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Thu Dec 27, 2012, 05:11 PM

 

The Social Security Trust Fund has not been 'looted'.

By the terms of the original SS legislation, any excess SS taxes must be borrowed by the federal government in exchange for federal securities. Those securities are what's in the TF.

The borrowed money goes into the federal budget and is spent on all the things the federal government spends on.

TF securities are redeemed (i.e. paid back) regularly, with interest.

This is not 'looting;' this is the way SS has always operated.

The problem came when a 1983 BIPARTISAN congress, on the recommendations of the BIPARTISAN GREENSPAN commission, voted to increase SS taxes significantly above the amount needed to fund current retirees and maintain a normal cushion. This was supposed to 'save' SS and 'prefund' the boomers' retirements. Supposedly the money would be paid back when the boomers began to retire -- in other words, the Trust Fund would be drawn down at that time & return to more historically normal levels.

The result was 30 years of ever-accumulating surpluses, which are now represented by the over $2.5 TRILLION dollars in securities the TF now holds -- an amount unprecedented both in real and inflation-adjusted dollars in the history of the TF. THIS WAS THE WAY IT WAS SUPPOSED TO WORK, & NOW IS THE TIME THAT THE BORROWED MONEY WAS SUPPOSED TO START GETTING REPAID.

So what's the problem? Rich people and corporations don't want to repay it. They want to tell you it has already been 'looted,' whatever the hell that's supposed to mean. THEY WANT TO SCARE YOU INTO THINKING THE LOOTING HAS ALREADY TAKEN PLACE & THE MONEY CAN NEVER BE REPAID.

But it HASN'T been looted; everything is working just as it was supposed to in the bill signed by SAINT RONNIE. NOW IT'S TIME TO REPAY.

IT'S NOT LOOTED UNLESS THEY DON'T PAY IT BACK. RICH PEOPLE LIKE STEVE FORBES ARE THE POTENTIAL LOOTERS. DON'T LET THEM GET AWAY WITH IT.



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Reply The Social Security Trust Fund has not been 'looted'. (Original post)
HiPointDem Dec 2012 OP
Turbineguy Dec 2012 #1
HiPointDem Dec 2012 #2
TrollBuster9090 Dec 2012 #23
HiPointDem Dec 2012 #25
DCKit Dec 2012 #53
SugarShack Dec 2012 #3
HiPointDem Dec 2012 #6
Faryn Balyncd Dec 2012 #4
Overseas Dec 2012 #5
pa28 Dec 2012 #7
sabrina 1 Dec 2012 #8
HiPointDem Dec 2012 #9
customerserviceguy Dec 2012 #11
sabrina 1 Dec 2012 #13
customerserviceguy Dec 2012 #22
HiPointDem Dec 2012 #26
customerserviceguy Dec 2012 #31
bhikkhu Dec 2012 #33
customerserviceguy Dec 2012 #83
bhikkhu Dec 2012 #88
customerserviceguy Dec 2012 #92
bhikkhu Dec 2012 #98
HiPointDem Dec 2012 #37
customerserviceguy Dec 2012 #84
HiPointDem Dec 2012 #89
customerserviceguy Dec 2012 #91
HiPointDem Dec 2012 #105
customerserviceguy Jan 2013 #109
JDPriestly Dec 2012 #54
HiPointDem Dec 2012 #63
JDPriestly Dec 2012 #64
sabrina 1 Dec 2012 #51
customerserviceguy Dec 2012 #85
sulphurdunn Dec 2012 #75
customerserviceguy Dec 2012 #86
sulphurdunn Dec 2012 #97
ronnie624 Dec 2012 #76
customerserviceguy Dec 2012 #10
sabrina 1 Dec 2012 #14
customerserviceguy Dec 2012 #19
allrevvedup Dec 2012 #71
customerserviceguy Dec 2012 #90
allrevvedup Dec 2012 #103
HiPointDem Dec 2012 #17
customerserviceguy Dec 2012 #21
HiPointDem Dec 2012 #28
customerserviceguy Dec 2012 #32
HiPointDem Dec 2012 #40
customerserviceguy Dec 2012 #93
HiPointDem Dec 2012 #61
customerserviceguy Dec 2012 #94
HiPointDem Dec 2012 #106
customerserviceguy Jan 2013 #108
HiPointDem Jan 2013 #111
customerserviceguy Jan 2013 #112
HiPointDem Jan 2013 #113
customerserviceguy Jan 2013 #114
HiPointDem Jan 2013 #115
Pretzel_Warrior Dec 2012 #59
HiPointDem Dec 2012 #60
allrevvedup Dec 2012 #70
customerserviceguy Dec 2012 #95
allrevvedup Dec 2012 #102
customerserviceguy Jan 2013 #110
Flatulo Dec 2012 #67
HiPointDem Dec 2012 #78
Flatulo Dec 2012 #82
HiPointDem Dec 2012 #107
suffragette Dec 2012 #87
JDPriestly Dec 2012 #55
shintao Dec 2012 #12
rhett o rick Dec 2012 #15
tonybgood Dec 2012 #16
HiPointDem Dec 2012 #18
TrollBuster9090 Dec 2012 #20
abelenkpe Dec 2012 #24
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HiPointDem Dec 2012 #29
TrollBuster9090 Dec 2012 #50
HiPointDem Dec 2012 #62
calimary Dec 2012 #30
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socialist_n_TN Dec 2012 #38
HiPointDem Dec 2012 #42
dkf Dec 2012 #47
HiPointDem Dec 2012 #57
TheProgressive Dec 2012 #43
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Conium Dec 2012 #35
HiPointDem Dec 2012 #41
TheProgressive Dec 2012 #44
HiPointDem Dec 2012 #45
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HiPointDem Dec 2012 #58
newfie11 Dec 2012 #66
HiPointDem Dec 2012 #77
plethoro Dec 2012 #36
HiPointDem Dec 2012 #46
Trailrider1951 Dec 2012 #39
JDPriestly Dec 2012 #49
HiPointDem Dec 2012 #56
lrellok Dec 2012 #52
HiPointDem Dec 2012 #65
Gothmog Dec 2012 #68
ProSense Dec 2012 #69
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klyon Dec 2012 #79
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HiPointDem Dec 2012 #81
murphyj87 Dec 2012 #100
HiPointDem Dec 2012 #101
MrMickeysMom Dec 2012 #96
Oilwellian Dec 2012 #99
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Response to HiPointDem (Original post)

