Social Insecurity

[vandalshandle]

Sounds perfectly reasonable to me, VB. I might raise the retirement age a little for people under 50 years old.

[mwcpa]

"To change the rules now is breaking ones word and reneging on a contract. "

Isn't that what all politicians do? Look at the rally against unions today, especially civil servants. Politicians negotiated the deals, now politicians make the union the scapegoat for their years of mismanagement of tax dollars collected. (this is not meant to be pro or anti union, just making a point about how reneging seems to be the new American way)

I am game for changing the social security system.... we can raise the retirement age for younger people, let's not forget what the life expectancy was in 1940, the first year of social security payouts....62.9... in 2010 that number was 78.7 (http://www.infoplease.com/ipa/A0005148.html). I would also be game for raising the income threshold for employee contributions, but I would couple that with a lower rate.... let's say keep the current 4.2% but raise the taxable wage income level.

[Deleted]

"It's an interesting idea but one, except for the reinstitution of the 2%, that I'm not crazy about. The idea of SS is that we all contribute and thus all receive. To change the rules now is breaking ones word and reneging on a contract. "

The original "contract" spelled out you paying that extra 2% to get your benefits. If they don't raise the tax, SS will become a shell of its former self really quick.

[Deleted]

"let's say keep the current 4.2% but raise the taxable wage income level. "

Let's be clear, then. You want the wealthy to pay for your SS benefit.

[Savoir Faire-Demogague in NJ]

The original "contract" spelled out you paying that extra 2% to get your benefits. If they don't raise the tax, SS will become a shell of its former self really quick.


Contract? WTF are you talking about? There is no contract. The Supreme Court has already decided that there is no constitutional right to social security benefits, as there is no "account in your name" anywhere.

[Deleted]

That's why I used quotes. Just carrying on the word in the post I responded to.

[mwcpa]

Dec 30, 2012 19:30:02 GMT -5 @investorbob said:

"let's say keep the current 4.2% but raise the taxable wage income level. "

Let's be clear, then. You want the wealthy to pay for your SS benefit.

As someone over the current FICA limit, I would be paying my way and making a sacrifice so others could benefit from the plan by fixing the gross mismanagement by politicians. I am merely offering my own suggestion to the original post. Is my idea right or wrong, I do not know, but at least I offer an idea and not just criticism.

[Deleted]

Ah, you're one of those whacko rich folks who WANT higher taxes.... (kidding about the whacko part).

Sorry for jumping to conclusions. 99% of the time I would have been right.


On a related note, easy solution to the fiscal cliff: Since most rich folks say they want to pay higher taxes, just give them the option. That way, everyone wins....

[djAdvocate]

Dec 30, 2012 16:52:43 GMT -5 Savoir Faire-Demogague in NJ said:

Dec 30, 2012 16:38:24 GMT -5 djAdvocate said:

i don't call people idiots, SF. Friedman is a bright guy who says all kinds of stupid shit. kinda like you in that way.

You sound tense?

no no. not tense. but you are categorically wrong about me thinking more of myself than i do of Friedman (or anyone else for that matter). if i see an impressive, well thought out opinion from anyone, no matter how much i disagree with them, i will give them credit. but Friedman's argument here doesn't even come close to that, so i really don't give a crap how bright he is. being smart is no excuse for making a bad argument. in fact, quite the opposite. it is less forgivable coming from Friedman.

Maybe you need a drink...?? Perhaps a frisky woman?

i don't drink, and i doubt my wife would approve of the latter.

Will ya' chill.....

sure thing, SF.

edit: nobody acknowledged my near-perfect "back handed compliment" in the fine Twain tradition, so i am going to give myself a pat on the back for it.

[djAdvocate]

Dec 30, 2012 17:14:05 GMT -5 @investorbob said:

"that is not my understanding. my understanding is that it "exists" as a book item ONLY. there is no reserve, no fund. the money is spent in the general fund even before it is collected."

That's just semantics. If you invest all your money in gov't debt, you still have an asset, right? Same for SS.

if you say so. as they say in Jerry MacGuire, "show me the money".

[djAdvocate]

Dec 30, 2012 19:32:06 GMT -5 Savoir Faire-Demogague in NJ said:

The original "contract" spelled out you paying that extra 2% to get your benefits. If they don't raise the tax, SS will become a shell of its former self really quick.


Contract? WTF are you talking about? There is no contract. The Supreme Court has already decided that there is no constitutional right to social security benefits, as there is no "account in your name" anywhere.

precisely. it is an absolute myth. THAT we can agree upon.

[Deleted]

"if you say so. as they say in Jerry MacGuire, "show me the money"."

The Social Security trust fund is basically a big CD ladder. IT is continuously receiving interest and cashing in gov't bonds. It's actually less risky than a CD ladder. So if you don't consider the SS trust fund to be an asset, do you also not consider CDs to be assets?

[djAdvocate]

Dec 30, 2012 21:21:15 GMT -5 @investorbob said:

"if you say so. as they say in Jerry MacGuire, "show me the money"."

