I'd switch the order and one item.

One I'd start with #5: Show us your plan Mr. President. And add that it's absolutely ridiculous that the President has been on the road touting a plan for two months that doesn't exist.

Second, I think that the Democrats should start counter-attacking on Medicare. Last year the President pushed a Medicare plan through that pushes that program into deficits next year, shouldn't he address that problem first?

Second that - item 5 is all you need - for now. KISS.

Eventually, there will be changes. The current system doesn't work. There has to be changes. If not private accounts, then the only possible changes are:

- Means testing. If you have assets like a house, brokerage accounts or income, you may not get Social Security.

- Raising the retirement age.

- No early retirement benefits. In otherwords, no payouts at age 62. People would have to wait until 65 or 68.

- Make 100% of benefits taxable.

I am sick and tired of hearing from Carville and Greenberg with these warnings. If you guys are this smart, then pick up the phone and talk with Nancy Pelosi and Harry Reid about this and offer your assistance in putting together this message instead of doing these releases publicly to toot your horn.

Maybe their calls aren't being taken because of their track records? This would leave them on the outside looking in with nothing but media commentary to assuage their emptiness.

Muck, what is it about the current Social Security system that doesn't work currently? However you define "work"--administratively, targeting benefits, delivering promised services, covering people who were promised to be covered--I think Social Security works. I understand the long-run sovency issue. Addressing that will necessitate almost none of your suggestions. But addressing that is a question for another day. My 94 year old mother thinks Social Security is working just fine, and as i observe it directly, it is.

Charles

Muck dog - even the staunchest advocates of privatization say ALL those things will have to happen under Bush's (UNRELEASED) plan UNLESS privatization also includes draconian benefits cuts... with sufficient custs even privatization 'works'...

Privatization is the WORST of all worlds... all the risk of the market, all the costs of actively managed accounts and no better actuarial results. Fucking perfect...

Get real... this is all about WHO BENEFITS (fund managers & wall street) and PHILOSOPHY (egghead know nothing libertarians pushing pie in sky ideology)... average people, the ones who need SS do NOT benefit.

I would put "show us your plan, Mr. Bush" first. Doing it your way would put the Democrats in the position of proposing tax increases and benefit cuts while the Republicans are the free lunch guys, promising that the magic of the free market will put more money in everyone's pockets at no cost, except for some borrowing that we won't talk about, after all, it's only a few trillion.

If Carville wants us to say what we stand for, say that we stand for Social Security. It's a great program, and it's the Democratic Party's proudest accomplishment. Retirees in red states, you like that check that comes every month? Thank the Democrats.

The Democrats' position should be that we'll wait until 2007 to discuss changes to Social Security, and the voters, who have already demonstrated that they don't trust the Republicans on the issue, should install the Democrats as the majority of at least one house. At that point, a consensus deal can be worked out, but not before.

As Bush says, you're not going to trick us into negotiating with ourselves.

O.K. Muck let the GOP come out for making SS benefits 100% taxable, real vote winner especally in those poorer SS dependant red states.

Gotta love Muck.

"- Means testing. If you have assets like a house, brokerage accounts or income, you may not get Social Security."

Let's rewrite that: "If you have assets like a house you may not get Social Security." If that phrase doesn't scare you, all you middle-class homeowners, this one will:

"- Make 100% of benefits taxable."

The current system doesn't work. If it did, we wouldn't have had to raise taxes from 2% to 12.4%, or keep raising the cap year after year beyond the CPI.

Dry Fly's comments are a hoot, if you're a big fan of ignorance. Which, I realize, some of you are.

Finaly, idio scoffs at the idea of how means testing will work. But, in order to provide the current level of benefits, there will have to be a huge increase in the numbers of folks who are excluded from receiving benefits.

The system works, and would work better if Georgey and Friends would keep their sticky fingers off the trust fund.

You are already being "taxed" to put your wage $ into the SS trust fund...6.2% or thereabouts...that's money right off the top of your paycheck.

I am not sure that it makes sense to tax those dollars again, but I am sure someone will argue that it does.

