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Free Minds & Free Markets

Fix Social Security Before It Goes Broke

Eventually the government will run out of other people’s money.

Social Security is running out of money.

You may not believe that, but it's a fact.

That FICA money taken from your paycheck was not saved for you in a "trust fund." Politicians misled us. They spent every penny the moment it came in.

This started as soon as they created Social Security. They assumed that FICA payments from young workers would cover the cost of sending checks to older people. After all, at the time, most Americans died before they reached 65.

Now, however, people keep living longer. There just aren't enough young people to cover my Social Security checks.

So Social Security is going broke. This year, the program went into the red for the first time.

Presidents routinely promise to fix this problem.

George W. Bush said he'd "strengthen and save" Social Security. Barack Obama said he'd "safeguard" it, and Donald Trump said that he'll "save" it.

But none has done anything to save it.

"There is a plan out there to save it, but it requires some tough choices," says Heritage Foundation budget analyst Romina Boccia.

Heritage proposes cutting payments to rich people and raising the retirement age to 70.

Good luck with that. Seniors vote. Most vote against politicians who suggest cutting benefits.

This summer, interviewing people for my new video about Social Security's coming bankruptcy, was the first time I had heard the majority of such a group say they were aware there is a problem. One said, "We're already at a trillion dollars (deficit)…. (I)t's almost like a big Ponzi scheme."

Actually, more like a pyramid scheme. Ponzi schemes secretly take your money. But the Social Security trick is written into the law—there for anyone who bothers to look.

Social Security isn't the only hard choice ahead of us. Medicare will run out of money in just eight years. At that point, benefits will automatically be cut. Social Security hits its wall in 15 years.

Amazingly, as we approach this disaster, Democrats say—spend even more.

Sen. Elizabeth Warren (D-Mass.) proudly announced, "Nearly every Democrat in the United States Senate has voted in favor of expanding Social Security."

How would they pay for it? "Raise taxes on the wealthy!" is the usual answer.

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  • loveconstitution1789||

    No payments into social security and no benefits collected from social security.

    That and my desire to end social security, medicare, and medicaid.

  • LeaveTrumpAloneLiberal-tarian||

    Right you are John and isn't it great that we're being led by the party of fiscal responsibility led by the calm and reassuring leadership of Donald J. Trump.

  • Red Rocks White Privilege||

    Way to fuck up the link, moron.

  • vek||

    Other than just phasing it out completely, private accounts, or at least the stupid government directly investing it in something that actually makes a real return (instead of IOUs from themselves) are the only ways out.

    Australia transitioned their version of SS to a more market based one, and it has actually worked wonders at building net worth there. The reason SS is so worthless is because they're just buying FedGov bonds that don't pay out shit. People like my grandma would literally be millionaires if all the money they paid in SS had been invested in a mutual fund instead of the no return government bonds. So if we're going to force everybody to save/invest, at least do it in a way that isn't retarded!

  • Restoras||

    at least do it in a way that isn't retarded

    It's the government. It's the only way it knows how to do anything.

  • vek||

    Well, that's the funny thing... Not always!

    Other nations have experimented at a large scale with almost all the major reforms we need to make. Australia basically fixed their version of social security in the 80s. It's worked 1000x better, and built net worth down there quite well. The short version is it's almost just like mandated 401K contributions or whatever. So they've made good returns.

    Same can be said for charter schools, privatizing this that and the other... Most things have been tried somewhere, and they've usually worked well, just as libertarians would predict. It's just they've never ALL been tried in a single country, which is where shit would get really awesome.

  • Jerryskids||

    Hey, let me know when you figure out how to fix a Ponzi scheme, I've got a business plan burbling around in the back of my mind.

  • sharmota4zeb||

    Forcing everyone to buy insurance works in Jersey.

  • Earth Skeptic||

    Nice liver you got there. Shame if anything happened to it...

  • ShotgunJimbo||

    I'll happily leave the money I have paid in and never collect if they stop taking it out of my pay every month. Ill put it into a mutual fund or ETF. This is a broken system that has been corrupted by the govt, and should be gone. Ill save for my own retirement thx. Oh you didn't save for yours? I guess you will be eating ramen in retirement.

