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Originally posted by KazetNagorraThe U.S. Social Security System.
Do you know what a Ponzi scheme is?
Payments to current retirees were (and continue to be) financed by a payroll tax on current workers' wages, half directly as a payroll tax and half paid by the employer.
...in the hopes that one day, we too shall live off the efforts of others.
Originally posted by monster truckAnd all we get is silence as they continue to champion this entitlement system. Amazing.
The U.S. Social Security System.
Payments to current retirees were (and continue to be) financed by a payroll tax on current workers' wages, half directly as a payroll tax and half paid by the employer.
...in the hopes that one day, we too shall live off the efforts of others.
Originally posted by whodeyIt's quite possible that the U.S. government uses some financial trickery to divert funds from social security funds to make the public debt seem smaller than it is. This has absolutely nothing to do with social security, nor does it mean social security it going "belly up". It just means the taxpayer will pay in the future for the fiscal irresponsibility of today. Social security expenses (not counting Medicare/Medicaid) are very low in the U.S. so it's hard to see how things could go "belly up" in the first place.
Sure, investors are paid from other investors pooring money into a fraudulent investment that earns nothing. So here we have tax payers pooring money into a system and this money is used to pay recipiants. What then is left over the government takes and an IOU is left behind, thus, when the tax money coming in one day does not exceed the payments going out the whole system goes belly up. I think they estimate the date to be around 2030.
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Originally posted by KazetNagorraFinancial trickery, eh?
It's quite possible that the U.S. government uses some financial trickery to divert funds from social security funds to make the public debt seem smaller than it is. This has absolutely nothing to do with social security, nor does it mean social security it going "belly up". It just means the taxpayer will pay in the future for the fiscal irresponsibili ...[text shortened]... ery low in the U.S. so it's hard to see how things could go "belly up" in the first place.
Try reading this article
http://www.profutures.com/article.php/487/
In this aticle, you will see Obama's appointee, Ben Barnanke, as well as Alan Greenspan, discuss the state of current events in terms of social security and health care. The looming financial crisis is not a matter of if, but when. Fed chairman after Fed chairman have said, "Something needs to be done now, before its too late". However, Ben Barnanke's latest warning had a new twist. Now, "It is already too late." He says we are now exereincing, "The calm before the storm" in regards to social securty and health care costs. As the Baby Boomer juggernaut careens toward retirement, the US government is faced with gigantic entitlements it cannot afford to fulfill, at least, not without some major negative economic consequences. For the last 25 years, Congress has heard the warnings from Volcker and Greenspan that it was time to pay the piper in regard to Social Security and Medicare. Nothing was done. Actually, that is not correct, Congress has spent all the money in the trust funds and replaced it with government IOU's (T-bonds). They have also recently decided to increase medical entitelments across the board with the new NHC plan. President Bush tried to reform Social Security, but was tarred and feathered. Ben Barnanke has said, "The US faces a "vicious cycle" of rising federal deficits and interest rates unless Congress acts quickly to shore up funding for both Social Security and Medicare" He then went on to say that the right time was about 10 years ago because it would have given us a few years before the Baby Boom generation actually started retiring to allow any solutions to have an effect. Now, with the oldest Boomers just a year away from early retirement, the barbarians are already at the gates. So what will be the consequences according to Barnanke? He estimates that Social Security and Medicare spending will rise from 7% GDP today to almost 13% by 2030., however, these numbers are based upon a continuing growing economy. LOL. The result accoring to Bernanke will be a continuing erosion of the economic future of the US.,which, in turn, will increase the looming financial crisis of promised entitlements. But the Fed chairmans are not the only voices of warning. The Congressional Budget Office and Socdial Security and Medicare Boards of Trustees have also issued reports stressing the necessity of taking action as soon as possible to avoid even worse problems in the future. The problem is that BOTH parties have supported increases in promised benefits without commensurating increases in funding. It is comparible to what happened with corporate defined benefit plans, which were the targets of the recently enacted Pension Protection Act. Large corporate employers found that they could satisfy workers and unions by promising higher levels of employee benefits in the future. Doing so created a comfortable liability, which, in essence, is a debt on the corporatoin owed to its workers in future years. If used responsibly, actuarial science can employ this tactic to create a win-win for both the employer and employees. However, US corporations allowed their unfunded liabilities to get out of hand, and Congress felt the need to step in. The irony of this situation is off this scale. Congress established rules to restrict American businesses from doing much the same thing that is had been doing for decades. In fact, Congress is worse. Not only did theynot fund all of the increased future benefits, they also spent all the money put back to pay for the Baby Boomers reitirement.
So what is to be done in light of insolvency estimated to be around 2030 in terms of social security? As a result of some of Greenspans recomnedations in 1983, tax rates were raised to fund benefit payments. Great news, eh? Nope. Congress spent the money in the trust funds and replaced it with more T-bills. So as we see, increasing taxes does not seem to be a solution unless reforms are put in place to keep their greedy hands off the money!!