I guess I don't have a problem with means testing although I can see why others might. I mean you work all your life and pay significant $ off the top for Social Security, those same $ that sure would have been helpful when you were young and just starting out a family or whatever, and then as you get older you get more secure in your career and start making more money only to find as you get older that when you retire you find yourself means tested out of a SS check...

Glad to see muck has shown up to propose more "sharecropper" economics!

I am VERY DISAPPOINTED in the Left Coaster -- one of my favorite blogs. You all are completely clueless on this one in two ways.

First, as I have posted on this blog recently, there is a very simple way to couch the Dem resistance to Bush's plans to dismantle Social Security in moral terms: its a SCAM, a fucking rip-off. There's your moral values language. I am amazed that you all dropped the ball so badly on this obvious point.

Here is the scam in a nutshell: In 1983, taxes were raised on workers as a way to keep Social Security solvent. The excess funds were put in a TRUST Fund. Al Gore campaigned in 2000 saying he would secure the Trust Fund (remember the lock box?). George Bush agreed with Gore on the lockbox and reiterated that point in March 2001. Now Bush turns around and says the Trust Fund he promised to put in a lockbox doesn't exist.

Bottom Line: Bush is trying to massively screw workers out of their Social Security money to help pay off the debt he ran up giving away tax cuts to the rich.

Second, how in the world can you be proposing to increase the payroll tax after Bush said the Trust Fund doesn't exist? Are you fucking CRAZY? Haven't you been listening? Where would you put the extra money? Bush says there IS no Trust Fund. The con man tipped his hand and you still want to go ahead with the con! Why in the world would we put any more money into the non-existent Trust Fund?

I expect an offical response from the Left Coaster as to why they have missed these obvious points.

Fool...

The excess funds were put in a TRUST Fund.

Not since LBJ decided to eliminate the TRUST Fund and use the dollars in the general fund. Since then, Social Security tax has just been a flat tax that today is 12.4% on your first $90K of income.

how in the world can you be proposing to increase the payroll tax

If the payroll tax is increased or the current cap eliminated, then those excess dollars won't go into any TRUST fund. They'll just go into the general fund and be spent on programs, weapons, and wars. The crisis will still exist, because there are no investments in Social Security, just IOUs.

muckdog: WRONG.

In reality, there is a Trust Fund and the General Fund only borrows money from the Trust Fund by buying bonds at interest.

There are two reasons the Retirement, survivor, and disability parts of the Social Security Act have been so successful, as compared to the more problematic (nopt to me, but over the next seventy years, politically) Aid to Dependent Children part. First, that part was universal, applying to all workers, disabled, and survivors, and not means tested, as ADC (and its successors) was. Second, that part was contributory, not a grant or stipend, meaning that all workers contributed a portion, which was matched and returned. People who tallk about means-testing want to undermine the original genius of Social Security which is still applicable. That is why SS has such wide-spread support.
Charles

Well, give yourself a raise! Take $20 from your left pocket, and put it in your right pocket; replace the money you took from the left pocket with a scrap of paper that says "I owe you $20."

I bet you feel richer already! How are you going to spend that extra money?

actually, selling bonds

1) its not the same as two pockets in the same pair of pants. In the one case the bonds are repaid with money from the progressively funded General Fund. In the other they come from the regressively funded payroll tax. Fuck off scam artist.

2) Bush says it doesn't exist all which is like putting the money in a pocket with a big hole in it

Look, Muck, if the General Fund doesn't pay off those bonds, it won't just be the end of Social Security. It will be a serious depression. Any default on T-Bonds indicates full-on fiscal meltdown (Argentina style).

The reason social security has worked in the past, but won't work in the future is the retiree/worker ratio. In 1960 there were 15 people in the work force to every 1 retiree. Now it's around 3 or 4, with the number going down every year. So the 2030 / 2040 date thrown around is when it's projected that there will be about 2 working people for every retiree. At this point the benefit cuts Muck is talking about would have to be implemented to keep the system going. Just simple math.

