Democrats want to expand social security

[Bearded Man]

http://thehill.com/policy/finance/247648-sanders-dems-urge-obama-to-expand-social-security

Remember, this is in a country where 1 out of 3 people are on the literal definition of welfare, and half don't pay taxes. When will they learn that you can't keep taking from those work, to give to those who don't and expect this to be sustainable.

[beltim]

http://thehill.com/policy/finance/247648-sanders-dems-urge-obama-to-expand-social-security

Remember, this is in a country where 1 out of 3 people are on the literal definition of welfare, and half don't pay taxes. When will they learn that you can't keep taking from those work, to give to those who don't and expect this to be sustainable.

1) Your tired talking point isn't even specific enough to be accurate, plus it's outdated.  Yes, 43% of American households don't pay federal income taxes.  Within that 43%, more than two-thirds pay payroll taxes like Social Security.  Another 22% are elderly and don't have enough income beyond Social Security to pay taxes, and another 8% have income below $20,000.
http://www.businessinsider.com/43-of-americans-dont-pay-federal-income-tax-2013-9

2) This doesn't include any state or local taxes which are much more regressive than federal taxes.

3) You have to pay into Social Security in order to get benefits from it, and any expansion maintains that.  So your point about the percentage of households who don't pay taxes has literally no relevance.

So, in conclusion, this doesn't give to those who don't work, and none of your other points have any relevance.  So I'm not sure why you're upset.

[use2betrix]

http://thehill.com/policy/finance/247648-sanders-dems-urge-obama-to-expand-social-security

Remember, this is in a country where 1 out of 3 people are on the literal definition of welfare, and half don't pay taxes. When will they learn that you can't keep taking from those work, to give to those who don't and expect this to be sustainable.

1) Your tired talking point isn't even specific enough to be accurate, plus it's outdated.  Yes, 43% of American households don't pay federal income taxes.  Within that 43%, more than two-thirds pay payroll taxes like Social Security.  Another 22% are elderly and don't have enough income beyond Social Security to pay taxes, and another 8% have income below $20,000.
http://www.businessinsider.com/43-of-americans-dont-pay-federal-income-tax-2013-9

2) This doesn't include any state or local taxes which are much more regressive than federal taxes.

3) You have to pay into Social Security in order to get benefits from it, and any expansion maintains that.  So your point about the percentage of households who don't pay taxes has literally no relevance.

So, in conclusion, this doesn't give to those who don't work, and none of your other points have any relevance.  So I'm not sure why you're upset.

Knew this was coming shortly. Good post.

[regulator]

http://thehill.com/policy/finance/247648-sanders-dems-urge-obama-to-expand-social-security

Remember, this is in a country where 1 out of 3 people are on the literal definition of welfare, and half don't pay taxes. When will they learn that you can't keep taking from those work, to give to those who don't and expect this to be sustainable.

You are wasting your time trading talking points with the welfare state true believers.  Let them do their thing and just wait for the swift and brutal backlash.

[2lazy2retire]

http://thehill.com/policy/finance/247648-sanders-dems-urge-obama-to-expand-social-security

Remember, this is in a country where 1 out of 3 people are on the literal definition of welfare, and half don't pay taxes. When will they learn that you can't keep taking from those work, to give to those who don't and expect this to be sustainable.

But if it is coupled with the Obama death panels the number collecting will be kept lower so it may work well

[Bearded Man]

http://thehill.com/policy/finance/247648-sanders-dems-urge-obama-to-expand-social-security

Remember, this is in a country where 1 out of 3 people are on the literal definition of welfare, and half don't pay taxes. When will they learn that you can't keep taking from those work, to give to those who don't and expect this to be sustainable.

You are wasting your time trading talking points with the welfare state true believers.  Let them do their thing and just wait for the swift and brutal backlash.

Yeah, I suspected as much before I posted, even debated not posting it. The facts I posted are real. 1/3 people in the country are on welfare. A full half on some kind of government dole, and probably also the half that don't pay into the system. 18 trillion in debt, but liberals still think they are right. lol

[beltim]

http://thehill.com/policy/finance/247648-sanders-dems-urge-obama-to-expand-social-security

Remember, this is in a country where 1 out of 3 people are on the literal definition of welfare, and half don't pay taxes. When will they learn that you can't keep taking from those work, to give to those who don't and expect this to be sustainable.

You are wasting your time trading talking points with the welfare state true believers.  Let them do their thing and just wait for the swift and brutal backlash.

The link Bearded Man posted dealt only with expansion of the retirement portion of Social Security - a program into which you pay based on your salary, and the benefits are determined by your lifetime earnings history and age at which you take benefits.  This is indistinguishable from a pension plan.  So what does it have to do with welfare?

[EricP]

If we're going to expand Social Security, why not just change it completely?  Get away from the current generation paying for the older generations.  Sure, someone will have to bite the bullet, but let's move to a defined contribution system (with front-end subsidies for poor people) with guardrails in place to make sure that people don't screw up their own retirement by pulling their money out of the market at the wrong time.

