Fed Is Systematically Destroying Social Security And The Retirement Plans Of Millions

It would have an equal impact on the poor. In fact, if tax were based on real measure of wealth, instead of "income", and applied equally, the poor would pay almost nothing.

why not make the system voluntary ? Do you believe government has to hod our hands ?

yes

 

Yes, because what could go wrong if we let people who are barely making it, choose to spend that money now, instead of saving it for retirement?

 

And what is the "real measure" you propose?

I wonder what a totally voluntary system might look like (with no safety net how would the natural incentives play out), but due to democratic and political constraints I don't think it's in the realm of possibilities.

 

You don't know Ryans proposal. You have 2 options.

One is to stay in SS just as it is now, you keep paying the payroll tax just as it is now. If you are on SS, you keep it and it stays just as it is.

The other option is to opt for a personal savings account, you still pay the same payroll tax but a portion of it goes into your savings account, the rest of the payroll tax still goes to SS. The savings account is managed by the govt and you can only withdraw from it when you reach retirement age. Its basically an IRA funded through your payroll tax and managed by the govt. Unlike SS, the savings account is your account and is a real "lock box".

Personally I want out of SS completely. I'll keep paying half the payroll tax, but let me keep the other half and put it in a regular IRA.

And means test SS. People like Warren Buffett (who gets SS checks) and Bill Gates should never qualify for SS.

 

A personal savings account you own, that no one can keep you from spending.

Yeah, can't see how that could go wrong.(<-----E-sarcasm)

 

The savings account idea is a great one!!! Is it interest bearing account? So what would happen if the interest being paid is virtually zero and actual inflation was say 5% yearly? That doesn't sound like a very good deal to me if you are on fixed income or poor. Who wrote that plan? Jamie Dimon? Ben Bernanke? Lloyd Blankfein?

Why does the govt have ANY business taking SS or any other retirement funding out of my check?

 

because though you are responsible enough to vote for your leaders, you are not responsible enough to live your life without their benevolent care taking, ensuring you don't waste your own money.

 

what are the things that constitute real wealth ?

why do free individuals need bureaucrats to prevent them from squandering their own future ?

 

why do we need "prevented" from spending anything ?

 

Please learn to read. Its a savings account managed by the govt with restrictions similar to an IRA - you cannot take funds out until you reach SS retirement age. The funds are yours in the sense that the govt cannot take the funds and spend them on some other got program (as happens with SS), and when you die any funds remaining goes to your beneficiaries.

 

The account is invested in govt selected items such as govt bonds and blue chip stocks. If the interest is zero or near zero - like it is now thanks to the Fed and Treas - then you are screwed.

Current retirees are getting screwed right now because of the artificially low interest rates, rates kept low by the govt for the purpose of allowing the govt to borrow a lot of money at very low rates. The govt places itself above the people, obama/bernanke/geithner don't mind killing retirees and driving them into poverty if its in the govts best interest.

These are the same people who are in charge of SS. The govt raided the SS "lock box" ages ago. SS is a ponzi scheme, nothing more, and it will collapse.

It has no business to do that.

 

It could be handled just like we do bonds, two positive things would occur as a result. Since selling bonds is basically contracting the money supply it would be an inflation fighter and second it increases the US's capital reserves hopefully enough to get our AAA rating back.

I could tell you why we do it, but can't answer whether it's an appropriate role for the state.

You tell me since those are the things you think we ought to tax.

In some cases it's cheaper than the alternative. Neither is free.

 

Remove the special privileged tax exemptions which cap SS taxes at $110k of income and exclude it from investment income that mean billionaires and millionaires don't effectively pay SS and problem fixed. You could probably lower the rate for everyone.