The idea behind private accounts is to make the system perpetual. No more fixes/tax increases to pay for those in private accounts. Would have been nice if they originally did it this way, and I'm all for doing it if they can pay for it without borrowing... By the way there is a county in Texas that went off of Social Security system when there was a window that allowed local governments to come up with their own plan. Those on the plan I've talked to are really happy with the results. No stock investments and returns that are a lot better than SS...

The reason Dems are so defensive on this is that they are terrified of the majority of the electorate having interests in the stock market. They know stock owners break for Republicans in high percentages. Repubs also see this as a chance to make 95% (eventually) of the electorate stock owners... that's the real fight...

I should clarify that there are some retirees out there (I don't know them personally) that are angry about the Galveston private social security plan. One of the flaws of the original plan was that it allowed people to borrow from it or use funds early if they were in dire straights. Some people spent a lot of their money and are angry that their benefits suffered for it...

That's true, Tex. But I don't think the folks here grasp that. There needs to be some underlying investment with growth at the heart of the system.

Also, the voting demographics show that those who make more than $50K tend to vote Republican. Privatizing Social Security scares the heck out of Democrats who know about investments "compounding over the long term."

Tex, if you really think Democrats are terrified about this because they are worried about "the majority of the electorate having interests in the stock market", and because stock owners break for Republicans, then you are sadly misinformed. Stockowners do better under Democrats, and the idea of millions of retirees depending on the market instead of an old age insurance/safety net should give pause to anyone who cares about such things.

"That's true, Tex. But I don't think the folks here grasp that. There needs to be some underlying investment with growth at the heart of the system.

Also, the voting demographics show that those who make more than $50K tend to vote Republican. Privatizing Social Security scares the heck out of Democrats who know about investments "compounding over the long term."

There is no guarentee market securities will appreciate sufficiently to make any privatized scheme work... and faced with the anticipated outflows at peak years will likely DEPRECIATE in value over at least SOME of that period leaving the folks who retire then VERY screwed... that will hurt working and middle class Americans the hardest... Meanwhile stock speculators game the system the whole time making a killing... Talk about your ponzi schemes...

The Ubber GOP-Libertarian hacks who push this crap refuse to face the fact that there will NOT be enough compounding to produce anything close to the growth rates needed to cover the additional debt obligations to pay promised benefits for current retirees and then also fuel future benefits for current workers. Greenspan, the WH shill even came clean on this in recent testimony... privatization does NOTHING to correct for this demographic bubble. Only Muck Dog sticks to the old dogma - there is some ignorance for you... read your party's script next time.

FWIW the demographic bubble could be managed at current benefit levels in either a private or public model but the private model is worse... because private funds that are sufficiently low risk are expensive to manage (heavily hedged, eating away a lot of the market upside potential).

And private systems have NO CHANCE of making it work if the actual retirement funds are expected to produce enough growth to cover BOTH the additional debt to fund the transisition... and the growth needed to overcome the demographic bubble without tax increases or benefit cuts... all those cuts you mentioned except worse.

The only chance a private system has of making those two goals (support transition & SAFE SUFFICIENT growth to support future retirees at current benefits) is massive tax increases now to front load the two or more million or more in cost expected for transition, that and start running a balanced budget today...

When pigs fly...

There is no crisis in the current system - there will be some jiggering required but far from a crisis - this whole thing is ideological and or narrowly self interest driven by Cato and Wall Street.

The only crisis is the overall debt - private and public. And that is a seperate issue - don't take care of that and neither system flies. Pigs and all.

The only chance a private system has of making those two goals (support transition & SAFE SUFFICIENT growth to support future retirees at current benefits) is massive tax increases now to front load the two or more million or more in cost expected for transition, that and start running a balanced budget today...

Did I say million? Make that TRILLION instead...

The reason Dems are so defensive on this is that they are terrified of the majority of the electorate having interests in the stock market. They know stock owners break for Republicans in high percentages. Repubs also see this as a chance to make 95% (eventually) of the electorate stock owners... that's the real fight...tex

Bout time someone got it right!!! DEMS worst nightmare is Bubba the night janitor reading the wall street journal. DEMS already lost this battle and they know it. The DEM party leadership is disgusting. Pelosi who has more face lifts then the Vermont ski slopes and Father time Reid The both of them looked like they crawled out of the movie "Night of the Living Dead" You can't look at them when they talk.