Thu Dec 27, 2012, 05:15 PM

1. Not until

Steve Forbes' buddies get their hands on it anyway.

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Response to Turbineguy (Reply #1)

Thu Dec 27, 2012, 05:19 PM

2. exactly, which is why forbes is going around telling you the looting has already taken place. it

 

makes it that much easier to steal it when people believe it's already stolen.

steve forbes is a lying sack of shit. i can't believe anyone would post his bullshit & take it at face value.

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Response to HiPointDem (Reply #2)

Thu Dec 27, 2012, 06:52 PM

23. Exactly! It hasn't been "looted" YET. But it WILL be if we allow there dingleberries to continue

claiming that it's already gone.

Politicians are already trying to float the idea that the money we borrowed from the Trust Fund doesn't have to be paid back (or that it may not be possible to pay it back). See the Alan Simpson video I posted below.

This is the idea we have to prevent from taking root. The idea that the money we owe to our own Senior Citizens doesn't have to be taken as seriously as the money we owe to regular Bond Holders, both here and abroad.

This psychological link, that money we borrowed from ourselves doesn't have to be paid back, must be broken right now. If necessary, by INVOKING REAGAN!

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Response to TrollBuster9090 (Reply #23)

Thu Dec 27, 2012, 07:04 PM

25. "This is the idea we have to prevent from taking root." = yes. i've already seen these ideas being

 

pushed here at du, too.

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Response to Turbineguy (Reply #1)

Fri Dec 28, 2012, 12:41 AM

53. They' ve put in the hands of Wall St. and the Banksters. Exactly. nt

 

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Response to HiPointDem (Original post)

Thu Dec 27, 2012, 05:19 PM

3. And Forbes said today on CSPAN they MUST QUIT operating this way! Won't work no more...

 

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Response to SugarShack (Reply #3)

Thu Dec 27, 2012, 05:30 PM

6. oh, is that what he said? my OP is confirmed, then.

 

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Response to HiPointDem (Original post)

Thu Dec 27, 2012, 05:21 PM

4. Absolutely correct...They WANT to make permanent the subsidizing of income taxes with payroll...



...taxes by keeping the Trust Fund in permanent surplus, by slashing benefits.

Those that desire to do so do not advocate defaulting on the $13 trillion in bonds owed other bondholders (other than the SS Trust Fund).... Yet they portray the $2.7 trillion in funds loaned by the Trust Fund to the Treasury as "already spent", ignoring the fact that these loans are backed by the full faith and credit of the US Treasury.

They are essentially advocating a selective default of bonds held only by the SS Trust Fund.


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Response to HiPointDem (Original post)

Thu Dec 27, 2012, 05:27 PM

5. K&R. Well said.

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Response to HiPointDem (Original post)

Thu Dec 27, 2012, 05:41 PM

7. Best summary yet. Spread this far and wide people. n/t

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Response to HiPointDem (Original post)

Thu Dec 27, 2012, 05:47 PM

8. It always surprises me that even democrats still buy this old lie.

Does Forbes think that the US Govt's other creditors, like China eg, have been raided?

