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Old 09-29-2007, 04:21 PM
 
Location: Near Manito
20,170 posts, read 24,264,523 times
Reputation: 15285

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Well, at least we don't have to worry about the cost of the new Medicare prescription drug benefit mushrooming into something unmanageable for today's young folks to cover. The estimates I've seen anticipate an unfunded cost of only 73 trillion or so in the next four decades.

As someone nearing retirement age, I would like to epxress my heartfelt gratitude to all you younger folks for heeding the President's call and providing such a windfall for us geezers in our declining years.

And I mean that from the bottom of my (cough cough) heart. No,wait. I'm okay. I'll be around for years and years.

And years.
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Old 09-29-2007, 04:29 PM
 
19,198 posts, read 31,406,452 times
Reputation: 4013
Quote:
Originally Posted by amichel View Post
Here we go again. Again, I think you misunderstood what I said. The funds "for me" don't belong to someone else, therefore, they are not being taken from them. This is money that I am paying!
Except for the special Trust Fund arrangements concluded in respect of the special circumstances posed by the baby-boomer bulge, Social Security is a pay-as-you-go insurance program. The premiums (payroll taxes) you pay today are used to pay the beneficiaries of today -- retirees, survivors, and the disabled. No money is put into any coffee can or shoebox with your name on it. The money is not yours. It is in the hands of some little old lady in Lawrenceville. It is hers. To get it back as you want, we have to take it away from her. Or we have to borrow it from the public.

Quote:
Originally Posted by amichel View Post
Terrible deal? What is going on right now is what I call a terrible deal.
You've been reading to much partisan pap. Social Security is one of the most effective and beneficial programs in US history, and despite what you may have heard, there is no reason at all why it should not continue to be.
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Old 09-29-2007, 04:34 PM
 
Location: Near Manito
20,170 posts, read 24,264,523 times
Reputation: 15285
Quote:
Originally Posted by saganista View Post
You've been reading to much partisan pap. Social Security is one of the most effective and beneficial programs in US history, and despite what you may have heard, there is no reason at all why it should not continue to be.
...as long as young folks are willing to have their SS taxes raised to much higher levels and their future benefits reduced significantly. The government will used terms like "targeted" or "focused" benefits -- but it will mean the same thing: you'll pay more and get less.

But please feel free to consider this "effective and beneficial." The government will appreciate your positive attitude in trying times.
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Old 09-29-2007, 04:53 PM
 
Location: Spots Wyoming
18,700 posts, read 41,936,036 times
Reputation: 2147483647
The math ain't cutting it.

Is everybody saying, that for instance, we had 10 people in the US. And along came the baby boomers. So now we had 20 new people, paying the "pay as you go" for the 10 people that are retired. So our 20 people were paying double what was needed? The 10 retired were pulling twice as much as they should? I'm not real sure that's what happened. It should have stockpiled somewhat.

If the gov hadn't borrowed out of it for wars, it might be a tidy sum.
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Old 09-29-2007, 04:59 PM
 
Location: Mesa, Az
21,144 posts, read 42,040,157 times
Reputation: 3861
Quote:
Originally Posted by saganista View Post
Well, maybe the fact that you left out the part about payroll taxes in 1936 being 1% of the first $450 of covered wages? And come to think of it, you didn't note that to retire on full SS at 65, you'd have to have been born before 1938. If you were born after 1959, the age is currently 67.
Thanks for the heads-up re: age 67 for the 1959+ cohort.

Anyway one cuts it: the age 65+ crowd is a much greater percentage of the population today than the 20 YO's on down compared to 1936.

Something needs to give.
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Old 09-29-2007, 05:22 PM
 
19,198 posts, read 31,406,452 times
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Quote:
Originally Posted by Yeledaf View Post
...as long as young folks are willing to have their SS taxes raised to much higher levels and their future benefits reduced significantly. The government will used terms like "targeted" or "focused" benefits -- but it will mean the same thing: you'll pay more and get less. But please feel free to consider this "effective and beneficial." The government will appreciate your positive attitude in trying times.
Well, even if we do nothing at all to Social Security, when it does (sometime in the second half of the century) fall short of being able to pay 100% of scheduled benefits, it will still be able to pay 70+% percent of scheduled benefits all but indefinitely, and those benefits will be worth more than what 100% of benefits are today. The adjustments that would be needed to eliminate that eventual shortfall are not necessarily substantial, and do not need to include increased tax rates or decreased benefits.