  • Jerryskids||

    As Drew Carey said, "I gambled away all my retirement money. I was betting I'd be dead by now." That's pretty much how Social Security was set up, sort of a tontine, where it didn't pay off when you got old, it paid off if you got old.

  • Earth Skeptic||

    So take the tontine model one more step, and offer bounties to "survivors" who reduce the beneficiary pool. works for underfunded pension plans, too.

  • loveconstitution1789||

    Exactly Jimbo.

  • Enjoy Every Sandwich||

    "Raise taxes on the wealthy."

    Um, sorry, you have already made plans for that money, honey. Remember "free" college? "Free" healthcare? "Green" energy replacing fossil fuels?

  • Lowdog||

    "Free" "healthcare".

  • John C. Randolph||

    SS has always been broke. Don't kid yourself.

    -jcr

  • creech||

    It will never be substantially reformed. Boomers are now the chief beneficiaries, Gen Xers are starting to get close enough to retirement that they don't have enough years to save on their own, and Millennials are all about redistributing money. Raising the normal retirement age to 70, and the early from 62 to 65 would help but AARP goes apeshit at the suggestion.

  • ||

    The millennials will turn the corner on redistribution...Soon. Maybe it will actually take running out of other people's money.

  • sharmota4zeb||

    This is why we have to amend Social Security policy so that Americans born between 1945 and 1965 must live in Mexico to collect their retirement benefits. ;) Make Mexico Great Again with immigration!

  • tommhan||

    No thank you.

  • Horny Lizard||

    Doesn't printing more money accomplish the same thing as cutting benefits or raising the retirement age?

  • Palin's Buttplug||

    No. That is goldbug myth.

  • ||

    You misspelled Krugman.

  • vek||

    It most likely would... But it SEEMS better to cut the value through inflation, versus lowering the payment amount in dollars. Mind games FTW!

  • Rossami||

    No because the benefits are automatically adjusted for inflation. Stopping those adjustments is therefore seen as the same as "cutting" benefits.

    Also no because printing money indiscriminately has gobs and gobs of piled on adverse consequences. Cutting benefits or raising the retirement age have their own negative consequences but nowhere nearly as sweeping or severe as uncontrolled inflation.

  • vek||

    As I understand it, the increases don't USUALLY really keep up with real cost of living increases. So doing some shadowy small tweak in how COLA is handled could allow them to skim even more. I'm not saying it's good, or that nobody would notice... But it's the kind of sneaky shit government does.

    As far as inflation goes, yes and no... I hate fiat currencies... And I don't trust people to manage them correctly... BUT moderate inflation is one of the only ways out for the USA really, thanks to our government debt etc. Several years of 5-7% inflation would go a long way towards screwing off all kinds of obligations the government has, but perhaps not entirely destroy the economy. The 70s/80s basically did this, and we came out the other side alright.

    I'm not saying I'm in favor of it, but it's a plan a lot of people want...

  • Weigel's Cock Ring||

    Good to see that Reason took away that stupid-ass disclaimer they had for a while disavowing Stossel's views.

  • Palin's Buttplug||

    Stop with the lies that "no one has tried to save it", Stossel.

    Chained CPI and other cuts in Simpson-Bowles would have salvaged SS in 2012-13 but most of Congress was too cowardly to support it (both parties).

  • Palin's Buttplug||

    That FICA money taken from your paycheck was not saved for you in a "trust fund."

    Pure bullshit from Stossel. There is a SS Trust Fund with about $3 trillion in it. The fact that it is insufficient to pay future obligations is the issue here.

  • Mickey Rat||

    The SS Trust Fund consists of pieces of paper saying the government owes itself money. There are no assets as those pieces of paper are not tradable.

  • Palin's Buttplug||

    US Treasuries aren't an asset?

    More bullshit.

    When they hold a gun to your head to make sure you pay your taxes you will find out what an asset is.

  • Red Rocks White Privilege||

    US Treasuries aren't an asset?

    Not when you have to issue more debt to buy it, dummy.

  • Mickey Rat||

    What part of "not tradable" do you not understand?

    Those are no more assets than if you raid your mattress for 10 bucks for whatever prurient interest floats your boat and slip a note saying you owe your mattress a tenner.