So the way this would work is you are required to deposit X% of your income up to Y dollars and if you make less than $X the government contributes a pro-rated amount depending on how much less than $X you make.  Then the government provides a half dozen different funds for you to invest in (Port in the TSP funds if you will) so that people aren't getting gouged on expense ratios, and then set up some rules on how much one is allowed to take out during retirement (IE 4% SWR) so that people don't deplete their savings too fast. 

[2lazy2retire]

http://thehill.com/policy/finance/247648-sanders-dems-urge-obama-to-expand-social-security

Remember, this is in a country where 1 out of 3 people are on the literal definition of welfare, and half don't pay taxes. When will they learn that you can't keep taking from those work, to give to those who don't and expect this to be sustainable.

You are wasting your time trading talking points with the welfare state true believers.  Let them do their thing and just wait for the swift and brutal backlash.

Yeah, I suspected as much before I posted, even debated not posting it. The facts I posted are real. 1/3 people in the country are on welfare. A full half on some kind of government dole, and probably also the half that don't pay into the system. 18 trillion in debt, but liberals still think they are right. lol

But Obama just capitulated to Iran so we will all be nuked in a few years - no more worries about social security.

[Iron Mike Sharpe]

I don't understand what expanding SS means.

Like you pay more into it, but supposedly get more out when you retire?  What guarantee would there be that the money is actually there when one retires?  Presumably this wouldn't affect current retirees, would it? 

[Eric]

http://thehill.com/policy/finance/247648-sanders-dems-urge-obama-to-expand-social-security

Remember, this is in a country where 1 out of 3 people are on the literal definition of welfare, and half don't pay taxes. When will they learn that you can't keep taking from those work, to give to those who don't and expect this to be sustainable.

But if it is coupled with the Obama death panels the number collecting will be kept lower so it may work well

See Flanders!  You give a little, you get a little.

[regulator]

http://thehill.com/policy/finance/247648-sanders-dems-urge-obama-to-expand-social-security

Remember, this is in a country where 1 out of 3 people are on the literal definition of welfare, and half don't pay taxes. When will they learn that you can't keep taking from those work, to give to those who don't and expect this to be sustainable.

You are wasting your time trading talking points with the welfare state true believers.  Let them do their thing and just wait for the swift and brutal backlash.

Yeah, I suspected as much before I posted, even debated not posting it. The facts I posted are real. 1/3 people in the country are on welfare. A full half on some kind of government dole, and probably also the half that don't pay into the system. 18 trillion in debt, but liberals still think they are right. lol

Let's just hope the ire of those paying the bills rises enough to stop this before we become Greece.

[beltim]

If we're going to expand Social Security, why not just change it completely?  Get away from the current generation paying for the older generations.  Sure, someone will have to bite the bullet, but let's move to a defined contribution system (with front-end subsidies for poor people) with guardrails in place to make sure that people don't screw up their own retirement by pulling their money out of the market at the wrong time.

So the way this would work is you are required to deposit X% of your income up to Y dollars and if you make less than $X the government contributes a pro-rated amount depending on how much less than $X you make.  Then the government provides a half dozen different funds for you to invest in (Port in the TSP funds if you will) so that people aren't getting gouged on expense ratios, and then set up some rules on how much one is allowed to take out during retirement (IE 4% SWR) so that people don't deplete their savings too fast.

You've dealt with several of the issues that type of change would have (insufficient benefits for the poor handled by up-front subsidies is a good one), but there's a few more.  The biggest is funding people currently in the system.  How would you address that?

As a side-note, one interesting outcome of the way we've funded Social Security is that we've balanced contributions and benefits for all future people not in the system yet.  I've posted the link before on this forum that shows that; I'll see if I can find it.

[EricP]

http://thehill.com/policy/finance/247648-sanders-dems-urge-obama-to-expand-social-security

Remember, this is in a country where 1 out of 3 people are on the literal definition of welfare, and half don't pay taxes. When will they learn that you can't keep taking from those work, to give to those who don't and expect this to be sustainable.

You are wasting your time trading talking points with the welfare state true believers.  Let them do their thing and just wait for the swift and brutal backlash.

Yeah, I suspected as much before I posted, even debated not posting it. The facts I posted are real. 1/3 people in the country are on welfare. A full half on some kind of government dole, and probably also the half that don't pay into the system. 18 trillion in debt, but liberals still think they are right. lol

And 100% of the people in Canada are on "welfare" (or any other socialized health care country) and they aren't falling apart.  Seems like a pretty nice place to live, imo.  Of the 51M people currently on SNAP, I would be willing to bet more than half of them are children, probably much higher even.  So unless you want starving children, SNAP is necessary. 

[fattest_foot]

I don't understand what expanding SS means.

Like you pay more into it, but supposedly get more out when you retire?  What guarantee would there be that the money is actually there when one retires?  Presumably this wouldn't affect current retirees, would it?

The letter they submitted doesn't seem to have any actual content. It just says "expand benefits" with no mention of what that means.

[EricP]

If we're going to expand Social Security, why not just change it completely?  Get away from the current generation paying for the older generations.  Sure, someone will have to bite the bullet, but let's move to a defined contribution system (with front-end subsidies for poor people) with guardrails in place to make sure that people don't screw up their own retirement by pulling their money out of the market at the wrong time.

