Understanding the Social Security scam

[mosdef]

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Since the cap is 97,500 (we'll say 100k), anyone making less paid ssi taxes on 100% of their monies and had 48% of those ssi taxes go to paying the deficit.

Those football players making 2m a year, were taxed for ssi on 5% of their gross income.

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They also only get benefits based on 5% of their gross income, so this is hardly a flaw.

Then again, you made contributions to my pension plan on 0% of your earnings and I had to make contributions on 100% of my earnings. ZOMG MY PENSION PLAN IS A GET RICH SCHEME FOR YOU!!!!

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Your thinking is flawed. The ssi surplus cannot be repaid. That's 3 trillion dollars of the 10 trillion national debt that was paid for with ssi surpluses.

I was wrong in my original thread when I quoted 2t, it is 3 trillion.

http://www.yellowstone-national-park...s/ssi-fund.htm

If those making 97.5k were paying into a retirement program, then it would be fair and you would be right.

But that is not the case. The Gov't is using the excess to pay the deficit down before going out to the public and borrowing the rest, with no way to repay it, without raising taxes.

So, by raising taxes, they will be taxing us again to pay back our ssi surplus.

It is also a fact, that all they need to do to keep ssi afloat, is raise the cap on ssi taxes to 150k. ZOMG!! A football player making 2m a year, would have to pay ssi taxes on 7.5% of his gross!

We are fast approaching the day, when there will be no ssi surplus due to the outlays to the baby boomers, and congress will not have the 350b each year in ssi taxes to pay down the deficit. Instead they will have to go out and borrow to pay back the 3 trillion to the ssi fund.

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That's all well and good, but none of it is relevant to the idea that the poor are getting a raw deal because they make contributions on a greater percentage of their earnings. The distortions created by the mechanics of the system do NOT find their root at the contribution/benefit formula. Consider the alternative: the rich pay based on 100% of their earnings but get a benefit based on 5% of their earnings. This is better?

[Moseley]

"That's all well and good, but none of it is relevant to the idea that the poor are getting a raw deal because they make contributions on a greater percentage of their earnings. The distortions created by the mechanics of the system do NOT find their root at the contribution/benefit formula. Consider the alternative: the rich pay based on 100% of their earnings but get a benefit based on 5% of their earnings. This is better?"

That's not the way it works. The more you pay in to ssi, the more you get when you retire. So the football player would get more ssi at 62 paying on 150k of his income.

We would not have a problem keeping ssi afloat, if the surplus had not been used to pay down the deficit and the ceiling on ssi taxes had increased with inflation.

The MAJOR problem is: Congress is having to come up with a way of dealing with the fact that they will no longer have 300+ billion in ssi surpluses to pay the deficit, while at the same time, having to come up with billions every year to pay back the 3 trillion ssi surplus.

[andyfox]

Like just about everything President Bush has spoken of as a "big" priority, he has accomplished nothing. This goes for Iraq, ilegal immigration, social security reform, and energy policy.

You and I are on opposite ends of the political spectrum, but we agree that:

1) the tax is onerous on those who can least afford it, a regressive tax.

2) the "trust fund" has simply been used to pay for other things, to the tune of $1,700,000,000,000 over the period from Reagan to Clinton.

3) cognitive dissonance and double-speak are the lingua francas of American politics.

4) the whole thing is a giant smokescreen to enable the government to justify onerous taxes on the poor and middle class and then fund massive giveaways to the rich.

[mosdef]

You and I also have varying degrees of overlap and conflict in political philosophies and also both agree that social security is a disaster. The question is: how to fix it?

Wind it up? We could buy annuities for pensioners from private insurers and distribute the remainder to non-pensioners.

Individual accounts? It would clearly eliminate ALL of the intergenerational wealth transfer issues that are associated with a defined benefit plan. The issue is that there would be risk associated with the investment returns, and the pool of assets would strain the market. General market production would skyrocket though.

Privatization? All the obligations could be given to the market to sort out via annities and investment accounts.

Anything else?

[andyfox]

I don't know what makes sense. Any minor modification, much less the major ones you speak of, will surely have a hard time, AARP is one of the more powerful lobbbies.

[adios]

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1) the tax is onerous on those who can least afford it, a regressive tax.

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Don't they receive payments from the government when they reach retirement age given they meet all the other requirements?

One major objection (among many) I have with SS is that if you're earning an income your benefit payments are reduced. If you socked the money paid to SS into an IRA it wouldn't matter if you had earned income or not.

[andyfox]

Meanwhile, they have to pay the taxes while they're trying to support their family, send their kids to college, etc. Bill Gates pays the same amount as I do, and I pay the same amount as someone making a tenth of my income.

[mosdef]

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Meanwhile, they have to pay the taxes while they're trying to support their family, send their kids to college, etc. Bill Gates pays the same amount as I do, and I pay the same amount as someone making a tenth of my income.

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But they all get the same thing out, so it's not intriniscally "unfair".

I guess this question must be answered: do you expect the SS system to redistribute wealth or to defer wealth? In my mind, the primary purpose of pension plans is to defer wealth.

[adios]

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Meanwhile, they have to pay the taxes while they're trying to support their family, send their kids to college, etc. Bill Gates pays the same amount as I do, and I pay the same amount as someone making a tenth of my income.

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But they all get the same thing out, so it's not intriniscally "unfair".

I guess this question must be answered: do you expect the SS system to redistribute wealth or to defer wealth? In my mind, the primary purpose of pension plans is to defer wealth.

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It's defered consumption but otherwise you're correct. Also the EIC is available to many lower income earners which certainly offset their SS contributions. Finally SS does redistribute income:

SS Income Redistribution


If I Bill Gates contributes as much to SS as I do, he should get the same distribution as I do. Don't understand why he should get less. BTW I think this is exactly what will happen in the future, the laws will change and there will be many people who contribute but won't get a dime out of it.

[adios]

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1. The trust fund really is an asset. Just as when you purchase a good, your networth hasn't changed. You now own the good.
response: This is patently disingenuous. The trust fund is more like an accounting of how much you spent on hookers and blow. I'd really like to have one of these apologists point me to the "assets" that the trust fund purchased and how the govt will liquidate it in order to pay my checks down the road.

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Actually part of the interest paid by the Treasury department on the national debt goes to the trust fund.

From page 99 of the following linky:

Historical Budget Data

900 Net interest:
For 2007 (in millions)

Interest on Treasury debt securities (gross) 405,866
Interest received by on-budget trust funds –71,574
Interest received by off-budget trust funds –97,722
Other interest –7,306
Other investment income –2,661
Total, Net interest 226,603
(On-budget) (324,325)
(Off-budget) (–97,722)

So it appears that there is an accounting transaction entered for the federal government re-imbursing the trust fund.