The Social Security trust fund is basically a big CD ladder. IT is continuously receiving interest and cashing in gov't bonds. It's actually less risky than a CD ladder. So if you don't consider the SS trust fund to be an asset, do you also not consider CDs to be assets?

honestly? i don't know enough about CD's to comment. time for me to bow out of this discussion? or can you bottle it quickly for me?

[Deleted]

A CD is just a debt instrument. An IOU from a bank. Pays minimal interest like gov't debt does. Very low risk.

[djAdvocate]

Dec 30, 2012 21:40:28 GMT -5 @investorbob said:

A CD is just a debt instrument. An IOU from a bank. Pays minimal interest like gov't debt does. Very low risk.

oh, i know what it does, and how it works from an investment standpoint, but i thought you were going to describe how the funds were held (or not held).

[Phoenix84]

I don't know about means testing social security. SS was originally designed as insurance and not welfare. Beyond that I agree with you.

I think we need to fundamentally look at what SS is, should it be walfare or insurance/pension program.

I would also raise the retirement age (including minimum retirement age of 62), get rid of the spousal benefit (the world has changed), and index the future age to the average l ife expectency.

[fairlycrazy23]

Dec 30, 2012 21:21:15 GMT -5 @investorbob said:

"if you say so. as they say in Jerry MacGuire, "show me the money"."

The Social Security trust fund is basically a big CD ladder. IT is continuously receiving interest and cashing in gov't bonds. It's actually less risky than a CD ladder. So if you don't consider the SS trust fund to be an asset, do you also not consider CDs to be assets?

The problem is, the asset owner is also the owner of the associated liability.

[BeenThere...DoneThat...]

Dec 30, 2012 22:27:33 GMT -5 Phoenix84 said:

get rid of the spousal benefit (the world has changed),

...drop all dependent benefits? hmm...

[Deleted]

Dec 30, 2012 22:27:33 GMT -5 Phoenix84 said:

I don't know about means testing social security. SS was originally designed as insurance and not welfare. Beyond that I agree with you.

I think we need to fundamentally look at what SS is, should it be walfare or insurance/pension program.

I would also raise the retirement age (including minimum retirement age of 62), get rid of the spousal benefit (the world has changed), and index the future age to the average l ife expectency.

Spousal benefit helps to even out for families with one working spouse. Ie. two individuals with their own 50k annual salary will bring home significantly more SS than a single with 100k... You could possibly solve this with allocation choice? Ie. Similar to how i can put $ in a spousal Ira even if I have no income... Giving each individual credits that act as their base, but even then? Not sure if it would work out..

[mwcpa]

Dec 30, 2012 20:05:09 GMT -5 @investorbob said:

Ah, you're one of those whacko rich folks who WANT higher taxes.... (kidding about the whacko part).

Sorry for jumping to conclusions. 99% of the time I would have been right.


On a related note, easy solution to the fiscal cliff: Since most rich folks say they want to pay higher taxes, just give them the option. That way, everyone wins....

It's not that I want higher taxes, I just feel, like the "great depression" / world War II generation was called the "greatest generation" by Tom Brokaw for what they endured, we should step up to the plate and address the fiscal issues created by the overspending and under funding of the government (while there are rally cries to cut spending by many, no one wants their program cut.... all you here is cut this program, cut that program, just do not cut my program; I say balance is needed). Most believe social security is a good safety net, so lets help to fix it so our kids and grand-kids can have it too. In my opinion, that means sacrifice from all for the common good. That means, to me, increasing the tax base, more than raising the tax rate (and if I have to pay a little more that's fine). It also means changing the retirement age to be more in line with the increases in life expectancy. We lived through the "Great Recession" which was caused in many cases by stupidity of congress, the banks and many people; now let's step up to the plate and not do what this current Congress will end up doing before the stroke of midnight today... which at this hour seems to be nothing or kicking the can down the road.

www.businessweek.com/articles/2012-12-31/on-the-fiscal-cliff-republicans-are-blowing-a-great-deal

"And if, as polls suggest, voters would blame Republicans for going over the cliff, Democrats are also offering to save Republicans from their worst impulses — which, at least for the time being, since they haven’t yet agreed, is to reject this deal."

[Deleted]

"The problem is, the asset owner is also the owner of the associated liability."

Do you have a better suggestion? The American people have decided they don't want the money invested in anything "risky". So the options are cash (0% return) or govt bonds (close to 0% return). The choice is a no-brainer.

[Deleted]

Sorry meant to edit not quote...

[fairlycrazy23]

Dec 31, 2012 8:41:35 GMT -5 @investorbob said:

"The problem is, the asset owner is also the owner of the associated liability."

Do you have a better suggestion? The American people have decided they don't want the money invested in anything "risky". So the options are cash (0% return) or govt bonds (close to 0% return). The choice is a no-brainer.

Yea, no trust fund, should have just put in the general fund.

But, cash would have been better in this case, it would have earned no interest but it would have been an asset without a corresponding liability, of course they would have probably spent it even if t has been cash.

[djAdvocate]

Dec 30, 2012 22:27:33 GMT -5 Phoenix84 said:

I don't know about means testing social security. SS was originally designed as insurance and not welfare. Beyond that I agree with you.

I think we need to fundamentally look at what SS is, should it be walfare or insurance/pension program.