So the way this would work is you are required to deposit X% of your income up to Y dollars and if you make less than $X the government contributes a pro-rated amount depending on how much less than $X you make.  Then the government provides a half dozen different funds for you to invest in (Port in the TSP funds if you will) so that people aren't getting gouged on expense ratios, and then set up some rules on how much one is allowed to take out during retirement (IE 4% SWR) so that people don't deplete their savings too fast.

You've dealt with several of the issues that type of change would have (insufficient benefits for the poor handled by up-front subsidies is a good one), but there's a few more.  The biggest is funding people currently in the system.  How would you address that?

As a side-note, one interesting outcome of the way we've funded Social Security is that we've balanced contributions and benefits for all future people not in the system yet.  I've posted the link before on this forum that shows that; I'll see if I can find it.

When you say "balanced contibutions and benefits for future people," you mean when you don't take into account the opportunity cost of the money they are paying in, correct?

As for funding people "currently in the system," meaning those in retirement and close to retirement (say 40+) we would need to raise taxes.  I don't know how much it would take to be able to pay for both systems at once for 20 years, but taking the upper limit off FICA taxes would probably go a long way to affording it I would imagine.

[WingsFan4Life]

http://thehill.com/policy/finance/247648-sanders-dems-urge-obama-to-expand-social-security

Remember, this is in a country where 1 out of 3 people are on the literal definition of welfare, and half don't pay taxes. When will they learn that you can't keep taking from those work, to give to those who don't and expect this to be sustainable.

You are wasting your time trading talking points with the welfare state true believers.  Let them do their thing and just wait for the swift and brutal backlash.

Yeah, I suspected as much before I posted, even debated not posting it. The facts I posted are real. 1/3 people in the country are on welfare. A full half on some kind of government dole, and probably also the half that don't pay into the system. 18 trillion in debt, but liberals still think they are right. lol

You posted about Social security, which everyone pays 6.2% tax on income regardless of their federal income tax bracket. That is not welfare. And what does that have to do with our 18 trillion in debt? National debt is not the same as private debt. Take a freakin' macro economics course before you post ignorant gibberish.

[beltim]

Here's that link: http://www.ssa.gov/oact/tr/2013/IV_B_LRest.html
Table IV.B7

[2lazy2retire]

http://thehill.com/policy/finance/247648-sanders-dems-urge-obama-to-expand-social-security

Remember, this is in a country where 1 out of 3 people are on the literal definition of welfare, and half don't pay taxes. When will they learn that you can't keep taking from those work, to give to those who don't and expect this to be sustainable.

You are wasting your time trading talking points with the welfare state true believers.  Let them do their thing and just wait for the swift and brutal backlash.

Yeah, I suspected as much before I posted, even debated not posting it. The facts I posted are real. 1/3 people in the country are on welfare. A full half on some kind of government dole, and probably also the half that don't pay into the system. 18 trillion in debt, but liberals still think they are right. lol

And 100% of the people in Canada are on "welfare" (or any other socialized health care country) and they aren't falling apart.  Seems like a pretty nice place to live, imo.  Of the 51M people currently on SNAP, I would be willing to bet more than half of them are children, probably much higher even.  So unless you want starving children, SNAP is necessary.

Ah Jesus - don't mention children, the OP has less time for children than he does for liberals.

[r3dt4rget]

The proposal is already flawed:

We write today to request your help in ensuring Americans continue to have sufficient resources to maintain their standard of living in old age."

My wish list:

1. SS system opt out
2. Retirement age indexed to life expectancy (if you live longer, work longer if you haven't saved enough)

[beltim]

You've dealt with several of the issues that type of change would have (insufficient benefits for the poor handled by up-front subsidies is a good one), but there's a few more.  The biggest is funding people currently in the system.  How would you address that?

As a side-note, one interesting outcome of the way we've funded Social Security is that we've balanced contributions and benefits for all future people not in the system yet.  I've posted the link before on this forum that shows that; I'll see if I can find it.

When you say "balanced contibutions and benefits for future people," you mean when you don't take into account the opportunity cost of the money they are paying in, correct?

Correct.

As for funding people "currently in the system," meaning those in retirement and close to retirement (say 40+) we would need to raise taxes.  I don't know how much it would take to be able to pay for both systems at once for 20 years, but taking the upper limit off FICA taxes would probably go a long way to affording it I would imagine.

Yeah, it would require the same amount of money as just getting Social Security to a 100% funded level.  Some ways to do that: http://www.actuary.org/content/play-social-security-game or http://www.ssa.gov/OACT/solvency/provisions/summary.pdf
Eliminating the FICA limit would take about between 2/3 and 4/5 of the deficit depending on if you increased benefits correspondingly.

[EricP]

Here's that link: http://www.ssa.gov/oact/tr/2013/IV_B_LRest.html
Table IV.B7

What exactly am I looking at here?

@redtarget: People would opt out and then continue to not save for retirement so you'd have tons of people without retirement savings. Elderly Poverty would skyrocket, which is exactly what SS is there to prevent.

Indexing it to life expectancy, however, is a great idea.  That way it isn't a political carrot that conservatives and liberals fight about and use to try and buy votes.

[beltim]

Here's that link: http://www.ssa.gov/oact/tr/2013/IV_B_LRest.html
Table IV.B7

What exactly am I looking at here?