They soooooo want to get their hands on the People's Pension Fund to gamble with on Wall St. It has been their dream for decades.

They are like thieves looking through a window seeing a huge mountain of cash that they simply cannot resist. And little by little they've been working on it. And now with help from those elected to defend it.

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Response to sabrina 1 (Reply #8)

Thu Dec 27, 2012, 05:55 PM

9. yes, funny how so many democrats buy it.

 

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Response to sabrina 1 (Reply #8)

Thu Dec 27, 2012, 05:58 PM

11. China and the other creditors

get regular, fully negotiable T-bills and notes. That's the difference. It's what Al Gore was talking about when he used the word "lockbox".

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Response to customerserviceguy (Reply #11)

Thu Dec 27, 2012, 06:05 PM

13. Hi customerserviceguy



Well, we are all creditors of the US Government and since it is NOT their money they need to learn to respect the American people as much as they do other creditors. As you can see, the American overwhelmingly agree that the SS fund is not theirs to fool around with and any politician who tries, (see Bush) gets their head handed to them in no uncertain terms.

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Response to sabrina 1 (Reply #13)

Thu Dec 27, 2012, 06:49 PM

22. Hello, sabrina!

Yes, I'd like to see Congress respect the American people, too, but as the saying goes, people in hell want ice water.

The congresscritters who got us into all this mess are either retired, or most probably dead. They spent all the money, it's not in their mattresses. They bought votes with it. It's gone, and a pile of papers is all the Trust Fund has to show for it. The only way they get redeemed ultimately is by income, and that comes from taxes on US taxpayers.

To paraphrase Pogo, "We have met the creditors, and they are us."

Yes, I'd like to see rich people get taxed more, just to get to a balanced budget without wars. It will take a lot to bring this country back to a true prosperity, where we live within our means as a society, and not just pass the buck on to the future generations. But they've done it for so long, and so well, that they think they can keep doing it. The only problem is, as with any pyramid, eventually you run out of new people to get into the scheme. The baby bust sealed that one within our time.

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Response to customerserviceguy (Reply #22)

Thu Dec 27, 2012, 07:12 PM

26. your hero al, he of the 'lockbox,' was there for the 1983 vote which raised SS taxes significantly

 

above the rate needed to fund then current retirees, ensuring a steadily growing surplus in the Trust Fund, the $2.5 trillion plus that's there now. The same vote also began taxation of SS benefits and cut some benefits.

Rather than vote *against* it, al & others among our brave 'progressive' contingent, like kennedy & conyers, chose to *abstain,* thereby helping it to pass.

if by 'lockbox' gore meant 'make SS treasuries fully negotiable,' he kept that pretty hidden from the public.

the memes you are pushing: 'too late, it's all gone, blah blah blah' are the same memes people like steve forbes are pushing. also the 'baby bust,' the 'pyramid,' etc.

you may believe them, but they're still lies.

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Response to HiPointDem (Reply #26)

Thu Dec 27, 2012, 07:37 PM

31. Well, he's not my hero

But the concept of putting excess FICA contributions into some place where they were safer seemed to be his way to attempt to partially atone for his prior sins, and regardless of the messenger, was a good idea.

Do you deny that the US birthrate dropped after 1964? That's the baby bust I've been talking about. Families that had four or more kids got less numerous, and one or two kids became more of the norm. As for pyramid, I prefer that to "Ponzi scheme". In the latter, the suckers had no idea that their returns were an illusion. With a pyramid, you know that you're making money off of future suckers, and hope you can get your piece of the pie before there's nothing left.

How is a scheme where each generation finances the one or two that went before it, and can only be sustained by ever-growing generations NOT a pyramid?

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Response to customerserviceguy (Reply #31)

Thu Dec 27, 2012, 08:01 PM

33. "can only be sustained by ever-growing generations..."?

that's where you run into a fallacy. There is more than one way to show that a stable population can provide for the retirement of its own people, but you don't even have to go that far - if you look just at the productivity difference between a worker in 1930 and 2000, the increases are about ten-fold.

So the output of the average worker today (due to efficiencies, technology, etc) is ten times the output of a worker in 1930. And, presumably, if you say that it is actual good and resources (or its equivalent in money) that retired people need to live on, then there is ten times as much per person available now. Why wouldn't the output of 2 or 3 now be able to provide for the retirement of one?

Currently, my own work supports a family of four, in addition to various taxes paid to support local services...its not a difficult concept!

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Response to bhikkhu (Reply #33)

Sat Dec 29, 2012, 11:09 AM

83. Wherever did you come up with that productivity figure?

And it's not fair to go back to 1930, Social Security didn't even exist then. How about picking a fairer date, say, 1945, when the country was at full employment for the war effort.