  • Palin's Buttplug||

    Why the fuck would the SS Trust Fund want to trade them? They are fully backed by taxpayers and that gun pointed at my head.

    I don't like it either. I wanted Simpson Bowles.

    But you fuckers are too stuck on the con men in Washington.

  • GlenchristLaw||

    Please explain, without the bombast and tantrums, how an IOU from yourself to yourself is an asset.

  • Palin's Buttplug||

    Because the SS Trust Fund holds US Treasuries that are funded by taxpayers - not another branch of government. The IRS is the enforcement arm - not the payee.

    That $3 trillion WILL be collected. And I (and other taxpayers) WILL pay it.

  • Mickey Rat||

    You are just going to ignore the structural problem that that there are only about 2 or 3 people having FiCA garnished from their income for each person collecting SS? And that number is shrinking?

    That is not sustainable.

  • Restoras||

    The "Trust" Fund does NOT hold US Treasuries. They are not bonds in any sense of the word.

  • Palin's Buttplug||

    The "Trust" Fund does NOT hold US Treasuries.

    Prove it, liar.

    https://www.ssa.gov

  • Sevo||

    Palin's Buttplug|8.15.18 @ 10:46AM|#
    "Prove it, liar.
    https://www.ssa.gov"

    Oh, LOOK!
    Turd links us to the propaganda site for the ponzi scheme, proving what a fucking idiot he is.

  • Red Rocks White Privilege||

    Because the SS Trust Fund holds US Treasuries that are funded by taxpayers

    Which the Treasury has to sell as a bond--i.e., take out debt--to get the money from the "Trust Fund."

    The fact that you always leave out this little fact shows what a dishonest piece of shit and a nonperson you are.

  • PubliusVA||

    "Because the SS Trust Fund holds US Treasuries that are funded by taxpayers - not another branch of government. The IRS is the enforcement arm - not the payee."

    In other words, benefits funded by the "Trust Fund" will have to be covered by non-FICA tax revenues or new deficit spending--exactly the same as if the "Trust Fund" didn't exist at all.

  • Mickey Rat||

    Because trading them is how you get money for them. An item you cannot trade is not an asset.

  • TwelveInchPianist||

    "US Treasuries aren't an asset?"

    Sigh. US Treasuries are pieces of paper. In most cases, US Treasuries reflect an obligation by the government to pay money to someone, and that obligation is an asset. But in the case of the SS trust fund, these Treasuries are just pieces of paper.

  • Rat on a train||

    I do this all the time. I withdraw money from the bank, buy an IOU from myself, and spend the money. I now have the benefit of the purchase and a drawer full of IOUs I can redeem in the future.

  • tommhan||

    No they owe US the money. No different than individuals holding government bonds.

  • Red Rocks White Privilege||

    No, you lying sack of shit, there's a bunch of IOUs that require the government to issue debt to remit the "trust fund".

    Stop making excuses for Democrat ponzi schemes.

  • Palin's Buttplug||

    "IOU" is a term for dumbasses to use when they don't understand what a US Treasury is.

  • loveconstitution1789||

    Buttplugger is a dum dum who does not know that a treasury security is basically an "IOU" with interest.

  • Palin's Buttplug||

    Say Treasury then, you idiot propagandist.

  • Red Rocks White Privilege||

    Say Treasury then, you idiot propagandist.

    Don't obfuscate how it's actually remitted, you idiot hicklib.

  • Sevo||

    Palin's Buttplug|8.15.18 @ 10:45AM|#
    "Say Treasury then, you idiot propagandist."

    Note turd trying to get the rest of us to used 'approved' terms, while accusing US of being propagandists.

  • Red Rocks White Privilege||

    That Treasury can't be sold on the open market, dumbass.

    Maybe you should actually learn how the system works.

  • Enjoy Every Sandwich||

    Your childlike faith in the promises of the U.S. government is kinda touching. Kinda funny too.

  • Red Rocks White Privilege||

    shriek's a Democrat through and through, he doesn't want to see his beloved FDR legacy program go in the dustbin of history.

  • Palin's Buttplug||

    I want to cut the motherfucker, you liar.

