Understanding the Social Security scam

[Copernicus]

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Yes corporations do it for economic benefits.

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What do you mean by this? A corporation with revenue less than the sum of it's operating expenses and interest on loans would have a hard time finding investors, unless it was a severe outlier with some hope of massive future revenues.

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The favorable tax treatment of debt is why more or less. Why do they have to have revenue that is less than it's current operating expenses and interest on loans in order to hve corporate debt on the balance sheet?

I guess we'r now going to move towards a hijack of the economic benefits of government deficit spending. Why not just start a new thread on that topic?

I can't believe that with as much ranting and raving about the SS scam being perpetrated by the government in lending out the excess trust fund income that people don't have alternatives to that. It's amazing to me all the attempts at dodging the question simply because they don't like it. I guess I just have to conclude that the railing against the government lending money to itself is a smokescreen for just wanting to change the system entirely. or an overall anti-government agenda

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[TomCollins]

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I see that the only thing you or TomCollins has as an alternative is to get rid of social security. I doubt that anyone else has any other ideas regarding what to do with the excess being paid to the trust fund either btw.

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Incorrect, as I clearly stated in another post. Of course, I would prefer that there was no social security. However, I think the following alternatives are better than the current system.

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Social Security is not a retirement plan or a welfare plan for poor seniors, it is a government entitlement program funded by revenue to the government. Getting rid of the payroll tax is better than the current system. I think individual accounts would be even better. An opt-out system would be best.

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So in case that was too confusing, the following is what I would prefer, in order of best to worst. There are some ideas that could be combined, so I didn't make a full matrix.

1) Scrap social security entirely by buying out seniors with annuities.
2) Have social security as an opt-out system paid for by those in the program.
3) Individual accounts where individuals OWN their retirements, but they are controlled by the government.
4) Partial individual control.
5) Current system without payroll taxes.
6) Current system.


And you say I don't have alternatives?

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Alternatives with what to do with the excess money being paid to the trust fund. I already realize that you'd like to change the system drastically. I would too but that's not what I was asking.

Edit: I'd be interested in knowing if you though SS would be significantly less of a scam if the excess money was lent to the European Economic Union. I realize that maintaining the current system is your least preferred alternative and this wouldn't change that.

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It would be considerably less of a scam since you are investing in something rather than writing IOUs to yourself.

[adios]

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I edited my reply. Instead of hijacking this thread about the evils/benefits of government deficit spending just make a separate one.

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I don't really want to start a separate debate about government spending, but you seem to be defending that the government does it by saying "Hey, private business does it too", which I don't really see as being accurate.

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No not necessarily am I defending it. Mosely chimed in with a claim that the U.S. government doesn't meet it's debt obligations and never has. I pointed out that treasuries are considered to have no default risk and thus what he said is total baloney. Then he claimed that having permenant debt is inherently evil and I pointed out that it happens all the time just look at corporate balance sheets as one example. He pointed out an economic benefit to corporations using debt and I pointed out that there are economic benefits to governments using debt albeit different ones.

[adios]

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[TomCollins]

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Its the same thing as if I loan my money to my friend who will repay me with interest. If you take a loan to yourself and promise to pay yourself back 2x, you aren't making any investment. This is because you would have the 2x ANYWAY.

I am not surprised by Copernicus's direct concealment of the program, but I am pretty surprised you fail to understand the difference.

[Copernicus]

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Its the same thing as if I loan my money to my friend who will repay me with interest. If you take a loan to yourself and promise to pay yourself back 2x, you aren't making any investment. This is because you would have the 2x ANYWAY.

I am not surprised by Copernicus's direct concealment of the program, but I am pretty surprised you fail to understand the difference.

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And Im not surprised that you let your polictical agenda cloud your reasoning or justify your lying about what you do understand.

"If you take a loan to yourself and promise to pay yourself back 2x, you aren't making any investment. This is because you would have the 2x ANYWAY."

This is obviously true, and has nothing whatsover to do with the prudence of doing just that. If your savings account yields 5% and you have an investment opporunity "guaranteed" to yield 8%, then "borrowing from yourself" makes perfect sense, even though your net worth is unchanged at the moment of the transaction.

If you're an investing savant and your investments are earning 10% (but have exhausted those opportunities), but you can borrow at 6%, then go out and finance the purchase of your guaranteed 8% investment..even though at the moment of your transactions your net worth is unchanged. Its not that hard to understand on a personal level.

When you escalate it to the government level the transaction is fundamentally the same as the first transaction, although the decisions carry fiscal/monetary/risk and intergenerational consequences that in fact make it MORE appropriate for the Government to "borrow from itself".

If a thread starts on deficit spending many of the issues overlap, and of course, there are situations where deficit spending is appropriate and others where it isn't. The conflation of spending and funding discussions only serve to obfuscate the issues, which are totally independent, but are a common tactic in these attempts to disseminate myths about Social Security, so keeping spending out of this discussion can only improve it.