I'm glad that you have the ability to support a family of four on your income alone, but most folks I run into need a two-breadwinner household to exist in today's world. And yes, there have been productivity gains, but they've often been at the expense of workers, either with machines that require less people (and thus less jobs) or by offshoring jobs to cheaper places to raise productivity.

When you look at the history of Social Security financing, it was only the FICA tax increases of the late 70's and the early 80's, just as the baby boomers were collectively coming into their most productive years that kept the system afloat for the last 30 years or so. Now that it's their turn, and we have cohorts behind them that are smaller and earning less, it's coming to crunch time, despite the rosy predictions of the Social Security Trustees.

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Response to customerserviceguy (Reply #83)

Sat Dec 29, 2012, 12:43 PM

88. Ok, here's 1947-2010



Google US Productivity History and - like magic - you get US productivity numbers!

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Response to bhikkhu (Reply #88)

Sat Dec 29, 2012, 07:30 PM

92. And if as much of our economy were in manufacturing as it was in 1950

that would mean something. We've switched over to a service economy, high pay for the managers, low pay for the workers. Manufacturing has gone overseas, first to Japan, then Korea, then China and India. The latter is now competing for our service jobs.

My point stands, whether the productivity has been sucked out of the system by management or by shareholders, it's not there for the workers.

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Response to customerserviceguy (Reply #92)

Sat Dec 29, 2012, 10:40 PM

98. Manufacturing continues to be one of our very strong points



The whole tired "manufacturing is gone" line is an excuse for a host of regressive social and economic policies.

edit to add - this is a slightly better graph:

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Response to customerserviceguy (Reply #31)

Thu Dec 27, 2012, 08:28 PM

37. of course i know birthrates dropped after the 60s, but it's irrelevant, and here's why:

 

Last edited Fri Dec 28, 2012, 03:40 AM - Edit history (1)

when SS started there were about 16 workers for every retiree.

within a decade (50s) it went to about 5:1. by the 70s, it was 4:1. currently it's a little over 3:1. projected to go to 2:1.

(note: those are rough figures; it's been awhile since i did the research, using real sources, not the often-wrong figures sometimes quoted in the popular/propagandistic media, but those are roughly correct).

so why hasn't it *already* collapsed, since the ratio has constantly gotten smaller?

because productivity has continually increased, with every generation producing more goods and services than the one before -- and productivity gains have continually outstripped declines in the ratio of workers to retirees. by large margins.

so if one worker can produce, say, $100 worth of goods/services in 1940, but $400 (inflation-adjusted dollars) in 1950, the worker of the 50s can support more dependents -- and so on, and so on, to the present day.

just like it took 100 workers to get a ton of corn in 1900, but only 10 today means 1 worker can feed a lot more people than the worker of 1900. should today's worker be paid what the 1900 worker was? no, because today's worker PRODUCES MORE VALUE, he should be paid more. If he's not, that means that extra value ALL GOES TO CAPITAL, while labor becomes increasingly poor in relation to capital.

keeping SS solvent is only a matter of giving workers a constant share of productivity increases. That hasn't happened, but it has nothing to do with demographics or social security, it has to do with POLITICAL POWER. And if workers' wages and share of productivity is the problem, which it is, that should be the issue, not cutting SS because 'we can't afford it'. We *can* afford it, and we can afford higher wages, but certain forces would rather give the gain to the rich.



With a pyramid, you know that you're making money off of future suckers, and hope you can get your piece of the pie before there's nothing left.

Your comparison of SS with a ponzi scheme is fraudulent, and here's why:

1. a pyramid scheme has no real 'investment' backing it. the fraudster simply takes A & B's money, then takes money from C & D & funnels some of C & D's money to A & B while keeping some for himself. rinse & repeat. The pyramid collapses BECAUSE THERE'S NO REAL VALUE OR INVESTMENT BACKING IT. THERE IS NO NEW VALUE CREATED, already-existing value is simply shifted around to different 'owners'.

in contrast, SS is 'backed' by real work, producing real goods and services, for as long as the US has workers, businesses, and produces goods and services.

2. Because a ponzi PRODUCES NO NEW VALUE, but simply moves already-existing value to different hands, it is completely dependent on growing the number of 'investors' in the money pool. If the pyramid doesn't grow at the base, it collapses.

In contrast, SS can work with a growing pool of 'investors,' or a declining pool of 'investors,' or a steady-state pool of 'investors' -- because NEW VALUE is being produced in every case. That is, the supply of goods and services represented in the form of workers' wages is constantly renewed.

There will *always* be 'something left,' so long as:

1. the politicians or the rich don't steal it by stealing workers' share of productivity (in which case, no other retirement/investment scheme will perform any better)
2. the economy doesn't collapse totally (in which case, no other retirement/investment scheme will perform any better)
3. the resource base doesn't collapse (in which case, no other retirement/investment scheme will perform any better)







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Response to HiPointDem (Reply #37)

Sat Dec 29, 2012, 11:16 AM

84. And where have those supposed productivity gains been going?

Has it been to workers' paychecks? Most folks I know need two incomes to get by with their families, shouldn't we need only one worker working part-time to have the same standard of living that my father provided for our family in the 60's and 70's?