In effect, Republicans have for years been trying to scuttle Social Security because it has long been seen as both very successful and associated with Democrats. They would like to re-invent it (in a way that will benefit some of their more important constituencies), so that they can start taking credit for it for a change. Nobody ended up buying Bush's 2005 I'll-save-you-from-the-coming-catastrophe pitch, mostly because it was made up from so many easily exposed lies and Democrats wisely went over Bush's head and directly to the people to expose many of those lies. Two and a half years later, and the Republicans think maybe they can play the same charade all over again in one last-ditch effort to salvage something at least from these past eight years? I don't think it's going to fly. There is still no substance to their case, and as an intelligent person, if you were to look into it a little more deeply, that would be the only conclusion that you could come to either...
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Old 09-29-2007, 05:26 PM
 
9,877 posts, read 10,788,675 times
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Quote:
Originally Posted by grew-up-3rd-culture View Post
I propose (being in my 30's at the moment) that Americans should vote to decrease the amount of money being dolled out on each social security check NOW, so when gen-X reaches retirement we have something for us! Your thoughts.
sounds like an appropriate proposal coming from some one in the "ME" generation!
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Old 09-29-2007, 05:50 PM
 
Location: Near Manito
20,170 posts, read 24,264,523 times
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Quote:
Originally Posted by saganista View Post
Well, even if we do nothing at all to Social Security, when it does (sometime in the second half of the century) fall short of being able to pay 100% of scheduled benefits, it will still be able to pay 70+% percent of scheduled benefits all but indefinitely, and those benefits will be worth more than what 100% of benefits are today. The adjustments that would be needed to eliminate that eventual shortfall are not necessarily substantial, and do not need to include increased tax rates or decreased benefits.

Your projeciton of the future date of Social Security's insolvency are speculative, as best. And "indefinitely"? Please. Let us entertain conjecture of a time. Who can predict that our population will continue to increase at rates sufficient to yield those results? The adjustments need to address the situation RIGHT NOW are substanital. In the future, they will be intolerable.

In effect, Republicans have for years been trying to scuttle Social Security because it has long been seen as both very successful and associated with Democrats.

Sorry, but that's absurd. No one I know wants to "scuttle" anything. Do you really believe this?

They would like to re-invent it (in a way that will benefit some of their more important constituencies), so that they can start taking credit for it for a change. Nobody ended up buying Bush's 2005 I'll-save-you-from-the-coming-catastrophe pitch, mostly because it was made up from so many easily exposed lies and Democrats wisely went over Bush's head and directly to the people to expose many of those lies.

What lies? That private investent accounts -- which are already held by millions of Americans, including you and me, are somehow not appropriate for anyone else? And besides -- does it really make any difference who "gets the credit" for making Americans more secure in their retirement? You seem to think that only Democrat ideas are sincere ideas, and Republican ideas are somehow "tainted." Isn't that kind of partisanship pretty much what you are accusing the GOP of?

Two and a half years later, and the Republicans think maybe they can play the same charade all over again in one last-ditch effort to salvage something at least from these past eight years? I don't think it's going to fly. There is still no substance to their case, and as an intelligent person, if you were to look into it a little more deeply, that would be the only conclusion that you could come to either...

As an inteligent person, I think you know that it is inevitable that it WILL fly. You just keep hoping that a Dem is in the White House to take credit for it when it does!
Good topic. Have you looked at my thread on "rates of return", below?

