Quote:
Originally Posted by padcrasher
Well right now Obama has agreed to comprise with GOP demands to cut Social Security benefits by linking cost of living increases to a chained CPI.
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So, do you ever plan on addressing the Substitution Effect, or do you just plan to rage against the machine?
Quote:
Originally Posted by padcrasher
The Washington Post describes the cut as 5% for this person
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We already debunked this on the other bogus thread you started. You can't cut something that you never had.
COLA never existed until 1975, and COLA increases are not automatic.....there were no COLA increases in 2010 or 2011.
Quote:
Originally Posted by padcrasher
The organization "strengthensocialsecurity.com" calclulates the cuts like this.
1) It's a benefit cut. It's not some minor technical change to the COLA. It's a real cut to the benefits you have earned every year into the future.
2) It cuts benefits more with every passing year. After 10 years, your benefits would be cut by about $500 a year for the average retiree. After 20 years, your benefits would be cut by about $1,000 a year.
3)It hits today's Social Security beneficiaries. Politicians like to say that their cuts to Social Security will not affect those getting benefits today. Wrong! Switching to the chained-CPI would hit all current beneficiaries.
4)We need a higher COLA, not a lower one. The current COLA is not large enough--it does not adequately account for large health care cost increases faced by seniors and people with disabilities.
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It is not a benefit cut. You are not entitled to COLA. COLA is not automatic. You can neither assume, presume or guarantee there will be COLA increases. Like you, they refuse to address the Substitution Effect.
Concerning health care costs, that's just the Laws of Economics ensuring health care is being used as efficiently as possible -- which is difficult if not impossible in the current scheme.
If people are that upset, my advice, dump Cable TV and start saving or investing that money.
Like I said way, way back in 2007.....everyone needs to start learning how to do less with less....everyone.....including "seniors."
Quote:
Originally Posted by padcrasher
Your post is a great example of the propaganda this is put out to help undermine people's trust in the program. Of course your source goes on to explain why the Ponzie Scheme analogy is false.
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Social Security is a Ponzi Scheme.
In a court of law, to prove any Ponzi Scheme, I need only to put a forensic accountant on the witness stand and ask one simple question:
"If new entrants are barred from the scheme, what happens?"
If barring new entrants results in the collapse of the scheme, then it is a Ponzi Scheme.
If the scheme still stands on its own merits after new entrants are barred, then it is not a Ponzi Scheme.
If no new workers started paying into Social Security, or those who are in the system stopped making payments, Social Security would collapse....ergo it's a Ponzi Scheme.
Quote:
Originally Posted by padcrasher
It's a bunch of nonsense. SS is a well run program with only a 1% overhead.
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So, a system that is insolvent and bankrupt is well-run?
Really?
What kind of fantasy world do you live in?
Quote:
Originally Posted by padcrasher
It's never failed to deliver promised benefits.
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Irrelevant.
Past performance is not a guarantee of future success.
Quote:
Originally Posted by padcrasher
It has a small, manageable, long term deficit that could be completely solved by lifting the tax caps on high incomes. It's sad that low IQ, poorly educated people fall for your B.S.
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I'm going to debunk your BS right here, right now.
At the moment the long-term deficit is $20.5 TRILLION. In 2012 Dollars.
As things presently stand, the Combined OASI/OADI Trust Fund will be completely exhausted in 2023-2024.
The Social Security Trustees under their High Cost Assumptions state 2027 as the year of total exhaustion.
That is true if,
and only if, the US economy grows at rate of 5% per year,
each and every single year through 2021 -- which is what the Social Security actuarial people claim will happen --- even though they simultaneously claim that unemployment will not reach drop below 6.0% until 2018.
Did GDP grow 5% in 2012? Answer: No.....so you already failed.
For this exercise, we will use....
Individual Income Tax Returns, Preliminary Data, 2010 by Adrian Dungan and Michael Parisi, from
Statistics of Income Bulletin | Winter 2012
Adrian Dungan and Michael Parisi are economists with the Individual Returns Analysis Section. This article was prepared under the direction of Michael Strudler, Chief, Individual Returns Research Section, Internal Revenue Service.