So why won't those in government take action? The article suggests 3 problems.
1. Complexity - The task of projecting future costs and benefits for Social Security and Medicare are incredibly complex. These confounding factors include, fertility and mortality rates, health care cost projections, projected tax revenues, future inflation, productivity growth and a host of other factors. Even a relatively small adjustment to any of these assumptions can have a large effect on the probable outcome. So what is the answer? Why not base entitlements on a percentage of the GDP instead of trying to predict the unpredictable and eventually becoming insolvent?
2. The inability to convince others there is a problem. As I have mentioned above, the complexity of the situation tends to give various projections from various sources. For example, the Social Security Trustees estimated Social Security to become insolvent in 2040, while the CBO says 2046. The result is often that the Fed Chairman and company are often viewed as alarmists and wild eyed prophets of doom. In fact, the presence of at least some studies that show there will be no future funding problems gives some politicians the "plausible deniability" they need to do nothing. That way they need not make any unpopular votes now, which will keep them in power long enough to become vested and collecting a nice pension that is seperate from Social Security. This leads us to the last problem.
3. Americans like having "free" things but, at the same time, don't want to pay for them. The four solutions are to 1. increase payroll taxes, 2. decrease benefits, 3. incrase the retirement age, 4. pay taxes on all or a portion of their benefits. Of course, no American wants any of these things and politicians like to stay in power. So what you have is a situation like the recent credic crisis in which government officials were overseeing the likes of Freddie and Fannie heading for crisis but no one doing anything about it. After all, people were getting mortgages on houses they really could not afford, mortgage lenders were having increased sales, Wall Street made money off these bad loans through derivitives that were so complex Warren Buffet could not even figure them out, and politicians reaped the support from all those previously mentioned. Whistle blowers are nothing more than a kill joy that will cost elections. The government is a good whistle blower when it comes to corporations exceeding their entitlement promises, but none to be had for those in government.
new plank for my RHP third party:
we will all finally agree to stop thinking of Social Security and Medicare as separate off-budget programs that could ever possibly have solvency issues. Does anyone ever talk about Food Stamps becoming insolvent?
We may argue over how much spending needs to be cut, but we will agree that Social Security and Medicare are JUST like any other welfare programs. Everyone pays into them, and those who become eligible for benefits draw out from them. There will be no talk about some mythical "deal" that was made between the generations.
Originally posted by MelanerpesI'm confused as to how you think the SS system can remain solvent and fairly payback those that are paying in. The cuts will come and they will not be small.
new plank for my RHP third party:
we will all finally agree to stop thinking of Social Security and Medicare as separate off-budget programs that could ever possibly have solvency issues. Does anyone ever talk about Food Stamps becoming insolvent?
We may argue over how much spending needs to be cut, but we will agree that Social Security and Medicar ...[text shortened]... them. There will be no talk about some mythical "deal" that was made between the generations.
Those of us who have spent the last 30+ years paying in will be fortunate to see a fair return on the money in 'our' social securtiy 'account'.
Originally posted by whodeyYadda yadda yadda. Once again I will explain. Social security cannot become "insolvent" unless the U.S. government as a whole becomes "insolvent". Social security is not a company, it's a subsidiary of government. The U.S. government can choose to stop spending money on social security, of course, for whatever reason they may have. Just like the U.S. government can stop spending on the MOD. But does the astronomical rise in Defense costs mean that the army is going "belly up"?
Financial trickery, eh?
Try reading this article
http://www.profutures.com/article.php/487/
In this aticle, you will see Obama's appointee, Ben Barnanke, as well as Alan Greenspan, discuss the state of current events in terms of social security and health care. The looming financial crisis is not a matter of if, but when. Fed chairman after Fed cha ...[text shortened]... eding their entitlement promises, but none to be had for those in government.
Originally posted by KazetNagorraBoth are direct causes of the U.S. sliding further into debt.
Yadda yadda yadda. Once again I will explain. Social security cannot become "insolvent" unless the U.S. government as a whole becomes "insolvent". Social security is not a company, it's a subsidiary of government. The U.S. government can choose to stop spending money on social security, of course, for whatever reason they may have. Just like the U.S. go ...[text shortened]... . But does the astronomical rise in Defense costs mean that the army is going "belly up"?
Originally posted by KazetNagorraI'm not sure about the legalities of the government deciding to end a promised entitlement like Social Security. However, the fact remains that as entitlements eat up more and more of the GDP, it becomes an ever increasing weight around the economic health of both the US and the world. Lets just say it moves the US government ever closer to insolvency and leave it at that. The main concern is the interest of the debt increasing until it begins to grow exponentially. At that point the government may well become insolvent as Bernanke has also eluded to in a previous thread I started.
