Social Security, Medicaid, Medicare = WELFARE

[fredtam]

SS reform is all but dead in Congress anyway.

 

I find it a ironic we worry that way out in 2042 we'll have to pay out $1 for every .74 cents we bring in for SS (and consider that reckless)' date=' while our current federal budget is spending $1 for every .68 cents brought in. Could you sustain your family until 2042 if you made $20k a year and borrowed another $10k a year to cover expenses?

 

 

Fred, are you referring to a different planet other than Earth, or is this an April fools joke?

 

Read this:

 

WINTER HAVEN, Fla., March 10 /PRNewswire/ -- "The first steps toward [b']solving the Social Security problem must be an immediate halt to the ongoing daily spending of Social Security money on other programs[/b], followed by a repayment of the $1.7 trillion that has already been 'borrowed' and spent," says economist Allen W. Smith, author of the book, "The Looting of Social Security: How The Government Is Draining America's Retirement Account." (Carroll & Graf, 2004).

 

Smith says that he is baffled and bewildered that President Bush continues to get by with spending approximately $400 million of Social Security money daily on other programs after having misused $509 billion in Social Security funds during his first term.

 

A lot gets lost in semantics and spin. This money being spent is money that was invested into Special Treasury Bonds. It is no different in principle than you depositing money into your savings accont. The bank doesn't just let it sit there and pay you intrest for allowing them the privelege of your money taking up space in their vault. They spend it. In general this leads to them earning over and above what they are paying you for intrest.

 

The surplus was put into Special Treasury Bonds in order to prolong the life of a failing SS system. This allows the money to gain intrest and prolong the system further. As I have said twice already all estimates on the length of time SS secutity solvent are based on all of the surplus plus intrest being paid back.

 

These people act as if all the money that is outstanding were to be payed back everything would be fine. This money is already being counted.

 

Maybe you should read this. (simplest explanation I can find).

 

Now if you want to argue over deficits or comingling of funds and how it applies to this situation that would be fine. However what you seem to believe about SS is misguided.

[wheelman]

Fredtam,

Who "pays" the "interest" on those special treasury bonds?

The Treasury!!!

Who does it pay the interest to?

The Treasury!!!

 

See the problem??

 

There is no interest earned because the money is not invested in anything. Those "bonds" are just an IOU that holds the value of the money borrowed from one account and placed in another. They are just an accounting trick to make it look like the money is still in the SS account, but it has been transferred to other accounts and spent, it's gone!!! The bonds are advertised to pay interest but all the money comes from the same place so how can there be any additional to pay from one account to another. It's like saying you are borrowing cookies from one of "your" jars to put in another of "your" jars and the second jar will return more cookies than it borrowed at a later time but neither jar has any way of producing more cookies.

 

Wheelman

[Heavy Z]

Fred,

 

Thank you for the link, let's have a look:

 

"What happens with the excess money the system collects? The Social Security system buys U.S. Treasury bonds with the surplus. Essentially, the government (in the form of the Social Security Administration) loans the surplus to itself."

 

It says the more we squander today, the higher the taxes will become:

 

"In future decades, when it comes time to start drawing on the collected surplus, the government will pay itself back through tax revenue (or additional borrowing)..."

 

Look back to '98 about Clinton and this problem, add the following from the Concord Coalition, founded by former Senators Paul Tsongas (D-Mass.), Warren Rudman (R-N.H.), and former U.S. Secretary of Commerce Peter Peterson:

 

"While today's projections from the Office of Management and Budget (OMB) predict a budget "surplus" of $9.5 billion by 1999 under the Clinton administration's latest budget plan, that surplus is possible only by borrowing Social Security's surplus of $105 billion in that year...'The so-called budget surpluses that policy-makers are lining up to spend consist entirely of Social Security's annual trust fund surpluses,' said Martha Phillips, executive director of the Concord Coalition. 'We should be saving those surpluses to prepare for the retirement of the Baby Boomers, which will put a huge financial strain on future taxpayers.'"

 

http://www.concordcoalition.org/releases/980202_presbud_react.html

 

And this from 2001, notice they also mention that the SS surplus is being used for general funding:

 

"The new estimate for the federal surplus is sharply lower -- off by 44 percent --- from the $275 billion figure the CBO was predicting just three months ago. The reduction means that President Bush and congressional lawmakers will be hard pressed to keep their pledge not to use Social Security funds for any other government spending, save for a planned, steady retirement of the government's outstanding debt."

 

http://archives.cnn.com/2001/ALLPOLITICS/08/28/budget/

 

Which is exactly what they've been doing, and the pace is much faster now...

 

"Between 1983 and 2001 a total of $667 billion in excess Social Security payroll taxes was spent...In his first three budgets, Bush (who had the good fortune to take office at a time when the surpluses were growing rapidly) and Congress used $480 billion in excess Social Security payroll taxes to fund basic government operations—about $160 billion per year!"

 

http://slate.msn.com/id/2093707/

 

You seem like you've done some research, but to say SS isn't being looted ignores the obvious. Politicians of both parties, economists, and a multitude of articles from both conservative and liberal sources have made this painfully clear for a long time now. I hope this helps.

[fredtam]

Fredtam' date='

Who "pays" the "interest" on those special treasury bonds?

The Treasury!!!

Who does it pay the interest to?

The Treasury!!!

 

See the problem??

 

There is no interest earned because the money is not invested in anything. Those "bonds" are just an IOU that holds the value of the money borrowed from one account and placed in another. They are just an accounting trick to make it look like the money is still in the SS account, but it has been transferred to other accounts and spent, it's gone!!! The bonds are advertised to pay interest but all the money comes from the same place so how can there be any additional to pay from one account to another. It's like saying you are borrowing cookies from one of "your" jars to put in another of "your" jars and the second jar will return more cookies than it borrowed at a later time but neither jar has any way of producing more cookies.