Last edited by Yeledaf; 09-29-2007 at 05:52 PM.. Reason: spelling
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Old 09-29-2007, 06:44 PM
 
537 posts, read 439,064 times
Reputation: 182
And always remember that the majority of the new workers to the workforce are service people who get paid next to nothing and illegal aliens. Isn't that wonderful? Never forget that we also pay Mexicans ss and many other countries to boot.
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Old 09-29-2007, 06:51 PM
 
19,198 posts, read 31,406,452 times
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Quote:
Originally Posted by jgussler View Post
The math ain't cutting it. Is everybody saying, that for instance, we had 10 people in the US. And along came the baby boomers. So now we had 20 new people, paying the "pay as you go" for the 10 people that are retired. So our 20 people were paying double what was needed? The 10 retired were pulling twice as much as they should?
Briefly (sort of), the boomers are a bulge that has to get through the system. In 1983, it was recognized that if nothing was done, a very substantial burden would fall on those who were workers between about 2010 and 2050. To remove that burden, the boomers almost doubled the taxes they needed to pay in order to meet then current and scheduled future benefit payments, letting the excess build up in the Trust Fund to be used as a primary funding source for their own benefits when it came time for them to retire. In part because there is no other market capable of absorbing the almost $6 trillion that would eventually accumulate in the Trust Fund, it is invested all but entirely in US Treasury securities paying long-term market rates of interest. As more and more boomers retire in the coming decades, they will become a net drain on the Trust Fund rather than net contributors. Just about the time the last boomer dies, the Trust Fund will be essentially exhausted, returning to the operational holding account that it had been before 1983.

Quote:
Originally Posted by jgussler View Post
If the gov hadn't borrowed out of it for wars, it might be a tidy sum.
Well, a lot of people would consider almost $6 trillion to be a tidy sum. As for the borrowing, it's a case of now or later. When the Treasury sells securities to the SSTF, the proceeds are by law deposited to the Treasury General Fund. That's where the proceeds of any USG security sale go. Even a $50 US Savings Bond. Amounts in the General Fund are available for use against appropriations passed by Congress. In any year in which there is a deficit, there is not enough money in the General Fund to provide for all of the appropriations, so the Treasury borrows what it needs to cover the shortfall. If we assume that there were $200 billion worth of cash in the General Fund as the result of security sales to SSTF, then that was $200 billion less that the Treasury needed to borrow from the public this year. If Al Gore's lockbox proposal from 2000 had been in effect (which is what you seem to be suggesting), that would have been $200 billion more that the Treasury would have needed to borrow from the public this year, because it couldn't have touched the funds received from SSTF. The offset to this will come in the late 2020's and 2030's when SSTF drawdowns to pay boomer benefits start to become pretty significant. SSTF will need to redeem instead of purchase securities to make those scheduled payments, and the Treasury will have no lockbox to dip into to finance those redemptions. It will have to issue securities then (instead of now) to raise the funds. This sounds scary, but it is part of a process that goes on all the time. The public debt currently stands at $8,975.7 billion. About a fourth of it is the SSTF. Billions upon billions of dollars worth or public debt securities mature every month. Someone has to be paid off. For the most part, those maturing securities are simply rolled over either to the same or to a different buyer. The proceeds from the new security sale are used to pay off the maturing security. That process will have to continue, and it will have to accomodate both scheduled rollovers and new issues needed to fund SSTF redemptions. It assumes that there will always be those willing to buy the levels of securities that the USG will need to sell at some reasonable interest rate. But the assumption applies to the entire public debt, not just to the portion that is owed to the SSTF. Ergo, unless you believe that the USG will somehow come to be seen as an uncredit-worthy borrower at some point in the near term, there will be no problem to complain over re redeeming the SSTF securities, and the borrowing question will have become one of borrowing now versus borrowing 20+ years from now. Keep in mind that 20 year's worth of interest on between $2 and $6 trillion is a rather hefty sum. We're not paying that now. But the savings could be eaten up in 20 years if we need to raise interest rates then in order to attract the level of lenders that will be needed. We'll see how that turns out at the time, but from this perspective, one might note that one of the more serious but least discussed problems with the Bushie tax cuts and resulting deficits is that they are creating substantial new volumes of scheduled debt rollovers in the 2020's and 2030's that will make it more difficult for Treasury to drop the new issues needed for SSTF redemptions into the market without some perhaps significant increase in interest rates. It is this sort of effect that Greenspan had in mind when recently warning that the US might face a period of significantly rising interest rates in the relatively near-term future.
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