[TomCollins]

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Its the same thing as if I loan my money to my friend who will repay me with interest. If you take a loan to yourself and promise to pay yourself back 2x, you aren't making any investment. This is because you would have the 2x ANYWAY.

I am not surprised by Copernicus's direct concealment of the program, but I am pretty surprised you fail to understand the difference.

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And Im not surprised that you let your polictical agenda cloud your reasoning or justify your lying about what you do understand.

"If you take a loan to yourself and promise to pay yourself back 2x, you aren't making any investment. This is because you would have the 2x ANYWAY."

This is obviously true, and has nothing whatsover to do with the prudence of doing just that. If your savings account yields 5% and you have an investment opporunity "guaranteed" to yield 8%, then "borrowing from yourself" makes perfect sense, even though your net worth is unchanged at the moment of the transaction.

If you're an investing savant and your investments are earning 10% (but have exhausted those opportunities), but you can borrow at 6%, then go out and finance the purchase of your guaranteed 8% investment..even though at the moment of your transactions your net worth is unchanged. Its not that hard to understand on a personal level.

When you escalate it to the government level the transaction is fundamentally the same as the first transaction, although the decisions carry fiscal/monetary/risk and intergenerational consequences that in fact make it MORE appropriate for the Government to "borrow from itself".

If a thread starts on deficit spending many of the issues overlap, and of course, there are situations where deficit spending is appropriate and others where it isn't. The conflation of spending and funding discussions only serve to obfuscate the issues, which are totally independent, but are a common tactic in these attempts to disseminate myths about Social Security, so keeping spending out of this discussion can only improve it.

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This makes sense if you consider the payments that the government makes as "investment". For example, if spending $x today meant an increase of revenues in the future by $2x, you could argue that this is an investment. Is this your position, Copernicus? That when the federal government spends money, its actually resulting in an asset? What assets do we have to show for the $1T spent in Iraq?

The key difference in our debate (and with natedogg) is that we think when the government spends money its like buying hookers and blow (or other things that are not assets), and investing in a company that will appreciate in value. Have I understood your position correctly? I don't think we disagree one bit about the accounting being done.

[Copernicus]

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Its the same thing as if I loan my money to my friend who will repay me with interest. If you take a loan to yourself and promise to pay yourself back 2x, you aren't making any investment. This is because you would have the 2x ANYWAY.

I am not surprised by Copernicus's direct concealment of the program, but I am pretty surprised you fail to understand the difference.

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And Im not surprised that you let your polictical agenda cloud your reasoning or justify your lying about what you do understand.

"If you take a loan to yourself and promise to pay yourself back 2x, you aren't making any investment. This is because you would have the 2x ANYWAY."

This is obviously true, and has nothing whatsover to do with the prudence of doing just that. If your savings account yields 5% and you have an investment opporunity "guaranteed" to yield 8%, then "borrowing from yourself" makes perfect sense, even though your net worth is unchanged at the moment of the transaction.

If you're an investing savant and your investments are earning 10% (but have exhausted those opportunities), but you can borrow at 6%, then go out and finance the purchase of your guaranteed 8% investment..even though at the moment of your transactions your net worth is unchanged. Its not that hard to understand on a personal level.

When you escalate it to the government level the transaction is fundamentally the same as the first transaction, although the decisions carry fiscal/monetary/risk and intergenerational consequences that in fact make it MORE appropriate for the Government to "borrow from itself".

If a thread starts on deficit spending many of the issues overlap, and of course, there are situations where deficit spending is appropriate and others where it isn't. The conflation of spending and funding discussions only serve to obfuscate the issues, which are totally independent, but are a common tactic in these attempts to disseminate myths about Social Security, so keeping spending out of this discussion can only improve it.

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This makes sense if you consider the payments that the government makes as "investment". For example, if spending $x today meant an increase of revenues in the future by $2x, you could argue that this is an investment. Is this your position, Copernicus? That when the federal government spends money, its actually resulting in an asset? What assets do we have to show for the $1T spent in Iraq?

The key difference in our debate (and with natedogg) is that we think when the government spends money its like buying hookers and blow (or other things that are not assets), and investing in a company that will appreciate in value. Have I understood your position correctly? I don't think we disagree one bit about the accounting being done.

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I haven't stated a position on spending, other than that it doesnt belong in this discussion, because (other than the policy decision to have a national retirement system and that spending) spending has nothing to do with Social Security.

On the parenthetical I disagree that spending on a national retirement system is analagous to "hookers and blow", any more than your IRA or 401(k) plan is. (And if youre still spending your money on hookers and blow in retirement age, more power to you!)

With regard to the Government investing, I don't think the Federal Government should have any net financial assets other than short term cash flow needs. Introduction of financial assets to the government of a capitalist country creates a myriad of issues with regard to how to allocate those investments so it doesnt distort the markets, issues with regard to risky assets and the inter-generational transfer of risk, fiscal and monetary issues that overlap with the Federal Reserve policy decisions and may in fact be in conflict with good fiscal and monetary policy etc.