 

Wheelman[/quote']

OK. Go buy a Treasury Bond. Cash it in in a few years and tell me that you did not get any intrest because you paid taxes or you are the government..

 

SSA is independent of the General fund. Years ago it was decided that it would be best to help SS by investing in a company with good growth and a history of never defaulting (bonds) ie. the Government.

 

This is no different than the millions of people who invest part of their portfolio in "safe" treasury bonds. Should they change this?

 

The intrest is paid through increased revenue which the Gov. bases the intrest rates of those bonds on.

 

Now as I said if you want to discuss the defecit that will need its own thread. The deficit and fear that the government will not have the money to pay back the bonds are the real issues. If they don't have the revenue they will have to either raise taxes or cut other programs to make up the difference.

 

The decision to be made is if we want to continue to slowly pay ourselves to death with the current systems or bite the bullet and lay out the initial cost of going to a system more in line with our demographics.

 

Edit: How long do you think social security would be solvent if all the money were given back sans intrest to SSA today. Keeping in mind that there is no other way to earn intrest on the money.

[fredtam]

Heavy Z,

"Essentialy" is a severe oversimplification. I don't think I need to tell you that.

As to the rest of course we want to bring spending down so repayment of the bonds is not an issue.

It would be nice if we didn't have to use all of the money in the General fund.

 

I'm actually kind of glad we do though because otherwise we would just be using not only the money owed to SS but whatever was left if there was a general fund surplus to support a dead program.

 

Again all of this money is being counted as if it were there. That means the "omg they are raiding SS" mentality is moot. The current system will begin to fail at the projected dates even with all the money.

 

 

Actually the whole arguement either way is moot. No matter which way it goes you and I will pay for it.

[Heavy Z]

No oversimplification as I recall, I took issue with your assertion that SS surplus funds were secure.

 

Not much to be glad about IMO nor is it a moot point. That 'dead program' (i.e. what all of us pay monthly into SS) is being siphoned into the general fund, essentially making it a hidden tax.

[fredtam]

No oversimplification as I recall' date=' I took issue with your assertion that SS surplus funds were secure.

 

Not much to be glad about IMO nor is it a moot point. That 'dead program' (i.e. what all of us pay monthly into SS) is being siphoned into the general fund, essentially making it a hidden tax.[/quote']

It is an oversimplification. Also you are "taking issue" with one part of what I said without taking into account the rest of it. I will try to explain it one more time:

 

1. Social Security is a dead program because no matter how you look at it it will run out of money. If the money had been put in a box somewhere earning no intrest it would start paying out more than it takes in at the projected dates but it would have less money to prolong it.

 

2. The "hidden tax" as you refer to it is only one of two viable options for prolonging the current program. You can have the "hidden tax" or you can raise current SS tax. Either way the money has to come from somewhere. You can't just print more.

 

3. "Don't spend the trust fund principal". Why pay intrest on money you aren't able to use? This is just as much a "hidden tax" as anything. The money to pay intrest has to come from somewhere. What you are really saying is "pay us intrest on our money but don't use it". "Oh yeah and when you pay that intrest don't tax us or cut programs".

 

4. "Well, cut spending so you don't have to use the principle and you can still pay us intrest". This would be great if there was no debt. Running a budget surplus is wonderful however it isn't really a surplus if you have debt because the money is already spent. Now to the bolded portion. If you had no debt and ran a surplus over and above SS' contribution to the general fund (required for elimination of debt) why would paying intrest to Social Security (while not spending the principal) be any less of a "hidden tax" than the current setup? You would be taking money from the general fund to support a program that should be self sustaining.

 

5. "Raise the SS tax". To what levels? At what point do you realize the boat has a a 12" hole in it and your only DC equipment is a tampon? Unless you are going to play some Barry White over community loud speakers and pass out Spanish Fly or open the borders the demographics of the future will not require anything less than insane portions of your paycheck to support SS. Paying in all your money to support the "community" borders on socialism/ communism. If that is your idea of a nice place to live there are countries who can accomodate you. I would gladly buy you a ticket to said countries rather than see mine end up that way.

 

6. "Eliminate the debt, balance the budget, and provide for us". LOL. Pick any two and that will be the best you can hope for. Again none really matter when it comes to SS. Either:

 

a. You use the current setup with the "hidden tax" which has a finite lifespan.

 

b. You raise SS taxes to theoretically make the program support itself. Of course with current demographics you just continue to do so unless you are happy with 70% or less benefits. Yet again you are paying a "hidden tax". The lifespan is longer but again finite since at some point it has a serious affect on purchasing power/ economy.

 

c. In an alternate universe* somewhere you have no debt, the budget cup runneth over, and people are happy to let the general fund support SS rather than having money in hand (time value of money) to invest.

 

Sorry. Supporting SS in its current incarnation with current demographics requires to much circular logic imo. My brain doesn't work that way. Some like to call me "left brained" but I like to think of myself as realistic. To think that any institution is correct in its first incarnation and that the founders of said institution considered all possible variables is foolish imo. The only things that are destined to survive are those that are open and able to evolve with the enviroment whether that be physical, emotional, political, etc. A little part of me (I refer to it as my feminine side) can understand fear of change but at a point it simply become denial. I sometimes wonder which sides the people that were pro/ con the original SS act would be on now. Of course this country is built on debate and I anxiously await your reply.

 

 

*Alternate universe theories require that the speed of gravity be infinite. In the last few months, although contested, gravity has been calculated to be "c" putting constraints on multi-universe theories such as string and its variants so please pick A or B

 

**No matter how you look at it the current program is dying, dead or will put to much of a strain on Joe Citizens' wallet in the long run.