Yadda yadda yadda. Once again I will explain. Social security cannot become "insolvent" unless the U.S. government as a whole becomes "insolvent". Social security is not a company, it's a subsidiary of government. The U.S. government can choose to stop spending money on social security, of course, for whatever reason they may have. Just like the U.S. go ...[text shortened]... . But does the astronomical rise in Defense costs mean that the army is going "belly up"?
Originally posted by whodeyDebt is not caused by spending. It's caused by spending more than you have. If social security is important, and not enough taxes are coming in to pay for it, then taxes should be raised, or other expenses should be cut (coughdefensecough).
I'm not sure about the legalities of the government deciding to end a promised entitlement like Social Security. However, the fact remains that as entitlements eat up more and more of the GDP, it becomes an ever increasing weight around the economic health of both the US and the world. Lets just say it moves the US government ever closer to insolvency and l ...[text shortened]... rnment may well become insolvent as Bernanke has also eluded to in a previous thread I started.
Originally posted by monster truckMelissa Hoover, the Executive Director of the US Federation of Worker Cooperatives, wrote an article recently which included some points about what could be done to help worker cooperatives flourish:
Imagine that, folks feeling like they have a voice in the democratic process!
This leads directly to rwingett's #5. Imagine if folks felt they had a stake in the company they worked for (without gov. intervention of course🙂).
There is plenty America can do to help cooperative businesses flourish. The Small Business Administration could make clear that it guarantees loans to worker co-ops. Congress could set aside money for an urban co-op development initiative as it does now for rural cooperatives. State and local governments could provide tax breaks and loans to co-ops that create new jobs. They could also fund an employee-ownership bank to support these ventures. Charitable groups, too, could help develop and expand the co-op model as a strategic approach to creating jobs and building assets for working families.
If the government did just that much to help cooperatives, then I think they would really begin to take off. The United Nations has declared 2012 "the International Year of Cooperatives" and is urging governments worldwide to collaborate with the cooperative movement.
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Originally posted by monster truckIf you want to argue that the Social Security system will be unable to continue paying people according to the current formula without causing the ENTIRE budget to take on too much debt - that's a perfectly valid argument. It's an argument we need to be having. (Although I consider Medicare to be a much greater concern than Social Security).
I'm confused as to how you think the SS system can remain solvent and fairly payback those that are paying in. The cuts will come and they will not be small.
Those of us who have spent the last 30+ years paying in will be fortunate to see a fair return on the money in 'our' social securtiy 'account'.
But it's time to stop thinking of Social Security (or Medicare) as being a separate system that could ever "lose solvency". These. programs. are. just. welfare. programs. They happen to be a very popular welfare programs. Making cuts to their benefits will not be easy. Perhaps additional taxes will have to be levied.
But the ONLY body whose solvency is at stake is the entirety of the Fed Govt.
There's also this mythical idea about "I'm paying blah blah into the system now, so I deserve to get blah blah back from the system some time in the future". The ONLY reality is that everyone is paying into the system now and certain people are receiving benefits now according to some formula. The same as it is for ANY OTHER WELFARE PROGRAM. There is no guarantee that future benefits or future taxes will be the same as they are now. Changes can and most likely WILL be made.
I question the validity of your assertion that the welfare programs are 'popular' and also that by being 'popular' that makes them right.
I guess I've been incorrect in my assumption that I have a social security account that I've been paying into and am entitled to upon retirement. I wish the Feds would stop sending me those annual statements lying to me about what I have paid and can expet to receive. Apparnetly those decisions are made by the majority at the time. Nice.🙁
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Originally posted by monster truckthe reason I say these programs are popular is because rarely does anyone ever propose significant cuts to them. There's a reason why it's called "the third rail". If as you claim, these programs are NOT popular, it should be rather easy for candidates to win elections by promising to get rid of them.
I question the validity of your assertion that the welfare programs are 'popular' and also that by being 'popular' that makes them right.
I guess I've been incorrect in my assumption that I have a social security account that I've been paying into and am entitled to upon retirement. I wish the Feds would stop sending me those annual statements lyin ...[text shortened]... pet to receive. Apparnetly those decisions are made by the majority at the time. Nice.🙁
And I agree - just because something is popular doesn't mean it's "right". It just means that it's popular. But before a policy change can win votes, it usually needs to become popular.
As for your assumptions about Social Security. You are guaranteed nothing. All you have is a record of what you can expect to receive should the current laws remain in place. Nobody is lying to you. But if Congress should change the formula or the retirement age or whatever, or even abolish the entire system tomorrow, you would then be entitled to nada. Something to think about whenever you hear people talking about reducing the size of gummint. That gummint might include your own benefits.
What would a judge say? He or she would say that the same Congress that made the current Social Security laws has the rights to change them.