@redtarget: People would opt out and then continue to not save for retirement so you'd have tons of people without retirement savings. Elderly Poverty would skyrocket, which is exactly what SS is there to prevent.

Indexing it to life expectancy, however, is a great idea.  That way it isn't a political carrot that conservatives and liberals fight about and use to try and buy votes.

That's the table that shows that Social Security is balanced for future generations who haven't yet started paying in to Social Security.

[regulator]

Here's that link: http://www.ssa.gov/oact/tr/2013/IV_B_LRest.html
Table IV.B7

What exactly am I looking at here?

@redtarget: People would opt out and then continue to not save for retirement so you'd have tons of people without retirement savings. Elderly Poverty would skyrocket, which is exactly what SS is there to prevent.

Indexing it to life expectancy, however, is a great idea.  That way it isn't a political carrot that conservatives and liberals fight about and use to try and buy votes.

That's the table that shows that Social Security is balanced for future generations who haven't yet started paying in to Social Security.

So all those projections showing the negative cash flow and depletion of the non-existent trust fund are just a mirage?

[EricP]

You've dealt with several of the issues that type of change would have (insufficient benefits for the poor handled by up-front subsidies is a good one), but there's a few more.  The biggest is funding people currently in the system.  How would you address that?

As a side-note, one interesting outcome of the way we've funded Social Security is that we've balanced contributions and benefits for all future people not in the system yet.  I've posted the link before on this forum that shows that; I'll see if I can find it.

When you say "balanced contibutions and benefits for future people," you mean when you don't take into account the opportunity cost of the money they are paying in, correct?

Correct.

As for funding people "currently in the system," meaning those in retirement and close to retirement (say 40+) we would need to raise taxes.  I don't know how much it would take to be able to pay for both systems at once for 20 years, but taking the upper limit off FICA taxes would probably go a long way to affording it I would imagine.

Yeah, it would require the same amount of money as just getting Social Security to a 100% funded level.  Some ways to do that: http://www.actuary.org/content/play-social-security-game or http://www.ssa.gov/OACT/solvency/provisions/summary.pdf
Eliminating the FICA limit would take about between 2/3 and 4/5 of the deficit depending on if you increased benefits correspondingly.

Without the opportunity cost of the money, I'm still not getting warm fuzzies about the program even if I am getting $100 (inflation adjusted) for each $100 that I put in.

Unfortunately that actuary site is busted at work, so I can't "play the SS game," and for the SS booklet, that isn't really the whole picture because we would be phasing in a different program.  Sure, we can make the Trust Fund solvent, but we still need to pay for the new program as well, right?  And then we'd be scaling back Social Security payments as people die and the people under the new system come into retirement age.  Obviously, middle aged people would be half under SS and half under the new system, but that's not really important what the specifics are for just a web forum.

Oh, so it's "balanced" for 14 year olds?  I thought you meant it was balanced for everyone who hasn't retired yet.  KK.

[beltim]

Here's that link: http://www.ssa.gov/oact/tr/2013/IV_B_LRest.html
Table IV.B7

What exactly am I looking at here?

@redtarget: People would opt out and then continue to not save for retirement so you'd have tons of people without retirement savings. Elderly Poverty would skyrocket, which is exactly what SS is there to prevent.

Indexing it to life expectancy, however, is a great idea.  That way it isn't a political carrot that conservatives and liberals fight about and use to try and buy votes.

That's the table that shows that Social Security is balanced for future generations who haven't yet started paying in to Social Security.

So all those projections showing the negative cash flow and depletion of the non-existent trust fund are just a mirage?

Not at all.  The same table shows that there's a big gap between the present value of contributions and benefits for people currently in the system, because a large portion of their benefit went to fund earlier retirees.

[regulator]

Here's that link: http://www.ssa.gov/oact/tr/2013/IV_B_LRest.html
Table IV.B7

What exactly am I looking at here?

@redtarget: People would opt out and then continue to not save for retirement so you'd have tons of people without retirement savings. Elderly Poverty would skyrocket, which is exactly what SS is there to prevent.

Indexing it to life expectancy, however, is a great idea.  That way it isn't a political carrot that conservatives and liberals fight about and use to try and buy votes.

That's the table that shows that Social Security is balanced for future generations who haven't yet started paying in to Social Security.

So all those projections showing the negative cash flow and depletion of the non-existent trust fund are just a mirage?

Not at all.  The same table shows that there's a big gap between the present value of contributions and benefits for people currently in the system, because a large portion of their benefit went to fund earlier retirees.

So the system is busted for all current taxpayers and beneficiaries, but in 2362 kids on planet Quarkon will be sure to get all their benefits.  I feel so much better now.

[beltim]

Without the opportunity cost of the money, I'm still not getting warm fuzzies about the program even if I am getting $100 (inflation adjusted) for each $100 that I put in.

That's just a function of what we've decided Social Security is allowed to invest in.  Since it's only allowed to invest in government securities, that limits the return.  An alternative to your suggestion is to allow Social Security to invest in equities, the way most countries wealth funds do.