I didn't say Social Security was a Ponzi scheme, I said it was a pyramid. In the former, the "investors" have no idea about the fraud, and in the latter, they're actively aware of it. Everybody who pays FICA taxes KNOWS that the money doesn't sit in some kind of bank account somewhere, it goes right into the hands of the people receiving it. Now, I know a lot of them feel that they're owed it because they paid in for years and years, but there is no actual liability of the Social Security System to them, and it can be cut off at any time if there are not sufficient funds to pay out.

That's my definition of a classic pyramid scheme, the goal is to not be the last sucker holding the bag. Offshored jobs, and mechanized means of production that benefit a few workers at the expense of many jobs is not my idea of productivity making our lives better.

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Response to customerserviceguy (Reply #84)

Sat Dec 29, 2012, 03:08 PM

89. it's not a pyramid scheme either. you are trying to claim that the 'fraud' lies with the structure

 

of SS financing. It doesn't.

The fraud lies with the theft of workers' share of productivity gains, and that is what needs fixing.

Because if it isn't, there's NO retirement security program that will be able to do any better.

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Response to HiPointDem (Reply #89)

Sat Dec 29, 2012, 07:27 PM

91. You still haven't answered my question

Where are these supposed productivity gains going? I suppose that the CEO's and their boardroom buddies have done better with each passing decade, but even that doesn't explain how a "ten-fold" gain disappeared.

As for what can do better, well, I advocate each person socking away as much as they absolutely can during their working years, in 401K's if they have them and IRAs if they don't. Of course, I'm not talking about sticking them in the casino of the stock market, but in money market funds, like I've been able to do with mine over the last five years.

No company or government is going to look out after you like you can.

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Response to customerserviceguy (Reply #91)

Mon Dec 31, 2012, 05:01 AM

105. They're going to capital, as opposed to labor. Your solution is no solution, for the same

 

reasons. Those who make lots of money will sock lots away; those who don't make much won't sock away much, for the same reasons, and will starve on the streets.

Before social security old people were poor; the majority depended on their families or charity in their old age, and by charity, I mean workhouses, something within my parents' living memory. Dependence on family was partly workable when most of the population was rural and agricultural, but it isn't today, for lots of reasons.

Your solution is no solution. If social security can't work, the majority of old people will die in poverty, because that is the result the structure of income & benefits forces.

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Response to HiPointDem (Reply #105)

Tue Jan 1, 2013, 05:30 PM

109. My solution is solid reform

Raise the tax modestly, raise the wage base modestly, FICA tax on the employer side for 100% of taxable compensation (including stock options, etc.) and slow the growth of money being paid out for COLAs. Chained CPI is going to be part of the solution in a comprehensive entitlement reform, it's been thrown on the table twice by the President.

Also, I think we need to revisit the age of retirement for full benefits, 67 is too old for a person doing hard physical labor, and too early for a pencil pusher like me who gets to sit at a desk. And why have the same employer FICA rate for successful and start-up companies? Maybe the most successful ones can pay an extra 1, 2, or 3 percent tax, based on their size and profitability.

Last, and most important of all, if we EVER get to a place where more FICA taxes are paid in than go out, make damned good and sure that the Social Security Trust Fund gets real T-bills or notes, and not something that is redeemable at the pleasure of Congress.

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Response to HiPointDem (Reply #26)

Fri Dec 28, 2012, 01:13 AM

54. Would Al Gore's vote against the measure have made any difference?

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Response to JDPriestly (Reply #54)

Fri Dec 28, 2012, 03:37 AM

63. no, because most dems already voted for it. but about 20% of house dems & 30% of senate

 

dems abstained on a measure that was supposedly desperately needed to 'save' SS (or so it was billed at the time).

that strikes me as odd. especially since notable progressives like kennedy, conyers & gore were among that contingent.

it strikes me as wanting to be 'safe' from political attack on this particular issue.

there were similar fractions of republicans who abstained, & i'd say the same about them.

the 1983 amendments were truly 'bipartisan' in that respect. also in that a majority in both parties, in both houses, voted 'yes'.

here's the vote count:

http://www.ssa.gov/history/tally1983.html

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Response to JDPriestly (Reply #54)

Fri Dec 28, 2012, 03:56 AM

64. Bills pass or fail based on the number of "yea" votes. Abstentions have the effect of "nay" votes.

But abstentions don't have the same political effect for the Congressmember. Makes sense to me to abstain on certain votes. There is nothing sinister about this in my opinion.