Private accounts in SS should be no different then 401k's. Some at work were against Bush's plan and I asked them if they were satisfied with thier 401K plans. Of course they were so i asked what's differen't with private accounts when your employer by law matches 100% of your contribution where we only get 50% matched contribution with our 401k plans. they looked totally confused and this botherd me being they sport MBA's and Phd's. They never made the connection these accounts would by like our 401k plans.

The reason Dems are so defensive on this is that they are terrified of the majority of the electorate having interests in the stock market.

Defensive?! Hey, any time a GOP shill--like yourself, Chevy--wants to explain why we need to get rid of the Social Security that has now admirably served two generations, we Dems are more than happy to expose those arguments to the public. Somehow, I don't think the public will be receptive to your views.

Make 100% of benefits taxable.Posted by muckdog

Muck you feeling OK? Pay taxes on taxes already paid? Bad enough we're getting them back at a loss (Inflation). SS should be eliminated altogether replaced by private accounts setup by your employer through a federal bank whose funds can only be invested Gov't bonds and bank CD's insured by FDIC. Have disabilty become part of medicare payments. Transfer all monies witheld from SS to a federal bank having them setup the accounts with the individuals. Problem solved.

Check this one out...

cunningrealist

...for a market insiders take on SS...

Let's get right to it with some comments on the debate over Social Security. There is some excellent in-depth analysis on the web from many sources including Josh Marshall, National Review Online, and Nouriel Roubini, so I'll try to offer a unique anecdotal perspective. Through my job, I have frequent contact with insiders of public companies, both inside and outside the financial industry. This week, I spoke to an executive at a large publicly-traded technology firm. We talked about the state of his business, the outlook for the future, and the performance of his company's stock. One issue he is extremely concerned about is the FASB-required expensing of employee stock options, which will become mandatory for all public companies later this year. This new accounting rule will have the effect of making the stock of many companies that are profitable appear far more expensive from a price to earnings ratio perspective, and those companies that have no earnings at all--many of which are tech companies--will become even more unattractive to asset managers like me.

This executive sees one shining beacon in the fog of increasingly strict accounting standards and a difficult business environment: The prospect of Social Security reform. He told me that he and many of this colleagues at other companies favor the creation of private accounts, because a new source of demand for his stock will help compensate for the increasing unattractiveness of his company from an investment perspective. This executive also made it completely clear (albeit in casual, friendly terms--which is perhaps the only way he would have voiced this sentiment at all) that he looked forward to private accounts "picking up the slack" that the new accounting rules and increasingly difficult business conditions in general will create. He did not have to explain this to me. He works at one of thousands of public companies that rely heavily on options grants (which ultimately lead to insider selling as options are converted to common stock) to attract and retain employees. He depends personally on options grants as well; according to SEC filings, in the past few years he has sold tens of millions of dollars of stock converted from options. In the absence of any new source of demand for its stock, his company will have to either increase its buyback of stock in the open market--yes, personal stock he is selling-or, all else being equal, watch as the stock falls and employees like him convert large options grants and sell into a weak market at a lower price.

Make no mistake about it: This executive wants private accounts that invest in the stock market and his stock in particular. He sees private accounts as transferring risk from him to the public--risk, he surely knows, that is already being transferred through instruments such as IRA's, 401K's, and the explosion of mutual funds over the past decade. He's profited handsomely from that transfer of risk. From a corporate perspective he wants that transfer to continue, and from a personal one he needs it to continue to support his lifestyle.

Now who benefits and who loses from this ...er 'arrangement'?

Oh Cheeevy, still waiting for my answer and a site to back up your allegations.

Chevy... a stock holding public is a two edged sword... they cut for you when the market is heading up... they cut your heads off and kick them in the street when the markets are down... we have lived through a 20 plus year schumpeter wave driven bull market... one that coincided with a very favorable demographic wave (boomers) all forced to contribute something for their retirement... generating money and stuffing it into the markets... near perfect conditions.