  • loveconstitution1789||

    And institute national healthcare and national retirement, you liar.

  • Palin's Buttplug||

    Shut up, you Nazi Trumptard.

  • Red Rocks White Privilege||

    Jump in front of a cop's bullet, shriek.

  • Red Rocks White Privilege||

    No you don't, you liar.

  • Mickey Rat||

    George W. Bush did do something about it, but only having the powers of the executive, there was only so much he could do with so much of Congress either beholden to SS or scared because so many active voters believe fervently in the New Dealer's deceptive sales pitch about what SS does.

    Social Security probably cannot be "fixed" until a majority of voters understand that SS problems are inherent to the system and not the product of bad administration.

  • Palin's Buttplug||

    Dumbya wanted to divert money away from SS without cutting future obligations - making the situation worse. That dumbass idea died quickly.

  • Red Rocks White Privilege||

    Dumbya wanted to divert money away from SS without cutting future obligations

    No, dummy, he wanted to set it up as a TSP, which is nothing more than a 401K. There wasn't any "diversion" involved in that one except your little pea brain.

  • Palin's Buttplug||

    Bullshit. 1/3 of any worker FICA contribution would have gone into that diversion without being replaced.

    Once again the GOP would finance a new entitlement program on the backs of future taxpayers just like you always do.

    Just like Medicare Prescription Welfare Part D.

    DEFICITS DON'T MATTER!!! KILL IRAN!!!!

  • loveconstitution1789||

    Yup, those RINOs including Booosh, added a minor program but an expensive waste, to a burdensome welfare state with Social Security, Medicare, and Medicaid.
    Congress vote record 2003

  • Red Rocks White Privilege||

    Literally nothing you wrote in that post is factual.

  • Palin's Buttplug||

    Dumbya wanted to divert money away from SS without cutting future obligations - making the situation worse. That dumbass idea died quickly.

  • GlenchristLaw||

    Bush wanted a program of partial, voluntary privatization.

    Oh the horror.

  • Palin's Buttplug||

    We have 401K's already.

  • NotAnotherSkippy||

    Which are funded by obligatory payroll taxes, right?

    Moron.

  • Stephen Lathrop||

    Two points. One for this comment, one for the next comment.

    First, right now, approximately one-half of all personal income escapes Social Security taxation—either over the cap, or categories not taxed. Almost every penny of that is money owned by people who need it less than do less-wealthy folks who suffer taxation on every dollar of their income. Treat everyone alike, and tax every penny of personal income, from whatever source, and Social Security income doubles. For the foreseeable future, and a very long future it is, the problem is over.

    The claim that the rich don't have enough money is simply false. Or maybe, more generously, that claim is made based on an assumption that existing exemptions for the rich continue.

  • Mickey Rat||

    So are you expanding SS benefits proportionate to contributions made over the current FICA cap?

    No?

    Congratulations you have just turned SS from a social insurance program into welfare. Now you get to tell those proud seniors that they are on the dole.

  • D-Pizzle||

    It's hard to make this argument to leftists that don't understand how SS really works, which is, unfortunately but not surprisingly, the vast majority of them.

  • Earth Skeptic||

    The Left is converging on a single foundational policy: confiscate as much private wealth as possible and redistribute as they see fit. All the noise about gender fluency and racial oppression is just a distraction.

  • Stephen Lathrop||

    Nah, Earth Skeptic. Distribution is one of the two principal jobs of an economic system. Wealth creation being the other. It is at least as important that the economic system do the distribution job as the wealth creation job. And do it in a way widely perceived to be efficient and fair.

    If that doesn't happen, then there is no choice. Politics has to step in, to do distribution in place of the failed economic system. That is an outcome to be avoided, if at all possible. Politically mandated redistribution is always bad medicine. But it is an obligation which can't be ignored when managers of the economic system fail in their responsibility to enable efficient and fair distribution. Ever-increasing trends toward income and wealth inequality signal that kind of failure.

  • Enjoy Every Sandwich||

    The claim that the rich don't have enough money is simply false.

    Even if they have enough money to fund Social Security--and expand it as Warren wants--where will Democrats get the money for the rest of their program? Remember, they're going to fund "free" college by taxing the wealthy; "free" healthcare by taxing the wealthy; on and on and on.

