Wage Inflation.

Most people are ignorant of the fact that only a tiny 3% of US businesses are publicly-traded corporations and the employ a small fraction of the work-force, 5.8% or about 9 Million workers.

The other 148 Million workers work for the 97% of businesses that are general, limited and limited liability partnerships, limited liability companies and sub-chapter S-Corps.

Those 97% of businesses are not sitting on piles of cash, because, well, they don't have to, since there's no possible way they can be part of a hostile take-over, leveraged buy-out or forced merger/acquisition. Most of them are well-capitalized and they can absorb some shock over the short-term, but not the long-term.

However, the only way they could give 7%-12% annual pay raises is by raising the prices of the goods and services they offer. That would be the Wage Inflation I mentioned.

For those that are 100% Domestic, they might be able to get by, but for those that rely in whole or in part on foreign sales revenues, higher prices means they are less competitive globally, and that means lost revenues, which results in lost jobs, and you're right back to Square #1.

Worse than that, the Primary Insurance Amount is based on the average wage, so as the average wage increases annually, the Primary Insurance Amount increases annually, too, and that means you end up paying more in Social Security benefits, which means the cost to operate Social Security increases, so you don't really gain anything by raising wages.

So, the only feasible common sense alternative is to raise the FICA payroll tax.

A 28% increase in the FICA payroll tax is not the end of the world, since the Boomers had a 42% increase and the Silent Generation had a 520% increase, and they all managed to survive it, without the US burning down, falling over and sinking into a swamp.

And, a 28% increase would only happen if Congress waits until the last possible second to do something.

If Congress acts now, they can step-increment the increase 0.2% per year until reaching the maximum necessary, and it would only amount to a 22% increase in total.

If Congress waits, incremental step-increases aren't possible. Increasing the FICA tax 0.2%-0.5% is not going to off-set the losses. It will have to be one large increase.

And, you won't see a huge Trust Fund ever again. If Congress waits to the last second and increases it 28%, then by 2042, you might have $250 Billion in the OASI Trust Fund. After that, it should rise to somewhere between $500 Billion and $750 Billion, but you won't see a Trust Fund with $1+ TRILLION in it ever again.

Note that the Trustees never factor in recessions.

You're likely to have a recession 2019 or 2020, and probably another before 2028, so the Trust Fund will fail far earlier than they project, not to mention their revenue projections are all wrong.

Just what we need, further payroll tax increases causing the serfdom of the country. It’s already a huge problem for many Americans to find disposable income for self wealth building. I say enough with this socialist nonsense and compromise to mandated private accounts that stop the bleeding and allow Americans to grow personal wealth.
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Old 12-12-2018, 08:01 PM
 
Location: Ohio
24,623 posts, read 19,070,582 times
Reputation: 21738
Quote:
Originally Posted by SportyandMisty View Post
I spent 5 minutes searching on YouTube the following, but I couldn't find it.

But I do remember it.

Back in the 1970s the Postmaster General said the increase in First Class (letter) postage from 10 cents to 13 cents would be the last increase the USPS ever needed, as it would make the US Postal Service solvent in perpetuity.
Apples and oranges. The two situations aren't even remotely comparable.

USPS operations are not fixed, while Social Security's are.

The problem has always been the ratio of workers-to-beneficiaries, because the underlying financial scheme is effectively a Ponzi-scheme requiring constant entrants to the work-force to keep it viable.

The good news is that ratio has stabilized, so that it will always fall in the range of 2.2:1 to 2.8:1 workers-to-beneficiaries from this point through the infinite horizon.

Unlike USPS, Social Security relies upon:

Revenues = # of Workers * Wages * FICA tax

So, it's easy to make adjustments to permanently sustain the system.

Quote:
Originally Posted by SportyandMisty View Post
There are other dials, buttons, and levers that could be turned, pushed, and pulled in order to keep it solvent. Raising FICA payroll taxes is one, but by no means the only, way to do it.
No, there aren't.

The tweaks you're talking about are chump change.

If you eliminate the wage cap, and I'm not saying that should or shouldn't be done, it will only generate an additional $126 Billion per year, which won't even cover the cost of a single month of benefit payments.

The other tweaks, in total, don't even come close to $126 Billion per year.

Those amount to about $5 Billion to $6 Billion per year, and that is not enough to make the program solvent.

You need to generate $100s of Billions in revenues per year, not a few paltry $Billions.


Quote:
Originally Posted by maat55 View Post
SS is bleeding the country around 80-100 billion a year. This number is expected to increase as more baby boomers retire.
No, it won't. It will actually decrease costs.

The federal debt consists of two components: the public debt and intra-government debt.

Converting OASI special treasury securities decreases intra-government debt, while simultaneously increasing public debt, but total federal debt does not increase.

The interest rate on the OASI special treasury securities is greater than the marketable securities issued by the Treasury Department.

Consider the fact that the highest interest rate on marketable securities is 3.06% and that is only for 20-year bonds.