Both waves are petered out as all waves do... now we are heading into the part of the cycle where the money comes OUT of the market, not in... and where the schumpeter waves transitions from innovation to comoditization... both are VERY unfavorable for market valuations... this goes from being perfect to being the 'perfect storm'.

...the public will be kicking GOP heads in the street sooner than you think if these reforms go through...

First off, I think it is odd no one has commented on the Galvestion privitization link I posted. Has no one heard of this case outside of TX? Sounds like a good plan... no stock risks... greater returns thans SS... account ownership...

Both waves are petered out as all waves do... now we are heading into the part of the cycle where the money comes OUT of the market, not in... and where the schumpeter waves transitions from innovation to comoditization... both are VERY unfavorable for market valuations... this goes from being perfect to being the 'perfect storm'.

I have heard this crazy theory kicked around by some liberals, and I don't see how a level headed person thinking this through can buy into it. The theory as I see it is that markets will experience a severe bear market as more people are taking money out of the stock market than are putting money in, due to the SS system. This will cause a perpetual cycle that makes all market values go to zero. It's a funny/ludacris arguement on two counts

#1. It proves that deep down those making this argument know that the SS system as we know it will at some point run into serious problems. How can there be outflows in the system so significantly greater than inflows that the stock market sprials down to zero, but a "lockbox" type system will continue indefinately with no inflows from any other source, as the stock market has.

#2 It shows a complete ignorance of the stock market, business valuations, etc. A share of stock is owning a piece of a company. A company that has assets, revenues, etc... Let's say for arguement's sake that the market does start heading down to zero based soley on the supply/demand fears that are expressed. At some point on this wild spiral down to zero value, a company's market value will be worth half of the assets the company owns and will be paying out a dividend yeild of 20%. Who wouldn't want an investment like that?? Buyers from all over would be pouring in... of course buyers would stablize the price way before the investment got this attractive.

Swings in the market could be much more dramatic as stocks get way overvalued and then markets correct themselves. Just remember there is an underlying value to the company that increases over time if it is a good company.

The key phrase in your statement is 'if it's a good company'. Look at the way too many companies are run today. The stock market is part psycology and part economics. Heavy downward price pressure will wipe out too many small investors causing a real ( not just relative) decline in spending. That's supposed to be part of the Feds. job to shortstop the subjective side of the market. Remember the psudo-crash of 1987, in Miami a guy started shooting! Have a real crash and you will get bodies smacking the sidewalks.

Tex,

I was replyinf g to you of course, I don't know how my top line got cut off.

Sorry about my typing, it is late here on the east coast.

Tex... there are two 'waves' working in concert... schumpeter innovation wave and age demographics... both will have an effect on market valuations.

On Schumpeter... do you read the Economist much? They have been covering this since NASDAQ 5000... there are lots of drivers of the economy - short and long term - not just 'tax rates' like conservatives all think... read the series of articles the Economist ran on innovation, the new economy and Schumpeter Waves back in 1997 to about 2001 - they predicted the end of the dot.com and the NASDAQ bubble based on similarities with other waves and bubbles... like 1880s & 1929... start here here... but there is a lot more on theis at the Economist website... In short when you hit the bottom of an innovation wave - there is far less growth to support equity valuations... we hit a top around '98 and should be bottoming around 2015 plus or minus five years... right in the middle of the years when the market needs to grow the most to float SS... not bullish at all.

On demographics... The wild 'liberal concept' that valuations will decline when people cash out their IRAs, 401Ks pensions, personal mutual funds AND NOW PRIVATIZED SS is due to a truly seditious concept called SUPPLY AND DEMAND... more people selling securities than buying them. Radical concept but last I knew still valid.

More money moving into the market - drives share prices up... money flowing out, drives share prices down.

When the boomers and Xers start cashing out... who the hell is going to buy all these shares? And if so how deep the discount? Foreigners? Young workers? Speculators? Who cares if the stock represents a 'company'... or whatever... if there are more selling than buying - prices go down... period. That isn't democratic propaganda... that is Adam Smith, baby...