  • Earth Skeptic||

    Fuck off, Stephen.

    The cap in income taxed is more than matched by a cap in benefits. Just to remind everyone that SS benefits are already means tested, and the "wealthy" get less back. So, no cap in taxation? Then no cap in benefits, right?

    And very nice of you to offer your advice on how much money is enough, and what people need.

    Did I forget to say fuck off?

  • Stephen Lathrop||

    The cap in income taxed is more than matched by a cap in benefits.

    You mean because if the top 1% have 50% of all the wealth, they ought to get 50% of the Social Security benefits? Or less, if we let them off the hook on paying rates the same as ordinary workers?

  • Sevo||

    "Treat everyone alike, and tax every penny of personal income, from whatever source, and Social Security income doubles. For the foreseeable future, and a very long future it is, the problem is over."

    Fuck off, slaver.

  • TwelveInchPianist||

    "Treat everyone alike, and tax every penny of personal income, from whatever source, and Social Security income doubles."

    Why bother raising taxes? If you keep taxes the same, and simply treat all taxes as social security taxes, you have a giant surplus and social security will never go bankrupt!

    Then you just control the deficit by cutting spending.

  • RPGuy16||

    That makes sense if you consider everyone making over $100,000 to be rich. I'm sure the higher earners in NY, SF, and LA will love that idea as much as they loved getting rid of the state tax deduction.

  • Stephen Lathrop||

    Second point.

    Automation is a catastrophe for Social Security. If a machine comes online, and replaces five workers, Social Security loses the contributions from all five—while making it more likely that those workers will start collecting earlier, or under disability programs they otherwise wouldn't have tried to access.

    Fix that by assessing Social Security taxes on machines which cost workers' jobs, in proportion to the number and kinds of jobs lost. That will prove a far better tool for redistribution of income, and for creation of worker security, than anything which politics could accomplish directly through forced wealth transfers from the wealthy to the poor.

  • Earth Skeptic||

    Well, in a semi-free market place, those workers can show solidarity and refuse to buy products made by machines. What? Hand-made T-shirts cost 10 times as much?

    Back to the pre-industrial agrarian future!

    Again, fuck off.

  • Sevo||

    "Automation is a catastrophe for Social Security. If a machine comes online, and replaces five workers, Social Security loses the contributions from all five"

    Ned, is that you?
    Fuck off, luddite,

  • Rossami||

    It's hard to find a better example of the Broken Window Fallacy than Stephen's comment above. Well done.

    (You did mean that comment as a parody, right?)

  • Lost in the Woods||

    I was hopeful that you might redeem yourself with your "second point". But instead you just doubled down on stupid.

  • blondrealist||

    I seem to recall reading about an estimated 25% reduction in benefits if Social Security isn't "fixed". That's not the end of the world, and as a financial planner, when I speak to younger adults, I tell them to plan for such a reduction. Putting all that aside, I wish Stossel would get up to speed on how our monetary system works, from an operational standpoint. The federal government need not go "bankrupt" - not in the context of how an individual or business or city can be bankrupt. The federal government is a currency issuer - the rest of us are currency users. Harmful inflation is the risk in our monetary system - not solvency (for the federal government).

  • Stephen Lathrop||

    To any of the great many Americans doomed to try to get by on ~ $1300 per month in Social Security benefits (or less), I suggest a 25% reduction would indeed be the end of the world—or at least close enough.

    Are you certain your perch as a financial planner gives you a reliable view of the Social Security landscape?

  • vek||

    The 25% figure has been frequently cited as what would be needed to keep it going forever.

    The question is, if you bump the age requirement up 2 years... What does that do to it? If you did other small tweaks, what about the effects of those? I would imagine with VERY small adjustments, that could be reduced to 10 or 15%.

    Personally I favor the government phasing it out all together... But the second best option is to begin investing it in something that makes real returns, like the entire NYSE or something. They could probably only invest 25-50% in private things, and make it solvent forever. I'd still prefer other alternatives, but ANYTHING is better than the way it works now.