Unfortunately that actuary site is busted at work, so I can't "play the SS game," and for the SS booklet, that isn't really the whole picture because we would be phasing in a different program.  Sure, we can make the Trust Fund solvent, but we still need to pay for the new program as well, right?  And then we'd be scaling back Social Security payments as people die and the people under the new system come into retirement age.  Obviously, middle aged people would be half under SS and half under the new system, but that's not really important what the specifics are for just a web forum.

Right, but because of the below, the funding deficit is the same.  At least roughly.

Oh, so it's "balanced" for 14 year olds?  I thought you meant it was balanced for everyone who hasn't retired yet.  KK.

Nope, just for future generations.  It's not particularly actionable, but it's interesting.  It also shows that there's an endpoint to Social Security reform, rather than a slippery slope.

[beltim]

Here's that link: http://www.ssa.gov/oact/tr/2013/IV_B_LRest.html
Table IV.B7

What exactly am I looking at here?

@redtarget: People would opt out and then continue to not save for retirement so you'd have tons of people without retirement savings. Elderly Poverty would skyrocket, which is exactly what SS is there to prevent.

Indexing it to life expectancy, however, is a great idea.  That way it isn't a political carrot that conservatives and liberals fight about and use to try and buy votes.

That's the table that shows that Social Security is balanced for future generations who haven't yet started paying in to Social Security.

So all those projections showing the negative cash flow and depletion of the non-existent trust fund are just a mirage?

Not at all.  The same table shows that there's a big gap between the present value of contributions and benefits for people currently in the system, because a large portion of their benefit went to fund earlier retirees.

So the system is busted for all current taxpayers and beneficiaries, but in 2362 kids on planet Quarkon will be sure to get all their benefits.  I feel so much better now.

The fixes for Social Security are easy mathematically.  I gave a link earlier that showed the effects of hundreds of policy changes.

I'm not sure why you're railing on what I gave as an interesting fact.

[EricP]

Without the opportunity cost of the money, I'm still not getting warm fuzzies about the program even if I am getting $100 (inflation adjusted) for each $100 that I put in.

That's just a function of what we've decided Social Security is allowed to invest in.  Since it's only allowed to invest in government securities, that limits the return.  An alternative to your suggestion is to allow Social Security to invest in equities, the way most countries wealth funds do.

Unfortunately that actuary site is busted at work, so I can't "play the SS game," and for the SS booklet, that isn't really the whole picture because we would be phasing in a different program.  Sure, we can make the Trust Fund solvent, but we still need to pay for the new program as well, right?  And then we'd be scaling back Social Security payments as people die and the people under the new system come into retirement age.  Obviously, middle aged people would be half under SS and half under the new system, but that's not really important what the specifics are for just a web forum.

Right, but because of the below, the funding deficit is the same.  At least roughly.

Oh, so it's "balanced" for 14 year olds?  I thought you meant it was balanced for everyone who hasn't retired yet.  KK.

Nope, just for future generations.  It's not particularly actionable, but it's interesting.  It also shows that there's an endpoint to Social Security reform, rather than a slippery slope.

As for allowing it to invest in other securities, haven't me mostly screwed the pooch on that?  At this point our Trust Fund is small and set to be depleted by 2030, so we'd have a very small window to make up money and could end up getting burned.  It would be wonderful if we could have changed that 30 years ago so that we could have a large cushion in it so we could invest the money.  Is my thinking wrong here?

[regulator]

Without the opportunity cost of the money, I'm still not getting warm fuzzies about the program even if I am getting $100 (inflation adjusted) for each $100 that I put in.

That's just a function of what we've decided Social Security is allowed to invest in.  Since it's only allowed to invest in government securities, that limits the return.  An alternative to your suggestion is to allow Social Security to invest in equities, the way most countries wealth funds do.

Unfortunately that actuary site is busted at work, so I can't "play the SS game," and for the SS booklet, that isn't really the whole picture because we would be phasing in a different program.  Sure, we can make the Trust Fund solvent, but we still need to pay for the new program as well, right?  And then we'd be scaling back Social Security payments as people die and the people under the new system come into retirement age.  Obviously, middle aged people would be half under SS and half under the new system, but that's not really important what the specifics are for just a web forum.

Right, but because of the below, the funding deficit is the same.  At least roughly.

Oh, so it's "balanced" for 14 year olds?  I thought you meant it was balanced for everyone who hasn't retired yet.  KK.

Nope, just for future generations.  It's not particularly actionable, but it's interesting.  It also shows that there's an endpoint to Social Security reform, rather than a slippery slope.

As for allowing it to invest in other securities, haven't me mostly screwed the pooch on that?  At this point our Trust Fund is small and set to be depleted by 2030, so we'd have a very small window to make up money and could end up getting burned.  It would be wonderful if we could have changed that 30 years ago so that we could have a large cushion in it so we could invest the money.  Is my thinking wrong here?

It is worse than that.  The so-called trust fund is just a fantasy.  It is an IOU from the gubmint to itself.  There is no asset backing it except the ability of said gubmint to tax its citizens.  IOW, the trust fund does not really exist.

[beltim]

Without the opportunity cost of the money, I'm still not getting warm fuzzies about the program even if I am getting $100 (inflation adjusted) for each $100 that I put in.