Dry Fly,
For what is worth, I agree with you on one level. I think stock market corrections would enflame the average person. There were shooters after the 90's crash. I think investments should be limited to nonstock investments at first. Much like the Galveston plan.

But, I do want to correct crazy thinking when I see it posted to the masses... Only one of your artilces posted. And it was from 1999 when stock valuatoins were crazy. The market was pure speculation. Nasdaq 5000 was ridculous. Supposedly the old ways of valuing companies were out dated. Dodd was dead... Remember that talk? Of course it was stupid. I agree that this amount of capital flowing in can make the stock market much more bumpy, which I stated in my original post. But only because it will cause market values to be overvalued more easily. which will then be corrected....

When the boomers and Xers start cashing out... who the hell is going to buy all these shares?

Social Security participants will not be the enitre market of stock purchasers. If a company is cheap enough, the stockholders can force liquidation, force privitization, elect a board of directors to issue higher dividends, etc. There are a ton of people in the world that have access to stocks with a long term view. If the market gets cheap enough, they would buy more. I have three more comments I hope you would address directly, dry fly:

1. If there are so many more people taking money out of stocks than putting money into stocks in the social security system alone to drive that market down significantly below instrinsic value, where there are outside investors that can make inlfows into the market, how is the social security pay as you go system supposed to work? I agree with Adam Smith. You have just underestimated the size of the real market. The stock market will not be limited to SS participants...

2. What do you think about the Galveston privitization plan that has been in effect since 1981 that is working?

3. Are you saying that the good times of the 90s were in part caused by stock runnups, not Clinton, and the recent recession was a result of the market correction that began on Clinton's watch? I thought it was all Bush's fault. (I don't agree with this point, but I do think it is interesting you seem to be making that arguement)

Again, I don't like the idea of private accounts buying only stock, but I do like the idea of private accounts...

Hey guys: WAKE THE FUCK UP!!!!!!!!!!

The problem isn't some arcane technical one. The problem is that Bush is proposing to scam the workers out of their Social Security money. Get it?

A secondary problem is that many well meaning liberals, like the people who run this blog, want to hide their heads in the sand and pretend that we should propose reasonable alternatives. They seem to think that it would impolite to call attention to the scam.

Pay attention liberals: the Republicans aren't just trying to implement their own preferred ideological mechanism. They're trying to RIP YOU OFF. One primary mechanism for the scam is to set up a trust fund into which unsuspecting marks put real money.

Any liberal proposal which includes putting more money in the trust fundm which Republicans have now declared non-existent, would be the height of stupidity.

Does anyone on this blog understand this? Hello?

Private accounts in SS should be no different then 401k's. Some at work were against Bush's plan and I asked them if they were satisfied with thier 401K plans. Of course they were so i asked what's differen't with private accounts when your employer by law matches 100% of your contribution where we only get 50% matched contribution with our 401k plans. they looked totally confused and this botherd me being they sport MBA's and Phd's. They never made the connection these accounts would by like our 401k plans.

Posted by Chevy at March 8, 2005 06:02 PM

You mean the 401K plan I had that turned into a 101K plan when Putsch stole office the first time*? The one where the only firm I could invest in had their CEO on my company's board of directors? The one where they're now charging me fees to hold my money, now that I choose not to contribute any more?

401K plans usually only have matching for the first x percent contributed. In my company they've screwed arond with those rules every year - this year you get a 50% match on your first 6 percent contributed.

Wow, ShoveIt - that sure makes me want to invest more of my money in a 401K. And it puts that whole SS piratization scam the Illegally Installed Blow Monkey wants to shove up my a$$ into perspective. Thanks for clearing that up...

Maybe you should have asked some of the peons in your office how satisfied they are with the whole 401K system these days, instead of just talking to all the fatcats.

* - it has now come back to be a 251K plan - that is, for every $4 I put in originally, I now have $2.50. Including any company matches etc. Maybe by the time I retire I'll actually have as much money in this fund as I originally put in! What a great investment vehicle for my golden years!