Of course once you believe that the Government should have no net financial assets, the only way to deal with a cash flow surplus such as Social Security generates is to have Social Security invest in Treasury issues (ie have the government "borrow from itself"). Of course the alternative of making Social Security completely pay as you go, and have no surplus whatsoever would eliminate the investment problems. However that violates basic accounting principles in that you are deferring the entire cost of current worker's benefits to future generations, that are not directly benefiting from those workers' efforts. And of course the cries of "scam, Pyramid scheme, Ponzi scheme" would be even louder, to compensate for the rhetoric of "there is no Social Security Trust Fund".

[TomCollins]

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I haven't stated a position on spending, other than that it doesnt belong in this discussion, because (other than the policy decision to have a national retirement system and that spending) spending has nothing to do with Social Security.<font color="red"> Except you called it an investment. You compared it to taking money out of a savings account and putting it in a better investment. Your words, not mine. If you take money out of your savings account and spend it on hookers and blow, but write yourself IOUs, the only way to pay for those IOUs in the future is to increase your revenue to meet your typical obligations along with paying back your IOUs.</font>

On the parenthetical I disagree that spending on a national retirement system is analagous to "hookers and blow", any more than your IRA or 401(k) plan is.<font color="red">I never compared the retirement system to hookers and blow, I compared it to the government spending the money taken frmo the SS Trust Fund to it.</font> (And if youre still spending your money on hookers and blow in retirement age, more power to you!)

With regard to the Government investing, I don't think the Federal Government should have any net financial assets other than short term cash flow needs. Introduction of financial assets to the government of a capitalist country creates a myriad of issues with regard to how to allocate those investments so it doesnt distort the markets, issues with regard to risky assets and the inter-generational transfer of risk, fiscal and monetary issues that overlap with the Federal Reserve policy decisions and may in fact be in conflict with good fiscal and monetary policy etc.<font color="red"> So how is this an investment? You really are claiming its an investment, but its just a way to postpone the repayments that the funds are used for into the future. (Hookers and blow + IOUs)</font>

Of course once you believe that the Government should have no net financial assets, the only way to deal with a cash flow surplus such as Social Security generates is to have Social Security invest in Treasury issues (ie have the government "borrow from itself"). Of course the alternative of making Social Security completely pay as you go, and have no surplus whatsoever would eliminate the investment problems. However that violates basic accounting principles in that you are deferring the entire cost of current worker's benefits to future generations, that are not directly benefiting from those workers' efforts. <font color="red">So the IOUs are an Asset or not? You can't make up your mind. Normally when I buy a bond, I would consider it an asset. But when you buy bonds against yourself, you aren't doing a damn thing.</font>

And of course the cries of "scam, Pyramid scheme, Ponzi scheme" would be even louder, to compensate for the rhetoric of "there is no Social Security Trust Fund". <font color="red">Have they fooled you, or would your consulting business go away if the real way it was run became more well known and it was all accounting shenanigans.</font>

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[adios]

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Its the same thing as if I loan my money to my friend who will repay me with interest. If you take a loan to yourself and promise to pay yourself back 2x, you aren't making any investment. This is because you would have the 2x ANYWAY.

I am not surprised by Copernicus's direct concealment of the program, but I am pretty surprised you fail to understand the difference.

[/ QUOTE ]

And Im not surprised that you let your polictical agenda cloud your reasoning or justify your lying about what you do understand.

"If you take a loan to yourself and promise to pay yourself back 2x, you aren't making any investment. This is because you would have the 2x ANYWAY."

This is obviously true, and has nothing whatsover to do with the prudence of doing just that. If your savings account yields 5% and you have an investment opporunity "guaranteed" to yield 8%, then "borrowing from yourself" makes perfect sense, even though your net worth is unchanged at the moment of the transaction.

If you're an investing savant and your investments are earning 10% (but have exhausted those opportunities), but you can borrow at 6%, then go out and finance the purchase of your guaranteed 8% investment..even though at the moment of your transactions your net worth is unchanged. Its not that hard to understand on a personal level.

When you escalate it to the government level the transaction is fundamentally the same as the first transaction, although the decisions carry fiscal/monetary/risk and intergenerational consequences that in fact make it MORE appropriate for the Government to "borrow from itself".

If a thread starts on deficit spending many of the issues overlap, and of course, there are situations where deficit spending is appropriate and others where it isn't. The conflation of spending and funding discussions only serve to obfuscate the issues, which are totally independent, but are a common tactic in these attempts to disseminate myths about Social Security, so keeping spending out of this discussion can only improve it.

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A real world example of lending money to yourself is borrowing from your 401k and paying yourself back with interest. It's not like that doesn't happen ever, it happens quite frequently. If you're not very dilligent, frugal whatever, probably don't want to do it. If you are though it can be a rational thing to do.