  • blondrealist||

    I think those little tweaks could make a real difference. i also wonder why the early (age 62) option has never changed. Why not bump that up to 63 or 64? Starting Social Security at 62 means a significant reduction compared to the "full retirement age" amount, but lots of people continue to try to retire at 62.

  • tommhan||

    A lot of people "retire" at 62 so they can continue working and also get a check every month. This is mostly the lower wage workers since you can only earn about 15K a year while receiving SS before full SS age.

  • vek||

    Totally.

    The thing that infuriates me about all our major issues, is they're all super easy to solve. They mostly just require VERY minimal tweaks, and voila, we're good to go.

    Freeze federal spending increases for a several years, and voila the budget deficit would shrink to the point of having debt getting lower relative to GDP. Not a big deal, not a lot of pain. Same with SS and everything else. It's all soooooo easy, yet nobody has the balls to even do the tiny things. It's a joke.

  • Lost in the Woods||

    No one is 'doomed' to get by on social security. They chose that path for themselves.

  • blondrealist||

    $1,300 a month suggests the worker's earning history stayed in the low category. My sister - who was a public school teacher - just turned on her Social Security retirement benefit, and she will be receiving $2300 a month. The 25% cut, if necessary, is projected to be needed many years from now, which will give many workers more time to prepare - if make it a priority. Of course, those workers who spend their whole adult lives in low paying, low-skilled jobs will be seriously impacted by a 25% cut - but I'm pretty sure those workers make up a small percentage of the labor force. Lots and lots of middle-class baby boomers are retiring now and receiving around $2,000 a month - or more.

  • Stephen Lathrop||

    In large parts of the American economy (think red states, right-to-work states), blue collar workers can spend their employment years in high-skilled, low-paying jobs. I did too much of that myself, working as a skilled steel fabricator in Boise, ID, at a time when the prevailing wage was pretty close to the minimum wage. Of course, for my skills, I commanded more than twice the prevailing wage—which still left me, on account of overall low regional pay levels, with Social Security contributions destined to seem paltry after I retired. So I am 71, and still hard at work.

    As for your sister, of course I can't speak for her case. In the state where I live, public school teachers don't make Social Security contributions at all. They have a separate retirement system of their own. Are you sure your sister isn't getting her benefits from one of those? And do find out from her how secure she expects to feel if all she gets is $2300 a month.

  • Stephen Lathrop||

    A third point.

    Social Security provides a ready refutation of the often heard assertion that growing income inequality doesn't matter, because overall growth assures poor people are better off too.

    As Social Security is now structured, the more income inequality increases, the smaller becomes the share of total wealth available for retirement and disability. Inflation assures that smaller share will in fact be a declining amount in real dollars, even if, by some miracle, it continues to grow in nominal dollars.

    One way to address Social Security problems is to reduce income inequality problems.

  • Red Rocks White Privilege||

    Funny, I was hearing from leftists during the Great Recession that our overall consumer debt doesn't matter because we can just print more money. Now you're arguing that inflation is a bad thing?

    Where the fuck have you people been the last 50 years?

  • Earth Skeptic||

    Sure. Let's start with addressing inequality in abilities, self-control, and ambition.

  • Sevo||

    "One way to address Social Security problems is to reduce income inequality problems."

    Great. Give all YOUR money to someone with less and get back to us.

  • jcw||

    Not to sound unlibertarian, but is there a specific justification for not taking FICA taxes out of income over 128k other than the normal sane reasons not to tax people?

    I was talking with a retirement specialist who got his masters in SS research, and he tells me that bumping that up to 150k would effectively solve this crisis without needing to raise retirement age or any other politically bad ideas.

    That cut off just seems so weird, since I don't know of any cut off on receiving SS payments.

  • jcw||

    I guess I'm not sure how payments are calculated so maybe that cut off is somehow built in to the formula.

    And I also guess that raises taxes is also a politically bad idea, but it seems less so than raising the retirement age.

  • loveconstitution1789||

    They politically dont want people paying into SS far above what they will get out of it.

    Its supposed to be a 'pay in' retirement, so if you 'pay in' $1 million and only get out $750k, why would you do it.

    Social Security is a tax and its not a retirement plan. Social Security goes to handicapped/disabled people and kids too. The kid and disabled part is tiny compared to the payout for retirees.