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Response to customerserviceguy (Reply #22)

Thu Dec 27, 2012, 11:05 PM

51. We can change course. A lot of them are still around and they need to get out

of the way. The people do not want what they are selling and now it's up to them to start taking control of their own government. I believe it is going to happen. Far more difficult changes have occurred throughout history when the people realized the power they have. I believe that is finally beginning to happen.

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Response to sabrina 1 (Reply #51)

Sat Dec 29, 2012, 11:18 AM

85. Two problems with that

One, they're in both parties, and they're favorites of the most partisan people in those parties. Two, get rid of all of them, and the folks who take their place in Congress can say, "Well, it's not my fault, I wasn't here when this happened."

It still doesn't feed the bulldog.

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Response to customerserviceguy (Reply #22)

Fri Dec 28, 2012, 11:58 AM

75. Those "pieces of paper"

you suggest are part of a pyramid scheme are IOUs for money invested through FICA taxes at interest with the sole purpose of funding the SS benefits of retirees. Paying back that obligation is most certainly a matter of raising taxes and reorienting federal spending priories. Do you think we could redeem those "pieces of paper" if we didn't spend half of the discretionary budget on national security, if we didn't tax unearned income at half the rate of wages, if we didn't decline to impose FICA taxes on incomes above $110,000, if we didn't decline to tax financial transactions as they occur, if we didn't permit corporations and rich individuals to avoid taxes through our Swiss Cheese, rich man's tax code that favors capital over labor, if we didn't choose to let corporations squat on a trillion untaxed dollars, if we got as serious about creating a full employment economy as we are about bailing out the "job creators" at the expense of the jobs? Do you suppose?

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Response to sulphurdunn (Reply #75)

Sat Dec 29, 2012, 11:20 AM

86. So, can I put you down as being in favor

of running budget surpluses to pay them off? It will require raising more taxes than what we spend, and will most likely involve both spending cuts and higher taxes. I expect to see a unicorn before I see a budget surplus.

As long as the rich own Congress, we won't see progress.

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Response to customerserviceguy (Reply #86)

Sat Dec 29, 2012, 09:54 PM

97. You can see me

in favor of honoring the nations SS obligations. I don't give a rat's ass how it's done. If that means taking it from the people who have been looting the country for 30 years, I don't have a problem with doing that or whatever it takes to bring that about. I agree with you that the rich own Congress. Negotiating with them is pointless. You're more likely to see a flying unicorn with a shiny nose leading Congress clowns through the fog of their own legislative misfeasance before they willingly perform due diligence to their oaths of office.

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Response to sabrina 1 (Reply #8)

Fri Dec 28, 2012, 02:14 PM

76. There is no serious disagreement on this issue among progressives.

It's a simple matter of slightly differing perspectives. Some think that all that remains is to make the clearly intended looting 'legal', or privatize the trust fund or otherwise change its fundamental nature, so that it no longer matters. No progressive wants to harm Social Security, in any way. Some of the foremost experts on Social Security, like Eric Laurson and Nancy Altman, incidentally, believe that center-right Democrats are a greater threat to the program than Republicans. The Republicans got stung with their last attempt to tamper with it in 2005, by their subsequent loss of Congress and the White House. Now they will have to wait for a new opening, perhaps one created by Democrats.

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Response to HiPointDem (Original post)

Thu Dec 27, 2012, 05:56 PM

10. Why was the trust fund issued non-negotiable securities

instead of regular Treasury bills and notes, which are instantly redeemable on world securities markets?

If I sold someone my home for $250K, and took back a mortgage from them for 90% of it ($225K), and now the home is worth only $100,000, would you lend me $225K (or anything near it) for that security? Of course not. My mortgage is worth only what the borrower will be completely willing to pay me back. If he decides to walk away from the house and mail me the keys, I've got squat.

Congress was only too happy to borrow excess FICA tax contributions, giving back pieces of paper that they had no intention of redeeming, leaving that to future generations to sort out among themselves. Sorry if that looks like looting to me.

Oh, and that two or three trillion that is the nominal "value" of the securities -- well, Social Security has an obligation (which they do not call a liability - that implies a contract) of over fifteen trillion dollars, according to their own study released in 2009:

http://www.ssa.gov/OACT/NOTES/ran1/an2008-1.pdf

We are going to have to make changes to deal with the economic and demographic changes that are only now starting to crumble the pyramid.

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Response to customerserviceguy (Reply #10)

Thu Dec 27, 2012, 06:10 PM

14. SS is not crumbling, far from it. It is the Fed Govt that crumbled, that spent

money on wars and tax cuts for their buddies that they could not afford. They now have to try to pay back their debts and it is ludicrous for them to think they can force those they borrowed from to pay their gambling debts.

