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Monday, July 11. 2011
Or the upcoming Obamacare taxes.
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I'm far from an expert on this, and I'm as much asking a question as making a comment.
I disagree with the premise of the quoted piece, at least as far as Social Security goes. Are you telling me that had I paid/been forced to pay into some private investment vehicle the same amount that I (and my employer) did in Social Security over the years, that I wouldn't be better off at collection time? I highly doubt that.
So I don't get how "America(ns) aren’t willing to pay in taxes what their Social Security... benefits are worth..." (Or should be worth, after said investment.) I think the benefit should be more, relative to the investment.
I hate all socialized spending, btw. If I was king, I would do away with SS, welfare, Medicare, gov't prescription drug plans, etc. Gradually, though, as to not screw anybody who paid into said programs.
Howdy Big Al
That's kind of my question, too. I might or I might not have been smart enough to get into a pension fund when I was young. As it happens, I was in the Air Force for 20 years, so I paid into SS plus I earned a pension.
I've been in my employer's 401k since its inception.
If I'd had the 12-15% SS tax money over my working life, I hope I'd have been smart enough to stash it. As it is, I haven't felt like I had 6-7.5% of my income to stash. Raising kids, buying a house, a few hobbies -- stuff mounts up. If my share of SS, or mine and my employer's, had gone into real investments, we'd surely all be better off at this point.
As for a feeling of what we deserve: yes, I do feel that I've done my part. Compelled, at that.
Our benefits are going to be cut. Those who put in the most, and who already get a poor return, will get even less. That will be necessary to guard the ones who put in the least but have only SS or SS plus a pittance to live on. It's the reality, it is the necessity.
But don't tell me it is justice, and don't tell me I'm greedy because I feel like I'm taking it in the shorts. I am. I know it. Spare me the insults (which you didn't make, Big Al -- I'm agreeing with you, not picking an argument).
Don't know where the "argument" would come from, me at least, since I agree with everything you said!
The only (minor) dispute I might have is with those who have paid only a pittance into their "insurance" having a right to be taken care of.
In "the good old days," as I understand or envision them, we knew our neighbors, our church members, coworkers and friends, and their character. If someone was in a bad spot, we helped them... IF they weren't just scamming the system.
I remember my grandparents telling me of "hobos" in the Great Depression knocking on their back door, looking for food and work. The never refused them if they had the means to help.
But now the Nanny State has taken this all away. No longer are we expected to love our brother; to love our neighbor as ourself. The government has tricked us into passing that responsibility on to them, and it's going to be d--n hard to get it back.
Hell, Big___Al, you're not supposed to even take care of your elderly parents or grandparents!
Not sure if I'm missing something in your comment, mudbug.
I of course would help them if able. But I don't want the government mandating that I take care of them, or everyone elses grandparents!
My point is when I was a kid, my grandmother and great grandmother lived with us. My great grandmother was bed ridden with a broken hip. That rarely happens now. I'm not sure I want to blame government for all of that - maybe it's more a societal thing, but in either case, most people are fine not bothering to take care of their elderly family members. To the broader point of taking care of other people's parents - we do that to some extent with Medicaid (ever hear the lawyers on the radio advertising that you don't have to loose your house to get Medicaid?).
I get what you were saying now, mudbug.
And I agree, it is mostly societal. We get the government we deserve, right? But, as happened with Johnson's Great Society programs actually devastating and demotivating the poor, haven't these gov't programs we're discussing also contributed to--in a negative way--our sense of family and community responsibility?
It is unlikely we can rebuild or restore that for a long time, if ever. But like your elderly family members living with you, or philanthropic support for widows and orphans, it used to work. I just can't justify someone (the gov't/society) holding a gun to my head and demanding I pay for your food, or health care, or housing etc.
I was going to make the same point. Unless you have been retired for some years, you stand to get a pitiful return from your SS insurance dollar (remember, it is an insurance program). If politicians hadn't spent all those SS dollars - mostly by giving it to somebody else to help them get re-elected - that money would still be there. Oh! But SS money is invested in special govt. bonds. Great investment, that! They should have used that money to buy annuities or something. Better yet, get rid of that crappy program all together. That wasn't going to happen because until recently it was a good deal - to those who were receiving (or soon to receive) it. The rest of us were born too late so we'll get screwed. Thank you very little, Congress!
Yeah. How about that great "lockbox." What a bunch of crap... they spent every penny.
We all knew, though, or should have. We let them do it. We had ample warnings, such as: "(A democracy) can only exist until the voters discover they can vote themselves largesse out of the public treasury."