Referring to Page 12
Table 1. Individual Income Tax Returns, Tax Year 2010 Preliminary Data: Selected Income and Tax Items, by Size of Adjusted Gross Income
We are examining
Column 1 Items, specifically lines
#7 Salaries and wages: Number of returns
#8 Amount
For AGI (Adjusted Gross Income) Number of Returns Filed
$100,000 under $200,000 = 2,793,003
$200,000 under $250,000 = 1,401,593
$250,000 or more = 2,435,348
The total number of returns filed for those groups is 16,629,944 returns.
For AGI (Adjusted Gross Income) Salaries and Wages
$100,000 under $200,000 = $1,454,682,235,000
$200,000 under $250,000 = $251,279,279,000
$250,000 or more = $982,361,511,000
The total salaries and wages are $2,688,323,025,000 ($2.688 TRILLION)
Eliminating the cap and taxing 100% of all wages/salaries would yield....
$2,688,323,025,000 * 6.2% = $166,676,027,550 ($166 Billion)
However, a portion of those wages/salaries are already taxed. For simple math, and to give you every possible benefit of doubt, we'll use $100,000 as the "cap." The total amount under the "cap" is....
16,629,944 * $100,000 = $1,662,994,400,000
The amount FICA payroll taxes already collected is...
$1,662,994,400,000 * 6.2% = $103,105,652,800 ($103 Billion)
$166,676,027,550 ($166 Billion)
$103,105,652,800 ($103 Billion) less
-----------------------
$63,570,374,750
So $63.5 Billion is the amount of additional FICA tax revenues raised by eliminating the cap.....
in theory.
I say "in theory" because in Reality™ you would collect less than that...yes, the Laws of Economics will raise its ugly stick and beat all of you profusely about the head and shoulders. I'll let Social Security explain it in part....
In particular, the calculation of the necessary tax rate assumes that an increase in payroll taxes results in a small shift of wages and salaries to forms of employee compensation that are not subject to the payroll tax.
Let's go to see Exhibit A (I'm listening to Rush "
Show Don't Tell") in the 2012 Social Security Trustee Report...
Table IV.A3.—Operations of the Combined OASI and DI Trust Funds, Calendar Years 2007-21
In 2021 you're collecting $1,292.8 Billion in and paying out $1,482.4 Billion
$1,482.4 Billion
$1,292.8 Billion less
-------------------
$189.6 Billion
As you can see, the $63 Billion you get from eliminating the cap is not going to cover it....so where is that money going to come from?
You will have to raise the FICA payroll tax rate.
Then again, that $1.292.8 Billion the Social Security trustees
think they'll be collecting.....you only get that if your GDP grows 5% in 2012, and 2013, and 2014, and 2015, 2016, 2017, 2018, 2019, 2020 and 2021.
Right?
Because why, exactly?
Because Social Security thinks that in the year 2021, your GDP will be $24,702 Billion ($24.7 TRILLION) and it will get 4.85% of that as money to pay Social Security beneficiaries.
$24,702 Billion * 4.85% = $1,343,547,000,000 ($1.343 TRILLION)
If your economy performs, then by 2021 your GDP would be $19,919 Billion ($19.9 TRILLION).
$19,919 Billion * 4.85% = $966,071,500,000
$1,343,547,000,000
--$966,071,500,000 less
-------------------------
$377,475,500,000 is how much you will be short ------ eliminating the cap
will not solve the problem.
According to my calculations, you'll be here....
$18,421 Billion * 4.85% = $893,418,500,000
$1,343,547,000,000
--$893,418,500,000 less
-------------------------
$450,128,500,000 that's how short you will be, and by 2025, you'll be paying $1.954 TRILLION per year in Social Security benefits.
The Trust Fund will be gone by then.
You'll need to come up with close to $1 TRILLION or cut benefits across the board.
As I have repeatedly maintained, you
can save Social Security, over the mid-term.
But it will not be cheap, or easy, and it will cost you dearly in terms of jobs.
Obama's 2% FICA tax rebated was a mistake, because when it ends, and it will have to end, you just reduced the disposable income of all households as well as reduced the potential sales tax revenues that cities/States collect.