They can stop spending on wars right now and save millions of dollars every day. That should be the first step. Then they should raise taxes on the wealthy and make them finally pay their fair share.

All SS needs, and not even right now, but several years from now to meet all of its obligations, is to raise the cap. Creating jobs instead of losing them, would further extend the SS Fund way into the future.

The problem is not SS, that is solvent, it is our Reps who voted for policies that cost trillions of dollars which they did not have. Now let them fix that problem and leave the People's Fund alone, unless it is to pay back their debt to the people.

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Response to sabrina 1 (Reply #14)

Thu Dec 27, 2012, 06:33 PM

19. Yes, we've had this discussion before

I agree, they need to "pay their gambling debts" as you put it, and they've spent far too much on no-win wars and tax breaks.

The question still remains: How are they going to fix it? Run budget surpluses (theoretically from raising taxes, since no one wants budget cuts), flood the market with negotiable securities in exchange for the trillions of IOU's in the Trust Fund, or inflate the currency and try to get out of this the Zimbabwe way?

Perhaps you have some hard numbers on how many workers are making above the cap, and just how much 12.4% of the wages they're making above that cap would add up to. My guess is that it would be woefully insignificant compared to the demographic problems we face with Social Security.

Was it deplorable that this happened? Yes, it was. What are we going to do about that?

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Response to customerserviceguy (Reply #19)

Fri Dec 28, 2012, 08:53 AM

71. We don't need to do anything.

 

And as it's now Dec. 28, chances are good that we won't:

http://www.democraticunderground.com/10021773239

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Response to allrevvedup (Reply #71)

Sat Dec 29, 2012, 07:05 PM

90. I agree that we won't

Yet. But, have you seen with every passing year since the Great Recession started, the date at which full benefits can no longer be estimated to be paid drops by three years? At that rate, it won't be long before we're at the point of no return, and SS benefits have to be permanently chopped. That piddly two or three trillion in the Trust Fund isn't going to cover the $15 trillion in obligations the system has, and we'd have to redeem those specialized securities in some way, shape or form. Being as we won't run budget surpluses, my guess is that we're going to add them to the tab of general fund borrowing, or possibly inflate the currency.

We still have time to do a number of things, raising the cap modestly is one, but we also need another benefits "tier" to keep the maximum benefit from expanding, too. If we don't do them now, while fixes are relatively painless, we risk watching the system go bust in the very near future, as larger and larger waves of baby boomers crash into Social Security's shores.

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Response to customerserviceguy (Reply #90)

Mon Dec 31, 2012, 03:24 AM

103. Oh please.

 

I've heard scarier stories around the campfire.

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Response to customerserviceguy (Reply #10)

Thu Dec 27, 2012, 06:20 PM

17. um, because there's no need or intention of trading them?

 

if the US is stable, there's no need to trade them. if it's not, they're not worth much on international markets.

so why is this such a fetish of the right?

Congress has *always* borrowed excess SS taxes, because that was how the ORIGINAL LEGISLATION WAS SET UP in the 1930s.

The only thing that changed was the REAGAN-ERA INCREASE IN SS TAXES WHICH LED TO INCREASED AND ACCUMULATING BORROWING -- by necessity, because of over-taxation.

No looting has occurred UNTIL THEY DECIDE THEY WON'T PAY IT BACK.

and once they convince you the looting has already taken place, they don't have to pay it back. so you're already there in your own mind. but that just helps them.

the only economic change that's 'crumbling the pyramid' IS THE INCREASING CUT THE RICH ARE TAKING.

Demographics are almost totally irrelevant.

and that two or three trillion that is the nominal "value" of the securities -- well, Social Security has an obligation (which they do not call a liability - that implies a contract) of over fifteen trillion dollars...:

do you also notice that this supposed '15 trillion' represents only 3.5 percent of taxable payroll in 2008, whereas in 2003 the corresponding figure was $10 trillion but an even bigger 3.8 percent of taxable payroll?

i think you just see a big number, but you don't know what it really means.

what does that $15 trillion mean? can you explain it? can you explain the time window it represents and whether the dollars are inflation-adjusted or nominal?

why does the obligation get bigger, but the obligation as a percent of gdp & taxable payroll get smaller, hmm?

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Response to HiPointDem (Reply #17)

Thu Dec 27, 2012, 06:40 PM

21. There are a hierarchy of securities

The best bonds from the most solid companies and banks are worth the most on the markets. On the low end, you have the junk bonds. Why isn't Social Security good enough to get the securities that we give to regular investors?

They've already decided that they won't pay it back, they'll do another 1983-style "reform" that cuts benefits and raises taxes. That's the only way to keep the surpluses coming, in order to keep borrowing them. It's like a group of people sitting at a table in a restaurant, where collectively, they have ordered more food and drink than all of them have the money to pay for. Rather than asking for the check, then trying to work something out with the management, they keep on ordering more food and more drinks, figuring that someone else someday will deal with the mess.