TheFool,

I agree with you. Caps / payroll tax should not be increased now for future payments. That is a rip off. They should only be raised to pay for the transistion to private accounts or wait until the system goes bankrupt in 2050 and raise them then. Or maybe the system will die then, who knows. The AARP doesn't seem to care yet about me since I'm not close to retiremnet age... I know I'm not planning on a cent from SS when I turn 68 (2048)...

I know I'm not planning on a cent from SS when I turn 68 (2048)...

Why not Tex?

As things currently stand the "bankrupt" Social Security system will still be able to pay 70% of currently projected benefits in 2048. In fact all recent projections from the Trustees have tended to push the "bankrupcy" date further and further off into the future.

No Tex, you clueless dumbfuck. The rip off isn't raising the cap. The rip off is having workers put their money into a trust fund that the Republicans now say doesn't exist.

In a utopian world without Republicans, raising the cap would be a good idea. However, in the real world of blood sucking Republicans, there is no way for the government to hold money without the bloodsucking Republicans taking it and giving it to their rich cronies.

As things currently stand the "bankrupt" Social Security system will still be able to pay 70% of currently projected benefits in 2048.

I am aware of that. SS benefits aren't a lot to live off of, and some people are forced to live off of these payments. If you lop off 30%, it doesn't help matters. Personally, I think that if the system can only pay out 70%, then the bottom 70% should get full benefits, since they are the ones that really need it. I have been fortunate enough to begin my saving for retirement early so I hope to be in the top 30% of retirees eligible for SS. Also, when a program can only pay out 70% of what they have promised, I would consider that program bankrupt.

TheFool,
Obviously, you don't understand how the system works. Every penny you pay into SS doesn't go into a trust fund, you moron. A lot of goes it to your grandma or whoever else is drawing money. It's a pay as you go system. EXCESS funds (i.e. system inflows minus system outflows, not all system inflows) went into the trust fund. After 2008, outflows will be greater than inflows so money will flowing out of the trust fund. Raising the cap or tax rate could correct this and make money flow into the fund. I thought I was agreeing with you that this would be a bad idea. Little did I know you are a clueless idiot. Sorry for the mistake.

Tex: your point about net flows after 2008 is a good one. I stand corrected.

Also, when a program can only pay out 70% of what they have promised, I would consider that program bankrupt.

If that program has a legal obligation to pay those promised benefits and it could not that would be true. Like if I could only pay 70% of my mortgage. I'd declare bankruptcy. If on the other hand I could change just decide to change my mortgage payment to something I could afford I wouldn't be bankrupt. This is of course exactly what the SS system can do.

Raising the cap or tax rate could correct this and make money flow into the fund.

But those funds still need to be protected from being spent on anything other than SS benefits or the situation will not improve.

No?

I think Tex's point is that the funds from a cap increase would not be protected since it would reintroduce a surplus that would be squandered.

I think Tex's point is that the funds from a cap increase would not be protected since it would reintroduce a surplus that would be squandered.

Wasn't that your original contention The Fool?

Yes, but I foolishly called Tex a dumbfuck because I misunderstood that he was more or less agreeing with me.

The Fool,

more or less... I think we disagree on why it is a bad idea, but I think we can agree that pumping more money into the trust fund is a bad idea.

Now I'm confused.

I thought there was no Trust Fund!

There is a Trust Fund in reality. But in Republicanland it is not real, which means that in real reality it is real. In March 2001 Bush promised to put the Trust Fund into a lockbox to protect it. But in reality he didn't. Now he says the trust fund he promised to put in a lockbox can't be put in lockbox, like he said, because it isn't even real.

Bottom line: it's real, but I wouldn't put any more money into it because the bloodsucking Republicans will steal it and give it to their rich friends.

There is a Trust fund of the surpluses. Otherwise the dems woudln't be saying there is no crisis. In 2008, the program will be paying out more than it's taking in and 2008 is just a couple of years away. The fund basically purchased T-bonds. So the politicans say that previous admins stole the money and left it filled with IOUs. Dems and repubs are talking out of both sides of their mouth on this one. Dems say Bush stole all the money from the lockbox but then say that there is no problem until 2050... In actuallity all presidents since LBJ have taken SS money for T-bonds. The thing that stinks about it is it masks the full effect of our debt since it provides an government induced demand for our bonds...