That's just a function of what we've decided Social Security is allowed to invest in.  Since it's only allowed to invest in government securities, that limits the return.  An alternative to your suggestion is to allow Social Security to invest in equities, the way most countries wealth funds do.

As for allowing it to invest in other securities, haven't me mostly screwed the pooch on that?  At this point our Trust Fund is small and set to be depleted by 2030, so we'd have a very small window to make up money and could end up getting burned.  It would be wonderful if we could have changed that 30 years ago so that we could have a large cushion in it so we could invest the money.  Is my thinking wrong here?

It's not wrong, but I'd argue it's not complete.  In order to fully fund Social Security we have to do some combination of reducing benefits paid and increasing funding.  Either one will allow the current fund to invest - currently it's about $2.7 trillion according to http://www.ssa.gov/oact/STATS/table4a1.html

[2lazy2retire]

http://thehill.com/policy/finance/247648-sanders-dems-urge-obama-to-expand-social-security

Remember, this is in a country where 1 out of 3 people are on the literal definition of welfare, and half don't pay taxes. When will they learn that you can't keep taking from those work, to give to those who don't and expect this to be sustainable.

You are wasting your time trading talking points with the welfare state true believers.  Let them do their thing and just wait for the swift and brutal backlash.

Thought you were waiting for the brutal backlash?

[beltim]

It is worse than that.  The so-called trust fund is just a fantasy.  It is an IOU from the gubmint to itself.  There is no asset backing it except the ability of said gubmint to tax its citizens.  IOW, the trust fund does not really exist.

It's backed by Treasury bonds.  So you're right that there's no asset backing it other than taxing authority, but that's a general feature of government bonds.

Do you hold any treasury bonds in your portfolio?  If so, do you argue that those also don't exist?

[Another Reader]

And Phase II of this plan is to take your IRA's and 401k's, because your retirement annuity is now fully covered and we need the money to fund this plan.  That has been proposed by someone else, along with a similar plan requiring you to annuitize your retirement accounts privately.  After all, you should not be able to use tax advantages to pass on wealth to your heirs...  It's all theft to me, no matter who the thief is, government or private insurer.

As one of the older people here that completed paying into the system when I FIRED years ago and is now contemplating collecting, all I can say is that check had better be in the mail.  If it's not, you will find me out in the garage, sharpening up my pitchfork and fueling up my torch, along with the rest of my demographic.

[EricP]

Without the opportunity cost of the money, I'm still not getting warm fuzzies about the program even if I am getting $100 (inflation adjusted) for each $100 that I put in.

That's just a function of what we've decided Social Security is allowed to invest in.  Since it's only allowed to invest in government securities, that limits the return.  An alternative to your suggestion is to allow Social Security to invest in equities, the way most countries wealth funds do.

Unfortunately that actuary site is busted at work, so I can't "play the SS game," and for the SS booklet, that isn't really the whole picture because we would be phasing in a different program.  Sure, we can make the Trust Fund solvent, but we still need to pay for the new program as well, right?  And then we'd be scaling back Social Security payments as people die and the people under the new system come into retirement age.  Obviously, middle aged people would be half under SS and half under the new system, but that's not really important what the specifics are for just a web forum.

Right, but because of the below, the funding deficit is the same.  At least roughly.

Oh, so it's "balanced" for 14 year olds?  I thought you meant it was balanced for everyone who hasn't retired yet.  KK.

Nope, just for future generations.  It's not particularly actionable, but it's interesting.  It also shows that there's an endpoint to Social Security reform, rather than a slippery slope.

As for allowing it to invest in other securities, haven't me mostly screwed the pooch on that?  At this point our Trust Fund is small and set to be depleted by 2030, so we'd have a very small window to make up money and could end up getting burned.  It would be wonderful if we could have changed that 30 years ago so that we could have a large cushion in it so we could invest the money.  Is my thinking wrong here?

It is worse than that.  The so-called trust fund is just a fantasy.  It is an IOU from the gubmint to itself.  There is no asset backing it except the ability of said gubmint to tax its citizens.  IOW, the trust fund does not really exist.

Then the money in your back account is fantasy.  It's just one's and zero's saying you deposited the money, but in reality Steve has used the money to buy hookers and blow.  In case you didn't know, the government is taking loans out all the time to pay stuff off and it still gets paid out.  Just because they combined the federal budget back in 1970 doesn't mean the money is gone.  Please leave with this trash and we will continue having a conversation about the important stuff.

[EricP]

And Phase II of this plan is to take your IRA's and 401k's, because your retirement annuity is now fully covered and we need the money to fund this plan.  That has been proposed by someone else, along with a similar plan requiring you to annuitize your retirement accounts privately.  After all, you should not be able to use tax advantages to pass on wealth to your heirs...  It's all theft to me, no matter who the thief is, government or private insurer.

As one of the older people here that completed paying into the system when I FIRED years ago and is now contemplating collecting, all I can say is that check had better be in the mail.  If it's not, you will find me out in the garage, sharpening up my pitchfork and fueling up my torch, along with the rest of my demographic.

And the gubmint is going to take our guns right after that right? Please don't put words in my mouth and stop with your slippery slope garbage.