We citizens could have, should have done better to police our "rulers." I am chief of the sinners, and I regret it. But I am trying to atone for it. We all should do the same, 'cause it's getting late.
@Big_Al, I don't know about your local politicos, but the ones here in MD are lock-step in saying that 'SS is fine - you're making hay out of hot air!". I even brought this up to his Rotund-ness Rupertsburger, and he said the Lock-box was safe. 'You have nothing to worry about' is his favourite line....
Algore knew it was crap when he uttered it in the 2K race. And every other of the 535 clowns in that two-ring circus know its all a sham, but keep putting buttercreame on top of the meadow-muffin they keep serving us.
I've hoped that the citizenry would wake from its induced slumber, and DEMAND its representatives stop this chicanery, and come back to reality, but, alas, DC is light on logic/reason, and heavy on BS and fantasy....
Maybe I am in a sour mood today. But I regard Hawkin's essay as disgusting and misleading.
Hawkins mixes in a little truth to disguise a huge serving of nonsense and deception.
He artfully talks about the long run. Yes, he is correct, reforms are needed in the long run. I have no objection to changes or facing facts.
But we are dealing with spending and debt and deficits now. In July 2011. Not in some long run, someday.
SS and Medicare did not go broke from payouts or borrowing. It was the Treasury - IOW our Congress - that grabbed the money and spent it.
Now those who spent it complain the money is gone. And Hawkins shamefully tries to cast the blame people who didn't spend it.
And he plays the class card. The poor depend on SS and Medicare as much or more than the middle class. But Hawkins doesn't want to bash the poor so he tells us the middle class causes the trouble.
The Government took all the money and spent it on other things. Instead of earning interest on an investment - we are paying interest. Not only did we spend the SS/MC money - but a whole bunch more.
I, however, disagree with Mr. Hawkins that this is our biggest problem. In my opinion, the biggest problem is that over half the citizens pay no income taxes. Sure they pay SS taxes - but they have no skin in the game with overall spending. What the hell do they care about taxes or spending when they have no vested interest. Everybody needs to pay something.
So what he's saying is that the tax system is too progressive?
I don't know why he dumps on the middle class in personal terms. I've always found John Hawkins a little weird.
ok then. let the goddamned govt give me back every red cent PLUS INTEREST that I have been forced to pay into ssn my entire work career and I will walk away a happy woman.
The govt (irs) charges interest in addition to penalty when individuals have to pay back taxes so I do not think interest charge is an unreasonable demand.
It seems like none of the commenters understand what social security is. It's a tax, it's not an "Insurance program." The government didn't take your money and put it into an account with your name on it. The government spent it.
The government made a "promise" to you when it took your money, but the Supreme Court has said that those "promises" are not binding. By changing the law your benefit can be changed.
Social security relies on there being many more workers than retirees. But the baby boomers and subsequent generations failed to have enough children. So the ponzi scheme is collapsing.
In the same way medicare is a tax, not an insurance program. Thus its rules can be changed at any time.
Far too many people believe that like their 401k account, the government has saved their money and invested it, but that never happened. It's time that everyone learns the truth.
Re: tax vs insurance
It depends on your perspective. In order to pass Constitutional muster, they had to call it a tax since the govt. has the power to tax but not make you buy insurance (that was the thought in the 30s, anyway). To sell it to the public, they called it insurance. They hired actuaries, the benefit was the same for the same amount of money put in, etc. The reason there is a cap on FICA income is so the rich, who didn't need SS, wouldn't have these huge payouts when they retired. They put in $X and if the middle manager also put in $X, they would both get the same payout.
However, from early days (I don't know how early), if the middle manager put in X dollars, she would get Y% as a benefit. If the carpet sweeper put in (X-5) dollars, he'd get Y% plus a little more as a benefit, since he was poor and couldn't put in as much. I don't know if the first round was redistributionist, but it has been so since I first read about SS benefits some 40 years ago.
The more that was taken from you, the less of a return you will get. And the younger you are, the truer that's going to be. It is necessary under current circumstances, but necessary and just or fair are along way apart in the dictionary.
I may have to live with it, but I decline to like it or call it right.
That's new to me. Thanks for the info. I know a lot of stuff has been hung off the original SS that was not originally part of the deal (that's "New Deal", son ;-) ), so I would expect that the difference are greater now than in the past. There's a lot I don't know about SS, but the things that I do know make my blood boil. It has morphed into something that was never intended (you SSN cannot be used as a key field in a database, you had to pay in to receive benefits, etc.). It's a case study in why government should not be allowed to do such a thing... Like most other taxes, it's just theft with a pretty ribbon.
I think everyone here, or speaking for myself at least, knows that it is a tax, and they spend it the same as the general fund.