I would also raise the retirement age (including minimum retirement age of 62), get rid of the spousal benefit (the world has changed), and index the future age to the average l ife expectency.

i am all for indexing.

[Value Buy]

Dec 30, 2012 18:08:37 GMT -5 vandalshandle said:

Sounds perfectly reasonable to me, VB. I might raise the retirement age a little for people under 50 years old.

I disagree with raising the retirement age.
The fact we live longer, does not mean our bodies are deteriating at a later age than our parents did.
Most Americans are simply unable to physically do the same job at 68 that they were doing at 63, especially if it is a physical job. We will create far more health issues for seniors by requiring them to work later in life, thus effecting Medicare bills down the road even more than we do now.
As I approach retirement age, I can feel the difference in my body myself, and my job is not considered a physical one.

[Deleted]

"Yea, no trust fund, should have just put in the general fund."

By investing in gov't debt, it is basically in the general fund and still segregated at the same time. The point of segregating it is because the money itself is set aside to be used for SS. If you put it in the general fund, you wind up with something like Medicare, which is about 100% over budget, but people still think their tiny little Medicare tax actually pays for their benefit. Not a good idea.


"But, cash would have been better in this case, it would have earned no interest but it would have been an asset without a corresponding liability, of course they would have probably spent it even if t has been cash."

I think you misunderstand. If it's left as cash, the gov't debt get's sold to another investor. The gov't has to issue the debt whether it's bought by the SS trust fund or someone else. Leaving it in cash is actually the exact opposite of your suggestion to put it into the general fund.

[vandalshandle]

I am not sure that I understand all the hoopla about us not having accounts with SS, since the money has been pooled and distributed, in exchange for government debt instruments. If you open an account at the bank, do you expect them to have it sitting in a vault? Of course not. They loan it out. The money is not in the building. It is not even in their home office. Instead, it is pooled, and loaned out, just like SS. Even worse, it is loaned to people with marginal credit ratings, and many of them can't, and don't pay it back. The only difference is that they are supposed to use prudent business policies to insure that that does not happen enough for the depositors to lose their money. That remains somewhat "iffy" in the SS funding policies.

[Savoir Faire-Demogague in NJ]

Dec 31, 2012 14:15:41 GMT -5 vandalshandle said:

I am not sure that I understand all the hoopla about us not having accounts with SS, since the money has been pooled and distributed, in exchange for government debt instruments. If you open an account at the bank, do you expect them to have it sitting in a vault? Of course not. They loan it out. The money is not in the building. It is not even in their home office. Instead, it is pooled, and loaned out, just like SS. Even worse, it is loaned to people with marginal credit ratings, and many of them can't, and don't pay it back. The only difference is that they are supposed to use prudent business policies to insure that that does not happen enough for the depositors to lose their money. That remains somewhat "iffy" in the SS funding policies.

.....but there is a succinct difference. With a bank account, you have a legal claim to the money you deposit. With SS no such claim exists.

[vandalshandle]

Dec 31, 2012 14:17:48 GMT -5 Savoir Faire-Demogague in NJ said:

Dec 31, 2012 14:15:41 GMT -5 vandalshandle said:

I am not sure that I understand all the hoopla about us not having accounts with SS, since the money has been pooled and distributed, in exchange for government debt instruments. If you open an account at the bank, do you expect them to have it sitting in a vault? Of course not. They loan it out. The money is not in the building. It is not even in their home office. Instead, it is pooled, and loaned out, just like SS. Even worse, it is loaned to people with marginal credit ratings, and many of them can't, and don't pay it back. The only difference is that they are supposed to use prudent business policies to insure that that does not happen enough for the depositors to lose their money. That remains somewhat "iffy" in the SS funding policies.

.....but there is a succinct difference. With a bank account, you have a legal claim to the money you deposit. With SS no such claim exists.

True, but I don't think that really matters. After all, nothing is written in stone. In my lifetime, the government arbitrarily withdrew Silver certificates from circulation. If the government can arbitrarily decide to renege on their promise to exchange paper money for silver, then nothing is guaranteed.

[Phoenix84]

Dec 31, 2012 1:41:27 GMT -5 oped said:

Dec 30, 2012 22:27:33 GMT -5 Phoenix84 said:

I don't know about means testing social security. SS was originally designed as insurance and not welfare. Beyond that I agree with you.

I think we need to fundamentally look at what SS is, should it be walfare or insurance/pension program.

I would also raise the retirement age (including minimum retirement age of 62), get rid of the spousal benefit (the world has changed), and index the future age to the average l ife expectency.

Spousal benefit helps to even out for families with one working spouse. Ie. two individuals with their own 50k annual salary will bring home significantly more SS than a single with 100k... You could possibly solve this with allocation choice? Ie. Similar to how i can put $ in a spousal Ira even if I have no income... Giving each individual credits that act as their base, but even then? Not sure if it would work out..

Hmmm, interesting idea. Yes, I could support the spousal benefit it was treated as a IRA. If you have a spouse that doesn't work, you could have the option to pay more into SS in order to get the spousal benefit later. But if you don't then you don't. I'm always for mroe choices.