 

You completely misunderstand Social Securities relationship with the Federal government. The Social Security Trust buys US Treasury Bonds that pay the current market rate interest. The only difference between the bonds SS buys and those sold on the open market, and what makes them special, is that the bonds SS buys are redeemable on demand while all other Treasury bonds are redeemable only at maturity. The idea that SS bonds do not count against the national debt is a fiction. The concept that SS bond purchases do not count against the deficit is an invention used by the republican party to promote tax cuts.

So, these individual investment funds should be invested in the safest security available, which is US Treasury Bonds. Funny, that is what SS does now. As a matter of fact SS has collected $2.8Trillion in excess contributions, mostly from the baby boomers, and invested it in US Treasury Bonds. SS is beginning to redeem them from the Treasury to pay for the baby boomers retirement and will continue to do so until the bonds are all redeemed, which is projected to be sometime after 2046 if economic trends continue. Interestingly, if the current income limit on SS contributions was eliminated the SS fund would remain solvent indefinitely.

Personally I am not against a pension scheme where individual contributions are guaranteed against debasement or default but the Ryan plan is not really clear on that. It does not guarantee contributions against inflation or bad investment decisions. SS is required by law to invest its excess contributions in US Treasury Bonds but under the Ryan plan individual pension contributions outside traditional SS are not required to. In other words they can become just another IRA. In the financial crises of 2008-9 most IRA's lost 40% or more of their value. It is a little disconcerting that the Ryan plan contains no guarantees that those close to retirement will be protected from such situations.

There is another problem with the Ryan plan. The transition from the defined benefit plan of SS to his partially defined benefit, partially defined contribution plan is severely lacking in detailed finanical analysis. Also, we can assume the goal of the Ryan plan is to transition SS from purely defined benefit to purely defined contribution. This could take 50 years from its inception if the youngest people currently contributing to SS choose to continue in the defined benefit plan.

How the pensions of current retirees and future retirees for the next 50 years, who may live another 30 year or longer, will be funded by an immediate redirection of of SS contributions to IRAs is not really apparent. The Ryan plan will create massive shortfalls in the ability of SS to pay promised pensions for the next 80 years, shortfalls that the federal government will deal with by cutting pensions to those who need them most if Ryan gets his way.

A note of caution, Chile transitioned from a defined benefit to a defined contribution plan in the 1980s. The plan included government employees and large employers. Employees were able to choose between staying in the traditional defined benefit plan or joining the new defined contribution plan which would be overseen by the government but operated like IRAs by the private sector, basically the Ryan plan. After 20 years the first of the people who were given this choice began to retire. The people who had joined the defined contribution plans found themselves with 5% of the pensions of those who stayed in the traditional plan, not 5% more, 95% less. The middle class took to the streets and the government had to hurriedly pass legislation to borrow $Billions to make these people's pensions whole.

So, whatever you think about how bad SS is, it does provide a self funded path to retirement income for everyone for at least the next 40 years or so and could do so indefinitely with only small changes. Privatization, even partial, removes any guarantee that retirees will be assured of income and increases to probability that government will be required, most likely in a time of economic downturn when it can least afford it, to dedicate revenues to shoring up failed pension funds due to public clamour.

 

you can do better than that

if you buy into the flawed logic that society is responsible for your mistakes.

 

Ditto.

I either feed you or deal with your miscreant behavior. I'll go with whichever is cheaper since my options are limited.

 

Interesting, Thanks for posting this.

Yes, all that interest that would othewise have gone to social security has essentially been diverted to the Federal Reserve bank through their "quantitative easing" policy.
You can't get something for nothing - that is the first rule of economics. All that money the Fed is spending has to come from somewhere.

 

Sorry no cigar.

Whern it comes time to redeem those bonds so the SS program can pay people their benefits, the cash used to redeem the bonds does not exist. The priniciple and the interest on those bonds exists only on paper. The govt did not take the prinicple and use it in a manner that will return the prinicple plus interest. Also the govt has been deficit spending for decades and does not have cash available to simply pay the principle and interest. The govt has only 2 options to pay those bonds when they come due - print money, or borrow money. This is true for all US govt bonds.