And you will have to raise the FICA tax rate from 6.2% to 9.0%-9.2% sometime in the next 24-36 months if you want even the slightest hope of saving Social Security (as everyone knows and loves it).
That will further reduce household income and also potential sales tax revenues for cities/States.
And I didn't even get into the additional financial burden on employers.
Debunking (again)...
Mircea
Quote:
Originally Posted by LAWS
The rape of the young continues.
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You got slammed with a 520% FICA payroll tax increase to ensure Social Security benefits would be available to you?
No, you didn't, but the Silent Generation did.
You got hit with a 71% FICA payroll tax increase to ensure Social Security benefits would be available to you?
No, you didn't, but Boomers and Tweeners did.
How much have FICA payroll taxes been increased for you?
They haven't. If you want Social Security, then you're going to have to pay more in FICA payroll taxes ---- just like everyone else did.
Quote:
Originally Posted by LAWS
..the vast majority of the money you pay in Social Security taxes is not invested in anything.
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That is a patently false statement.FICA payroll taxes are converted to special treasury bonds which draw interest....that is an investment.
Quote:
Originally Posted by LAWS
Instead, the money you pay into the system is used to pay benefits to those "early investors" who are retired today.
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So, then, pray tell, where did the $2.6 TRILLION OASDI Trust Fund come from? Did it just fall out of the sky?
Quote:
Originally Posted by LAWS
When you retire, you will have to rely on the next generation of workers behind you to pay the taxes that will finance your benefits.
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That is true, due to the fact that the FICA payroll tax has not been increased since 1990.When you increase the FICA payroll tax rate, then you will have money sitting in a trust fund waiting for you.
How badly do you want it?
Quote:
Originally Posted by LAWS
Such high returns were possible because there were many workers paying into the system and only a few retirees taking benefits out of it.
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That is patently false too...first, Social Security is an insurance program, not a retirement pension plan hedge fund money market savings investment 401(k) plan; and secondly, it is not her fault that she happened to be born at the right time.
Quote:
Originally Posted by LAWS
In 1950, for instance, there were 16 workers supporting every retiree. Today, there are just over three. By around 2030, we will be down to just two.
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That's wrong.
As of December 24, 2012 there are 2 full-time workers for each Social Security beneficiary. That has more or less been the case since about 2009.
Quote:
Originally Posted by LAWS
As with all Ponzi’s scheme, when the number of new contributors dries up, it will become impossible to continue to pay the promised benefits. Those early windfall returns are long gone. When today’s young workers retire, they will receive returns far below what private investments could provide.
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What private investments provide are irrelevant.
Logic and common sense dictates that you should drive for a three-fold retirement scheme:
1] some form of employer-based benefit package; and
2] your own personal savings and investments; and
3] end-of-life-retirement insurance
Social Security, which is an insurance program, fulfills the role of #3.
In a Perfect World™ you'd have the advantage of having all three, but for any number of reasons, not everyone has an employer plan, and some people's lives make The Walking Dead look like an amusement park, so all the have is Social Security.
It is subsistence living...that's it. If all you can afford is an 8' x 10' room in a boarding house, then too bad, and if you can't afford that, then I guess you'd best start sucking up to your kids and other family members so you have a place to stay.
Amused....
Mircea
Quote:
Originally Posted by urbanlife78
Bingo, it is amazing the amount of garbage that gets pushed and passed off as to what Social Security really does. It is actually one of the best run programs in the country and the only thing putting any burden on it right now is the retiring baby boomers who won't be alive forever and thus in time the issues with Social Security will balance itself out with only minor changes to handle the life expectancy of Americans.
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You have no idea how incredibly wrong you are. It would behoove you to actually read one of the Social Security reports in your life-time....so you can see stuff like this....
For the combined OASI and DI Trust Funds to remain solvent throughout the 75-year projection period, lawmakers could:
(1) increase the combined payroll tax rate during the period in a manner equivalent to an immediate and permanent increase of 2.61 percentage points (from its current level of 12.40 percent to 15.01 percent);
(2) reduce scheduled benefits during the period in a manner equivalent to an immediate and permanent reduction of 16.2 percent;
(3) draw on alternative sources of revenue; or (4) adopt some combination of these approaches
That's from Page 21.