I'm confused, what exactly is "theft" here?  It seems as though you are threatening violence to ensure that you can continue "stealing" from the prior generation, just as the older generation "stole" from you.

[RangerOne]

Our 401k money is being treated the same way, its just reliant on cooperation's and their profits instead of tax income from the government.

Cooperation's can improve margins by growing or figuring out how to squeeze more work out of less and cheaper labor. The government can raise taxes or get more people to pay taxes. Either way we get squeezed so that investors can get a pay day.

So lets not pretend the government is some special kind of fuck up. America has historically always had a healthy mistrust of taxation and "big government" but we still have to utilize all of our infrastructure to try to create the largest, healthiest and most well educated population we can. Any plan that strives for that goal is going to need social programs and a government. If either corporate america or the government gain too much power we are going to get fucked. Its a balancing act.

[regulator]

Without the opportunity cost of the money, I'm still not getting warm fuzzies about the program even if I am getting $100 (inflation adjusted) for each $100 that I put in.

That's just a function of what we've decided Social Security is allowed to invest in.  Since it's only allowed to invest in government securities, that limits the return.  An alternative to your suggestion is to allow Social Security to invest in equities, the way most countries wealth funds do.

Unfortunately that actuary site is busted at work, so I can't "play the SS game," and for the SS booklet, that isn't really the whole picture because we would be phasing in a different program.  Sure, we can make the Trust Fund solvent, but we still need to pay for the new program as well, right?  And then we'd be scaling back Social Security payments as people die and the people under the new system come into retirement age.  Obviously, middle aged people would be half under SS and half under the new system, but that's not really important what the specifics are for just a web forum.

Right, but because of the below, the funding deficit is the same.  At least roughly.

Oh, so it's "balanced" for 14 year olds?  I thought you meant it was balanced for everyone who hasn't retired yet.  KK.

Nope, just for future generations.  It's not particularly actionable, but it's interesting.  It also shows that there's an endpoint to Social Security reform, rather than a slippery slope.

As for allowing it to invest in other securities, haven't me mostly screwed the pooch on that?  At this point our Trust Fund is small and set to be depleted by 2030, so we'd have a very small window to make up money and could end up getting burned.  It would be wonderful if we could have changed that 30 years ago so that we could have a large cushion in it so we could invest the money.  Is my thinking wrong here?

It is worse than that.  The so-called trust fund is just a fantasy.  It is an IOU from the gubmint to itself.  There is no asset backing it except the ability of said gubmint to tax its citizens.  IOW, the trust fund does not really exist.

Then the money in your back account is fantasy.  It's just one's and zero's saying you deposited the money, but in reality Steve has used the money to buy hookers and blow.  In case you didn't know, the government is taking loans out all the time to pay stuff off and it still gets paid out.  Just because they combined the federal budget back in 1970 doesn't mean the money is gone.  Please leave with this trash and we will continue having a conversation about the important stuff.

Its a bit different from the 1s and 0s in my bank account.  Instead of actually taking the excess SS money that came in via payroll taxes all those years and actually investing the money, the gubmint decided to invade countries that most Merkins cannot find on the map and wildly enrich military contractors and others.  To even out the books, they wrote an IOU from the government to itself.  Years later the criminals who did so are long gone and the rest of us are stuck with the mess.  Only so much tax revenue is coming in.  What would you cut from the budget to backfill the SS hole as it gets bigger and bigger?  Keep in mind that the bloated military budget is sacrosanct (they can still afford to buy politicians) and the interest on the national debt still has to be paid.

[Another Reader]

This has nothing to do with what you said so I am certainly not putting words in your mouth.  I follow these stupid proposals, because they have the potential to affect me.

And on another but related note, the nastiness in these forums has reached a level where it is now unpleasant to participate.  I think you will see fewer posts from rational, thoughtful people that are genuinely interested in learning something from others in the future.

[Eric]

And on another but related note, the nastiness in these forums has reached a level where it is now unpleasant to participate.  I think you will see fewer posts from rational, thoughtful people that are genuinely interested in learning something from others in the future.

You were expecting that in this thread?  One glance and it should be blatantly obvious that it will be a thread filled with partisan hacks.  It's easy enough to steer around them to the useful stuff if that's your preference.

[brooklynguy]

And Phase II of this plan is to take your IRA's and 401k's, because your retirement annuity is now fully covered and we need the money to fund this plan.  That has been proposed by someone else, along with a similar plan requiring you to annuitize your retirement accounts privately.  After all, you should not be able to use tax advantages to pass on wealth to your heirs...  It's all theft to me, no matter who the thief is, government or private insurer.

To be clear, the proposals to do away with IRA's and 401k's in favor of guaranteed retirement annuity programs are actually proposals to eliminate the tax breaks on a prospective basis, not to "take away" anyone's existing IRA or 401k account balances (unless you're talking about some proposal I've never heard of that would be even surer to result in the sharpening of pitch forks and fueling of torches).

[Another Reader]

Can't remember which politician or think tank policy wonk first proposed it would be a good idea to merge SS and retirement accounts and expand the annuity program.  It seemed improbable, so I did not add that to my list of stupid ideas that might actually get implemented.  There have been several proposals from some friends of the current administration and others to force people to annuitize.  And then we have Theresa Ghilarducci....