    Its a giant mess.

  • jcw||

    If we've determined that social security is not a retirement plan (which I think everyone can agree with), that makes that cut off even less persuasive to me.

  • Mickey Rat||

    It was sold as "social insurance", not old people welfare. You are supposed to earn benefits proportionate to what was taken from you. The cap on FICA taxes is there because of the cap on benefits. Because seniors find the idea that SS is welfare insulting.

  • vek||

    Yup. If skeezy politicians wanted to be skeezy, they could just lift the caps on payments, increase the caps on what they take in... And skimp juuuust enough to keep it solvent. Rich people would know they're getting fucked, but they know they are already anyway. It is a fact that high earners earn a lower effective return than low income people through SS, if the amounts were raised it'd be the same BS really.

  • D-Pizzle||

    "That cut off just seems so weird, since I don't know of any cut off on receiving SS payments."

    The cutoff income upon which SS payments are calculated is....wait for it...$128K. Eliminating this connection between income taxed via FICA and SS benefits received also eliminates the fictions that SS is not an income redistribution scheme and that we are paying FICA taxes solely for our own account.

  • loveconstitution1789||

    FICA tax goes to disabled people and kids too and goes to the current group of beneficiaries.

    Its a redistribution scheme.

    You have no absolute guarantee that the money you put in, you will receive.

    A 401k or IRA, that I invest in can be pulled at any time or passed onto kin if I die. The only uncertainty is how much return I can get on my investment.

  • jcw||

    What did that previous report say? Come 2043, retirees will get 73 cents to the dollar. I guess it just depends on how we want to solve that problem. Increase FICA tax cut off, or just have reduced SS payouts come 2043. The first option will certainly allow SS to live longer, but also makes me worry that they will just increase benefits putting us in this same problem just farther down the road. The second option might just be a graceful way for the program to wind down. I'm sure there will just be a bunch of pissed off old people later though as well (count me among them probably).

  • NotAnotherSkippy||

    2034 not 2043. And estimates invariably get closer rather than farther out.

  • jcw||

    Yeah, sorry about the number dyslexia mix up.

  • Earth Skeptic||

    ^^This

    From SSA.gov:

    "Historically, an average of roughly 83 percent of covered earnings have been subject to the payroll tax. In 1983, this figure reached 90 percent, but it has declined since then. As of 2010, about 86 percent of covered earnings fall under the tax max."

    If I understand this correctly, only about 14% of earnings that might be subject to SS tax now escape that tax. So lifting the cap would increase SS tax revenue by a whopping 16%. Somehow I doubt that will fix things.

  • jcw||

    Somehow I doubt that will fix things.

    Healthy amount of doubt is definitely a good idea. Just letting you know what I heard from someone who would know more than me about it.

  • Stephen Lathrop||

    That ignores the import of "covered" earnings. Uncovered earnings are huge. I don't want you to have to take it from me. Google "annual personal income US," Then Google "Annual Social Security Income." Compare.

  • Stephen Lathrop||

    You are ignoring the import of "covered earnings." Earnings not covered make up most of the difference. Wage slaves get nothing but covered earning. Rich people take only a tiny percent of their gross income as "covered earnings."

  • NotAnotherSkippy||

    No cut off aside from the fact that SS benefits can be taxed at up to 85% and the cap on benefits paid out you mean? Those caps of which you are unaware?

  • jcw||

    Are taxes now defined as "cut offs?" I am confused by your statement. I think the problem of benefits being taxed is definitely something that should be discussed (and seems like a dumb idea). But I wasn't talking about effectuating that change. My comment was very specific and not related to that.

    I'm not sure why you are being so adverserial. Reason.com brings it out of you, I guess.

  • NotAnotherSkippy||

    So if I take away your benefit through taxation that is different because...?

    To the fainting couches.

  • JeffreyL||

    That FICA money taken from your paycheck was not saved for you in a "trust fund." Politicians misled us. They spent every penny the moment it came in.

    not true. Tell me, do you consider pension funds that spend every penny when they convert the cash raised into investments differently, and if so, why? The government did the same thing. However, instead of purchasing securities like stocks and state and municipal bonds, commodities and such, the government purchased US Treasury securities as its sole investment holding.