That completely contradicts and debunks your claim of
"only minor changes to handle the life expectancy."
If you drank the "
Raising the Retirement Age Will Save Social Security" flavored Kool-Aid you might want to drink some Kaopectate as an anti-dote.
You are presently short $20.5 TRILLION in benefits. That short-fall will not disappear in the next 75 years based on wishful thinking. That would be part of your unfunded liabilities. When Social Security's 2013 Report comes out, you'll owe even more than that, and for each and every year thereafter, you will owe more and more, that you cannot ever pay.
Social Security, like many cradle-to-grave Ponzi Schemes functions on three variable components:
1] Labor Force Participation Rate
2] Wages
3] Tax Levels
High Labor Force Participation Rates ensures high Worker-to-Retiree ratios. In conjunction with high Wages, that permits lower Tax Levels.
Let's examine the facts....same data, different sources.
National Average Wage Index
1951-1960: 4.09%
1961-1970: 4.45%
1971-1980: 7.31%
1981-1990: 5.34%
1991-2000: 4.35%
2001-2010: 2.64%
Year/Wages per Return/Pct Change
1995 $38,259
..... 0.88%
1996 $38,503
..... 0.64%
1997 $39,600
..... 2.85%
1998 $41,073
..... 3.72%
1999 $42,027
..... 2.32%
2000 $43,066
..... 2.47%
2001 $42,609
..... -1.06%
2002 $41,952
..... -1.54%
2003 $41,718
..... -0.56%
2004 $42,425
..... 1.70%
2005 $42,296
..... -0.31%
2006 $42,206
..... -0.21%
2007 $42,430
..... 0.53%
2008 $41,773
..... -1.55%
Your wages are declining due to the fact that it is a global economy and the Laws of Economics reign supreme. You started losing manufacturing and other jobs that must compete globally with the rise of India and China in the 1990s. With BRIC -- Brasil, Russia, India and China -- fully recovered and expanding, they started nation-building around the world, expanding the economies of more than a dozen countries. Those countries now all compete globally against you, and you don't stand a chance because of the huge wage disparity between Americans and the rest of the world.
This is not a temporary situation. It is, for all intents and practical purposes, permanent.
You are unable to deal with China. A shift is currently underway from Southeast Asia to Southwest Asia. You will be unable to deal with India. It will eventually shift to Central Asia, then the Middle East, then sub-Saharan Africa.
Sub-Saharan Africa has nearly 1 Billion people who earn $300 to $800
per year.
That might be "slave wages" to you, but in reality, those are top premium wages set in accordance with Laws of Economics as they relate to Supply & Demand in those countries.
There is no possible way you will be able to compete globally in that arena either.
If you are offended by Reality™ then gouge out your eyes or something.
So if wages are stagnant/declining then we need to offset that by raising the Tax Level or increasing the Labor Participation Rate or both.
What has government done? Neither.
At present, you have 2 full-time workers per retiree. That is a function of your Labor Participation Rate. An unemployment rate of 5% without a corresponding Labor Participation Rate is a total fail. Right now, the rate is 63.5%.....not enough. Worse than that, you lost 530,000 full time jobs in November, and as I recall, you all were jumping for joy because lots of part-time employees got hired.
If you want to fund Social Security, this where you need to be job-wise 156,271,000 and at the moment, you are 12.7 Million jobs short.
So if your Labor Participation Rate declines, and your Wages decline, that means you need to raise Taxes to off-set the short-fall.
What has government done? Nothing.
Anytime you're ready to deal with Reality™ go ahead and post some facts.....and I do mean facts...as in numbers....as in Show, Don't Tell.....as in not 50 links to idiotic web-sites with some moron's fantastical view of how things might be on Fantasy Island if only Kim Kardashian was there.
You all need to get with the program. You got one shot to fix this and if you mess it up, because you don't know what you're doing, it'll just create more problems than you could ever deal with.
Problematically...
Mircea