[EricP]

This has nothing to do with what you said so I am certainly not putting words in your mouth.  I follow these stupid proposals, because they have the potential to affect me.

And on another but related note, the nastiness in these forums has reached a level where it is now unpleasant to participate.  I think you will see fewer posts from rational, thoughtful people that are genuinely interested in learning something from others in the future.

No.  You were one of the people starting "nastiness."  I was having a good productive conversation with beltim, and then you came in attacked a strawman, then claimed you weren't putting words in my mouth.  If you weren't putting words in my mouth, then why is your entire post nothing but criticisms of nothing that I proposed. If you wanted to actually contribute than you would have discussed the downsides, but you're just another "partisan hack" by ripping some other plan and then talking about "theft."

@Regulator.  No, wars are not the only times we have run budget deficits and the SS Trust Fund was buying Securities from the general fund long before the Wars in the middle east.  The Trust Fund will continued to be spent out of until 2030 when it actually runs out and the IOUs will be paid.

[MDM]

I don't understand what expanding SS means.

Like you pay more into it, but supposedly get more out when you retire?  What guarantee would there be that the money is actually there when one retires?  Presumably this wouldn't affect current retirees, would it?

The letter they submitted doesn't seem to have any actual content. It just says "expand benefits" with no mention of what that means.

... I follow these stupid proposals, because they have the potential to affect me.

And on another but related note, the nastiness in these forums has reached a level where it is now unpleasant to participate.  I think you will see fewer posts from rational, thoughtful people that are genuinely interested in learning something from others in the future.

E.g., what the operative definition of the word "expand" is in this context.  Without having a common understanding of that, people will read into this their fondest hopes and worst fears.

[Digital Dogma]

http://thehill.com/policy/finance/247648-sanders-dems-urge-obama-to-expand-social-security

Remember, this is in a country where 1 out of 3 people are on the literal definition of welfare, and half don't pay taxes. When will they learn that you can't keep taking from those work, to give to those who don't and expect this to be sustainable.

You are wasting your time trading talking points with the welfare state true believers.  Let them do their thing and just wait for the swift and brutal backlash.

Dogma detected.

[regulator]

@Regulator.  No, wars are not the only times we have run budget deficits and the SS Trust Fund was buying Securities from the general fund long before the Wars in the middle east.  The Trust Fund will continued to be spent out of until 2030 when it actually runs out and the IOUs will be paid.

We pretty much always run budget deficits.  Wars are just the biggest, dumbest part of the spending.  The military beltway bandits require to be paid regardless of whether we are enraging people somewhere on the globe or not, though.

You do understand that there is nothing backing the trust fund, though, right?  Just a promise by Congress that they will find the money "somehow" when the bill comes due? The bill is just starting to come due now.  You are really a true believer if you think this elected group of assclowns can really come up with the money...

[brooklynguy]

Can't remember which politician or think tank policy wonk first proposed it would be a good idea to merge SS and retirement accounts and expand the annuity program.  It seemed improbable, so I did not add that to my list of stupid ideas that might actually get implemented.  There have been several proposals from some friends of the current administration and others to force people to annuitize.  And then we have Theresa Ghilarducci....

Yes, Ghilarducci is the poster child for the movement to eliminate individually-managed tax-advantaged retirement accounts in favor of creating an exclusively government-run, government-guaranteed retirement program, but (as far as I know) no one has proposed taking away the tax-advantaged accounts that are already in existence (or forcing people to annuitize the existing balances in those accounts) (which I'm not sure is what you intended to mean with your original post, but I just wanted to clarify because that was one reasonable way to interpret your post with the references to "tak[ing] your IRA's and 401k's" and "theft").

[beltim]

Can't remember which politician or think tank policy wonk first proposed it would be a good idea to merge SS and retirement accounts and expand the annuity program.  It seemed improbable, so I did not add that to my list of stupid ideas that might actually get implemented.  There have been several proposals from some friends of the current administration and others to force people to annuitize.  And then we have Theresa Ghilarducci....

It might help the discussion for you to link to actual proposals.

[EricP]

@Regulator.  No, wars are not the only times we have run budget deficits and the SS Trust Fund was buying Securities from the general fund long before the Wars in the middle east.  The Trust Fund will continued to be spent out of until 2030 when it actually runs out and the IOUs will be paid.

We pretty much always run budget deficits.  Wars are just the biggest, dumbest part of the spending.  The military beltway bandits require to be paid regardless of whether we are enraging people somewhere on the globe or not, though.

You do understand that there is nothing backing the trust fund, though, right?  Just a promise by Congress that they will find the money "somehow" when the bill comes due? The bill is just starting to come due now.  You are really a true believer if you think this elected group of assclowns can really come up with the money...

Yes. I understand exactly what is going on.  And I am 100% sure that SS will continue to pay out full amounts until 2030 when the trust fund runs out.  It's not that I'm a "believer" it's just that we've gotten 18T in debt already, so I know that another 2.7T isn't going to break the bank.  (Although, the 2.7T is already included in the 18T, right?)

If you actually believed what you are saying, then you would be on the first ticket out of here, because I really don't think you want to be living in Greece, do you?