Tex: now you are being a dumbfuck.

The theft didn't occur when the surplus was borrowed, the potential theft comes from the Republican bloodsuckers who now say that the Trust Fund doesn't have to be paid back because the iou's are allegedly worthless.

Dems say Bush stole all the money from the lockbox but then say that there is no problem until 2050...

Well that's a bit of an exageration isn't it.

I think what most Dems say is that George Bush lied when he said he would not continue the practice of raiding the SS surplus to offset general expenditure deficits. And what makes it even worse is that he lied and continued to use the surplus SS funds to not only offset deficits in the budget but also to enable him to push through tax cuts for the wealthiest Americans. Tax cuts that made those deficits even worse than they would have been. So he knowingly robbed FICA payers to give a break to the rich.

Now the federal government owes itself $1.5 trillion dollars. Hmmm! If I owed myself that kind of money I'd just tear up the IOU's. Wouldn't you? That will be the final act in the largest tax fraud ever perpetrated on the American public.

I didn't say anything to the contrary. Repubs are also talking out of both sides of their mouth. The bonds are not worthless and saying so is political rhetoric. There can be no theft of the trust fund really as it will be impossible for the US to default on these bonds. Repubs may try to spin it that the trust fund is worthless to get people to think the crisis is around the corner (2008), but they know it's wrong. I think they plan to use the surplus to help fund the transistion to private accounts...

...the Republican bloodsuckers who now say that the Trust Fund doesn't have to be paid back because the iou's are allegedly worthless.

That's pretty much true.

That the iou's are worthless.

The Federal Govt. owes the Social Security Administration, a part of the Federal Govt., $1.5 trillion dollars. Where's the money going to come from to redeem those iou's? Tax money. Right? Where does tax money come from? Tax payers. Right? So why repay the SS debt rather than just wipe it out and use general revenue to cover the SS benefits. What's the difference? It's coming out of our pockets either way.

Big difference... it pierces a sacred veil for no reason. We owe the money for ALL bonds we have issued.

Think of it like the difference between a corporation and a shareholder... shareholders can have personal loans due to the corp. same thing...

Where's the money gonna come from?

Same place the money is going to come from for the other $6 trillion of debt we have...

Right. Out of tax payer's pockets. Either way.

George Bush comes to me and says;

Here's the situation.

We can do two things.

First we can pay back SS. This will mean higher taxes for you. But the bonds will be redeemed.

Or,

We can wipe out the SS bonds. This leaves a big gap in the funding of SS benefits. This can only be closed by raising your taxes.

Which do you prefer?

That's not the choice at all. Look into how the US manages it's debt.

Tex,

Please enlighten me as to the options.

We issue more debt. In the Clinton world of surpluses, we still issued debt (had bond auctions, issued savings bonds, etc.). In a world of fiscal responsibility, we just break even paying interest out of taxes and keep financing the pricipal amounts. Eventually the real amounts of these obligations will go down due to inflation.

Tex: there is no big difference between paying back the bonds vs. covering the SS debt. The problem is that the bloodsucking Republicans are proposing NOT paying back the bonds OR covering the debt from the general fund. They thus precipitate a Social Security crisis out of what is really a crisis for the general fund.

BTW: I'm all for paying it out of the progresively funded General Fund rather than out of the regressively funded payroll tax.

More debt.

Easy as that is it.

And your so sure that that debt would be devalued by inflation quickly enough in the next decade or two that it would not adversely affect the economy?

Tex,

Besides. What's the difference if the Federal Govt. issues more debt to by back bonds from SS or simply issues debt to finance the shortfall in the SS system?

The debt does have an effect on the economy. That's why I hat the budget deficits we have. But taxing people more to pay off significant amounts of the debt has a larger detriment to the economy.

Having SS benefits paid out of the general fund as a long term fix would be a disaster. I don't think any side would adovcate that...