The highest interest rate for OASI special treasury securities is 15.250%.

In other words, it costs more to service the OASI securities than it does to service US Treasury securities.

Converting special treasury securities from 15.250% to US Treasury bills, notes and bonds which pay a maximum of 3.06% (and some only pay 0.25%) results in lower costs to service the special treasury securities' debt.

The end result is the federal debt grows at a slower rate, not a faster rate.

Quote:
Originally Posted by maat55 View Post
A private system would not have this happen.
A private system cannot guarantee a minimum benefit, which is the whole point of Social Security.

A private system also requires the common people to be thoroughly knowledgeable about financial transactions, and to constantly monitor and manage their accounts in the hope of maximizing returns.

Since that isn't possible, the best solution is Social Security.
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Old 12-12-2018, 08:04 PM
 
26,172 posts, read 21,428,069 times
Reputation: 22766
Quote:
Originally Posted by maat55 View Post
You don’t see growing deficits and interest costs as a problem?
I didn’t say anything of the sort. But you are pretending the accounting for ss is fake and that’s simply untrue. If the ss gets insterest credit it is real even at the cost of increasing deficits
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Old 12-12-2018, 08:55 PM
 
Location: Oklahoma
2,186 posts, read 1,163,363 times
Reputation: 1015
Quote:
Originally Posted by Lowexpectations View Post
I didn’t say anything of the sort. But you are pretending the accounting for ss is fake and that’s simply untrue. If the ss gets insterest credit it is real even at the cost of increasing deficits
It doesn’t change the fact that the program is bleeding the country. A private system would not do this.
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Old 12-12-2018, 08:59 PM
 
26,172 posts, read 21,428,069 times
Reputation: 22766
Quote:
Originally Posted by maat55 View Post
It doesn’t change the fact that the program is bleeding the country.
You should focus on a single issue because pretending it’s all the same issue is a complete falsehood

Quote:
A private system would not do this.
A private plan would also no provide the same social safety net and thusly it would require additional funding in some other fashion
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Old 12-12-2018, 09:05 PM
 
Location: Oklahoma
2,186 posts, read 1,163,363 times
Reputation: 1015
Quote:
Originally Posted by Mircea View Post
Apples and oranges. The two situations aren't even remotely comparable.

USPS operations are not fixed, while Social Security's are.

The problem has always been the ratio of workers-to-beneficiaries, because the underlying financial scheme is effectively a Ponzi-scheme requiring constant entrants to the work-force to keep it viable.

The good news is that ratio has stabilized, so that it will always fall in the range of 2.2:1 to 2.8:1 workers-to-beneficiaries from this point through the infinite horizon.

Unlike USPS, Social Security relies upon:

Revenues = # of Workers * Wages * FICA tax

So, it's easy to make adjustments to permanently sustain the system.



No, there aren't.

The tweaks you're talking about are chump change.

If you eliminate the wage cap, and I'm not saying that should or shouldn't be done, it will only generate an additional $126 Billion per year, which won't even cover the cost of a single month of benefit payments.

The other tweaks, in total, don't even come close to $126 Billion per year.

Those amount to about $5 Billion to $6 Billion per year, and that is not enough to make the program solvent.

You need to generate $100s of Billions in revenues per year, not a few paltry $Billions.




No, it won't. It will actually decrease costs.

The federal debt consists of two components: the public debt and intra-government debt.

Converting OASI special treasury securities decreases intra-government debt, while simultaneously increasing public debt, but total federal debt does not increase.

The interest rate on the OASI special treasury securities is greater than the marketable securities issued by the Treasury Department.

Consider the fact that the highest interest rate on marketable securities is 3.06% and that is only for 20-year bonds.

The highest interest rate for OASI special treasury securities is 15.250%.

In other words, it costs more to service the OASI securities than it does to service US Treasury securities.

Converting special treasury securities from 15.250% to US Treasury bills, notes and bonds which pay a maximum of 3.06% (and some only pay 0.25%) results in lower costs to service the special treasury securities' debt.

The end result is the federal debt grows at a slower rate, not a faster rate.



A private system cannot guarantee a minimum benefit, which is the whole point of Social Security.

A private system also requires the common people to be thoroughly knowledgeable about financial transactions, and to constantly monitor and manage their accounts in the hope of maximizing returns.

Since that isn't possible, the best solution is Social Security.
It doesn’t matter what the interest rate is, the system isn’t collecting as much money as it is paying out. The fix involves higher payroll taxes and less wealth building potential for the citizenry.

I disagree, long term investing in modest investments has provided significant wealth growth. Staying with SS will only provide an impoverished dependent citizenry.
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Old 12-13-2018, 06:50 AM
 
9,344 posts, read 6,901,027 times
Reputation: 14748
The fix is very simple the hard part is that people will have to go with less and sacrifice. There seems to be an unwillingness to tell people the real truth in this country and there seems to be a reluctance to sacrifice for the greater good.

We are a nation of the entitled.
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