    While i would not agree with this, and in fact, i disagree with a national based social security system on the merits anyway (i would prefer state based if any at all), its still the same as any investment fund.

  • Red Rocks White Privilege||

    the government purchased US Treasury securities as its sole investment holding.

    Except it's not "being invested"--there's no interest coming from those bonds into the SS payout fund. It's simply a pool of potential debt that has to be taken out to meet the shortfall whenever current SS revenues don't match obligations.

  • JeffreyL||

    Not true. Interest is issued to the trust fund, which turns around and purchases US Treasury securities with the interest proceeds.

    Same as before.

  • Sevo||

    "Not true. Interest is issued to the trust fund, which turns around and purchases US Treasury securities with the interest proceeds."

    So the government trades one piece of paper for the other, and therefor profit? If you had any brains, they leaked out on the way here.

  • NotAnotherSkippy||

    It is no different than borrowing from you 401k. You have to pay that back with interest. Are you truly wealthier based on those IOU's? Even worse there is zero capital accumulation by buying treasuries. That money was spent on consumption and never invested in any real sense of the word.

    But if half the canaries are flying in the back of the van you can carry twice as many canaries, or something.

  • JeffreyL||

    Depends. If you use the funds you borrow from your 401(k) and purchase a stock that goes up in value more than the interest you pay back into your 401(k), yes you have actually made yourself wealthier.

  • Sevo||

    "While i would not agree with this, and in fact, i disagree with a national based social security system on the merits anyway (i would prefer state based if any at all), its still the same as any investment fund."

    No, it isn't. An IOU to yourself is not an asset.

  • EscherEnigma||

    Again, links to the actual proposal please.

  • Careless||

    "This year, the program went into the red for the first time."

    Uh, it happened first in 2009 or 2010

  • ||

    I can't wait until this house of cards collapses and we have a civil war.

  • signalfire||

    If we've got $3,000,000 every weekend for a fuckwit pretend President to visit his own golf courses and otherwise not work more than an hour a day, and if we have plenty of money for bombs, bombers and a military presence in dozens (or is it hundreds? But not enough for the veterans we keep making!) of countries, then we can fund $1K a month so gramma doesn't go hungry.

  • Sevo||

    Were you born this stupid, or did you study for it?
    Neither your bullshit claims of golf costs, nor cutting the militarily to zero would save S/S, you fucking idiot.

  • ||

    Cut payments to the rich? The rich are the ones that likely paid more towards social security. You are fucking over people who did their payments properly in favour of paying for people who did not even work for it.

  • Stephen Lathrop||

    Red, once you settle on blaming the poor as your answer for every argument about social policy, you don't ever need to think again. And every policy you prefer turns out to be optimal. Do you ever wonder if that is the right way to go about it?

  • tommhan||

    It seems to be useless to talk about this as politicians never do anything about it. Every time a politician speaks about making changes to help save this valuable program they are marked as someone trying to steal your retirement money. It seems both parties refuse to intelligently address this problem together. I am 65 and will retire next year so I know my SS will be there but if these leaders do not change their positions on this important issue our future recipients will receive much less.

  • mysmartstuffs||

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  • Richard Stallman||

    The solution is to tax the rich more.

    All the increased national income of the past few decades in the US
    has gone to the rich. That's because they corrupted our government to
    adopt policies that direct it to them.

    Let's take some of it away from them, for the rest of us!

  • Richard Stallman||

    The solution is to tax the rich more.

    All the increased national income of the past few decades in the US
    has gone to the rich. That's because they corrupted our government to
    adopt policies that direct it to them.

    Let's take some of it away from them, for the rest of us!

  • tlapp||

    I once worked on a contract position for the government. In my report I identified a number of issues in advance of problems with their plans. Afterwards I was called into an office and told the issues identified were correct but politically they wanted to move forward anyway and that government is reactive, not proactive. Simply put those working knew the plan would have problems but dared not bring them up. It was CYA and make sure there was someone to blame in another department or very likely the outside contractor.

    Government will not act until our creditors stop buying our bonds and not one moment sooner.

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