If I say "insurance program," I am just playing along, using the dialogue that was and is used to sell it to us, in order to disprove the truth or logic of it. Or more precisley, to compare and contrast the difference between any private insurance or investment, and this load of bull the gov't has given us.
This must be Storkdoc's very first day on the intertubes, or something.
Unfortunately, I am old and made my very first trip on the internet shortly after AOL started......
That being said I am tired of people calling SS and medicare insurance. It's nothing of the sort. I have paid in more taxes to it than I care to admit. Since 1994, I have paid the maximum (self employed) amount each year. Since I can't retire fully until 2030, IF SS still exists, I will certainly not get back my return on investment. But of course, as it's just a tax, there really is no return on investment. So I get back what I expect; which is more regulation, more paperwork and more people asking me to put them on disability.
So people, suck it up; it's a tax. Don't expect anything from it and you won't be disappointed.
When it comes to Social Security, people get very emotional about the subject, and so it's hard to have a dispassionate discussion about the funding problems that now beset the SS program. In one sense, Hawkins is right that people want their benefits, no matter who has to pay for them. After all, the government made us all a promise (and hoped we wouldn't look too carefully at what they were promising us), so we now expect them to pay up.
Of course, back in the day when SS was first launched, people didn't live long past the official retirement age of 65. With lots of workers supporting the first payouts of benefits to SS beneficiaries, the SS Trust Fund was flush (with gold-star Treasury IOUs, not actual cash...but back then who knew that would one day be a problem?). Today, the demographics are completely different. The worker to retired beneficiary ratio is a lot lower now than it was back then, and people are clearly living longer and therefore collecting benefits for much longer than before...which is Hawkins' point.
For example, if you are a white male and retiring at age 65, which (for the sake of argument I'll say is your full retirement age), you can expect, on average, to live for another 17 years according to government mortality tables. On the other hand, for you to recover in collecting benefits the SS payroll taxes you and your employer(s) paid over your working lifetime will take you at most 10 years, or maybe 12 years at the outside. And that's assuming a decent rate of return---higher than the interest rate of US Treasuries---that you think the SS Trust Fund SHOULD HAVE earned from the "investment" you made by way of your payroll taxes.
So, the bottom line according to my back-of-the envelope calculation is that the typical white male SS recipient will collect SS benefits for as many as 7 years longer than it will take him to recoup his contributions INTO the system, plus the earnings. What comes out ends up being as much as twice what when in. In agreement with Hawkins, that's why the system is broke.
My solution is to keep benefit levels the same without means testing and without imposing higher taxes on benefits, but to continue raising the full retirement age until it's around 72. More importantly, we need to start raising the early retirement age immediately from 62, until it's around 68 or 69. Those changes will help to put the system back onto the same actuarial status with regard to mortality rates as when the SS program first began. Ten years from today, the ages should be reviewed once again and adjusted to reflect any changes in the life expectancy of all Americans.
The fair solution to "fixing" SS, I think, is to ensure that the accumulated payout of benefits during a person's lifetime in retirement is preserved. This can be done either by reducing the benefits payments each year or by shortening the time period over which the benefits are paid out to retirees. Most suggestions for saving SS these days seem to prefer cutting the payout levels. I personally prefer cutting the time span by raising the retirement age.
Sorry, SS is a ponzi scheme. It is about to be over. I've been paying into it for the last 40 years. At least my parents get some benefit from it. I don't expect to.
SS isn't a Ponzi scheme, but it is a badly planned program. Pay as you go never works - it discounts a number of things, such as the productive nature of workers down the road. As long as the economy continues to grow and workers are more productive by a factor of about 6, then having it go from 12 workers paying for 1 to 2.5 paying for 1 is fine and dandy. But the problem with this is that the growth we've had HASN'T justified it.
It's called a "trust fund" - but how can it be a "trust fund" if it's "pay as you go"? Pay as you go implies money in covers money out. I know there is (or was) a surplus and that went into a trust fund...but that was designed to cover the bulging demographics of the baby boomers, not act as a buffer for future potential hard times (as it should have been).
The premise of this author - that the middle class takes, takes, takes, and refuses to give or pay, is absurd and frankly stupid.
I can honestly say that, for my money paid, I've never seen a dime back in value, and probably never will. I'm solidly middle class. My mom, who has gone from lower middle class to very low class (alcohol does that), will get MUCH more than I ever will. I suppose you could say I'm paying for her!