SS is a pay as you go system, thats why the demographics are such a big issue with the solvency of SS. Annual SS payments are paid from the payroll taxes. Some years there is an excess of payroll tax, but the vast majority of the tax is spent on current year benefits. And the SS funds will be exhausted in 2033 not 2045 (read the SS Trustee report).

 

if you are going to play the completely ignorant game, the discussion is over.

fasle dichotomy.

 

There is a third, more quotidian option, raise taxes. Reagan did it in 1986 particularly to help SS, Bush 1 and Clinton did it. Perhaps you could explain why raising taxes is not something a government can do to pay its debt. Maybe there is some peculiar circumstance in the US since there is a long history of nations successfully raising taxes to pay their debts. Considering that the federal tax burden in the US as a percentage of GDP is the lowest in over 60 years while Federal spending has remained constant, it might be a good time to reconsider tax revenues and their relationship to spending, which has gotten completely out of whack, not so much from increased spending as from tax cuts.

The idea that cutting taxes will reduce spending does not seem to be working. If anything tax cuts appear to be more coincident with spending increases. All it has done is make for larger deficits and increased debt in times of economic prosperity which led directly to the result of a government hamstrung when the economy turned down. As anyone who is not a complete imbecile about money management knows, when times are good you pay off debt and accumulate savings so that when times turn bad you have something to save you. In the 2000s the republicans did the opposite, the economy was booming and they kept cutting taxes and running up deficits and doubling the debt instead of paying it off so when things went bad in 2008 they went really really bad and the government had to borrow $Trillions before Obama even stepped into office.

SS was only a pay as you go system for a few decades after its founding but since the 1970s that has not been true because it has been accumulating a surplus to pay for future retirees. If it had continued as a pay as you go system it would not have accumulated almost $3Trillion in US Treasury bonds since this seem a little much for just putting aside the incidental excess of a few years. SS has been deliberately accumulating a surplus since the 1980s so that the baby boomers retirement would be funded without borrowing.

Look at it this way, the baby boomers paid for their parents SS while also paying in even more so that their children would not be so burdened by their retirement. The only failure here is the failure of the republican party to be responsible stewards of the Federal government's role in this. They had control at the most critical time and they tossed SS under the bus, deliberately.

 

It amazes me how many people just don't think.

Think. If under Romney's plan folks drop out of SS, and then a portion of their payroll tax doesn't go to SS, how are they going to pay the benefits of current retirees, when there already isn't enough money to pay for projected benefits?

Think folks. Don't just accept whatever they sell you.

 

It was really in 1983 that SS stopped being a pay-go, and the FICA taxes were increased, that SS supluses started to grow.

Which were stolen to fund tax cuts for the rich in the greatest steal from the poor to give to the rich scheme since the Sheriff of Nottingham.

 

You answered a question with a question, whether that was to be evasive or obtuse remains to be seen. How about back tracking and giving it another go.

Only if you live in a bubble.

 

You asked about wealth measurements other than "income", when you know darn well what wealth is. I'd rather have a conversation than play the debate game.

would you say that a person with no assets, who has spent years foregoing income to train himself, racking up significant costs to establish his occupation, who now, with significant a debt burden, who for the very first time manages to starts earning income, and manages to earn >$250K between two arbitrary dates on the calendar, should be considered "wealthy" based on a one time "income" ?

only if you capitulate to the support me or else philosophy.

 

Do I? Is what "wealth" is, so easily understood? It's not dollars in the bank, it's not the amount of land or gold you own, that's why it matters. To most it's understood in relative measures so it's important to make sure we're talking about the same thing.

Agreed.

Nope. I do believe income tax ought to be progressive, but not punitive. Taxation is going to exist, it's fantasy land to think otherwise all things considered, so with that in mind what do you think we ought to tax other than income (in that I'd include all types of income).

Or if I acknowledge the undeniable political and democratic realities.