No, this author is out to lunch. His ignorant rant is based on little or no proof or knowledge. I'd like to see him break down the various farm and industrial subsidies, the doubling down on the federal pensions, the inadequately funded trusts and pensions, etc. Once you see all this, and tack on the cost of Medicaid (half of which is spent in the final month of life - ABSURD!), you can see that we could have a surplus.
So - I'll tell this guy to come visit a real middle class family and take a lesson. That lesson will be: don't let your imagination get the best of you. If you think it's true, but don't have any facts to back it up, then shut your yap and take the time to visit with the people who have been shouldering the burden - the middle class.
I would prefer to be out of the SS system and am willing to take full responsibility for my own retirement, but I don't understand why you and others are so adamant you will see no SS benefits when you retire. As I wrote before, it is not that hard to restore SS to the status as a failsafe retirement plan it used to have---instead of the gravy train some people have now come to think it is.
I'm not going to defend the actuarial failings of SS. It was sold as a way for each generation to save for the future, but in actual practice does nothing of the sort. Rather, it forces each younger generation of workers to pay payroll taxes that are used to support older generations of workers who have already retired or are about to retire. In case you haven't noticed, in the abstract sense, these older folks are our parents and our grandparents! If SS did not exist, we might (or would probably) be paying to support them in retirement anyway. SS does the same job for us....involuntarily of course.
Now as I recall, the stats on wealth show that, as a class, retirees are pretty well off financially anyway. What are they doing with the money they get from SS, if they don't need it for their living expenses? It would not surprise me if a lot of them are saving it so they can pass it on to their kids in their estates when they die. So what we have here are two huge money flows, one from the younger generation to the older one via SS, and another that comes right back and flows from the older generation to the younger one through inheritance. Who are the winners and who are the losers in this crazy situation? Beats me.
Absolutely not true about SS. There is plenty of money in the SS system. The federal government owes the SS system about $4trillion. Those are our dollars not the governments. with current SS revenues and the $4trillion the feds owe SS it could continue for another hundred years or more. What they should do is stop paying SS to people who never contributed to it. The payments should be based on the individuals participation in the system
As for Medicare it does suffer from inadequate funding. However don't you think it is strange the Medicare which is at least 50% funded by the beneficiaries needs to be cut but Medicaid which is 100% funded our of the general fund does not!!!! Before one penny of medicare is cut 100% of medicaid should be cut. Ditto for welfare. Does it make any sense to pay trillions to welfare recipients but cut medicare which is at least partly paid for by the recipients????
Every time I read one of these stories, I realize what a pile of c**p it is. The proper analysis is if I had not been forced to make all the contributions to Medicare and Social Security, what return on investment could I have gotten on that money, plus the return of principal? The lost opportunity cost, plus the original money, is what I have contributed to Social Security and Medicare. The fact that the government, instead of likewise investing the money, pissed it away, is not my problem.
They ripped me off. They ripped all the responsible people in this country off. And now they are trying to blame all their irresponsibility on me.
I continue to advocate that we need to be putting a lot of our elected officials and bureaucrats in prison for what they have done to this country.
Yes, SS most assuredly is is a Ponzi scheme. The only way it works is by having enough workers to share the load supporting one retiree. The ratio used to be 17:1; now it is something like 1:1. So how do you think it's functioning at this moment? Answer: The money you paid today is being spent as we sit here. It's gone. Now that the Baby Boom is aging, the demographics have entirely reversed and the Ponzi chain is no longer possible. If you think that the government is going to be able to get enough money out of the paycheck of one young worker to pay for the aches and pains of several Boomers all by himself, you are huffing glue.
Of course, the much-maligned George Bush tried to fix the problem by offering Health Savings Accounts, just like the ones every member of Congress currently has--their SS accounts are just window dressing, the HSA is the thing to have--but he was demagogued by the Left. They love it when you're poor. And they're going to love it a lot for the next 20 years, because poor is what many of us are going to be.
Yes, our elected officials are all liars, and they should all be behind bars. If you vote Democrat, I hope there's a special spot in Hell for you.
The best comment I've seen on this was over at Zero Hedge today:
"The reality is there is no money. Is that unfair? Yes, but life isn't fair. If life was fair you would have an average income ($7K worldwide vs. $50K US), average lifespan (67 worldwide vs 85 US), have little or no freedom and little hope for a better life.
The US had a good run. We are still better off than most of the world (and will continue to live better---if we buckle down and accept that the easy times are over and get to work).
Demands that "someone" give us what we were promised aren't going to happen. We were promised more than can be delivered. That reality is starting to sink in in Europe. The socialists have run out of other peoples money.
Sorry, it is time for all of us to grow up."
Gone: If you really believe there is plenty of money in the system, I pity you from the bottom of my heart. I really do.