And your math just doesn't make a lick of sense to me. We clearly have falling incomes, and rising numbers of baby boomer retirees. Their taxes, raised by the Carter and Reagan "reforms" kept doing CPR on the Social Security System to keep it running for another generation. Now, they're at the table, and the restaurant check is finally arriving.

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Response to customerserviceguy (Reply #21)

Thu Dec 27, 2012, 07:20 PM

28. funny that they've always paid them back then & continue to pay them back on a regular basis

 

today. SS Treasuries are redeemed daily, weekly, monthly, in case you didn't know that.

You live in their minds, do you? You know what 'they're' 'decided,' & you know resistance is futile?

the meme about 'ordering more than you can afford' = right wing meme.

Yes, we have falling incomes. Not inevitable, because we have rising productivity. Falling income in the face of rising productivity and rising gdp is a function of POWER, not economics.

And if productivity & income is rising, then demographics are mostly irrelevant. The proportion of elderly in the population has been rising since SS began. It didn't crash the system when retirees per worker went from 1:16 to 1:4 and it won't crash the system when it goes from 1:4, 1:3, 1:2.

If social security can't support the elderly, NO OTHER SYSTEM CAN. And since you're convinced SS can't, then the only alternative is lots of elderly living on the streets.

But it's a lie.

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Response to HiPointDem (Reply #28)

Thu Dec 27, 2012, 07:48 PM

32. Yes, and the refinance boom kept going and going, too

Until one day, enough people realized that a two-bedroom condo with a view of nothing maybe really ISN'T worth $420,000. Yes, I'm talking about the unit right next door to mine, which sold for that at the peak of the boom.

I was a title insurance examiner before the housing bubble burst. Each new lender kept lending more and more on the same housing stock, each time refinancing not only the old mortgage, but the borrower's accumulated credit card debt, as well. Each one thought that they wouldn't get stuck holding the bag. Then they figured out how to make fairy-dust securities out of those mortgages, and bet against them with other looney-tunes financial instruments. That made sure the banks could unload the risks of pumping up the bubble on to other investors.

What's the bubble-popper for Social Security? The sheer numbers of people in the baby boom hitting retirement age. It started during the Great Recession, and whether we get out of that recession or not, they'll keep on coming for another sixteen years. And when we hit that point, most of them will still be alive, trying to collect from a shrinking pool of promises.

It was tax raises on the baby boomers that kept Social Security afloat when it went from 1:16 to the current ratio. Both the rates and the wage bases rose dramatically for that group as they hit their most productive years. Now, it's their turn for payback, and we have a shrunken work force, making lower wages to pay for it all.

And I find the phrases "right wing meme" or "Republican talking points" to be a poor substitute for an actual refutation of a person's argument.

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Response to customerserviceguy (Reply #32)

Thu Dec 27, 2012, 08:51 PM

40. the mortgage bubble was fraud. it has nothing to do with social security. the demographics

 

had nothing to do with the great depression, and have nothing to do with social security's problems today.

of course tax increases helped. but the tax increases during the period when SS dropped from a dependency ratio of 16:1 to 5:1 were not very large. From 1939 to 1956 the tax went from 1% to 2%, a doubling, but the dependency ratio , from 16:1 to 5:1.

http://www.ssa.gov/oact/progdata/taxRates.html

what mattered was increasing real wages that represented a share of increasing productivity which represented increased production of goods & services per worker. that was why taxes could be raised and workers still felt they were doing better: BECAUSE IN AGGREGATE, THEY WERE DOING BETTER. Their living standard was better, their elders were living better, and they had more spending cash. Because the economy was producing more goods and services, each worker was producing more goods & services, & workers were getting a rising share of that value.

Sorry, you *are* mouthing Republican talking points. That's a simple fact. And I've given you plenty of refutation.

You, on the other hand, have no real argument or explanation other than 'there aren't enough workers to support the old people!'

and your alternative would be, then....?

i presume to let people die, since if there aren't enough workers to support the elderly, there just aren't.

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Response to HiPointDem (Reply #40)

Sat Dec 29, 2012, 07:36 PM

93. All bubbles are caused by greed

fed by fraud. The only ones that aren't seen to be bubbles are those that haven't popped yet.

We're getting to the point where the Social Security bubble is going to pop. Every year since the Great Recession started, the Social Security Trustees have backpedalled by two or three years the date that even their rosy predictions show that the system won't be able to pay out promised benefits. Yes, they always have, and just like the "flip this house" fools who kept ratcheting up real estate prices, looking for someone else to be the next sucker, it has to stop somewhere.

"Mouthing Republican talking points" : Sounds like a poor excuse to refute facts.

As for the alternatives, there are many. At some point in the next year, Congress is going to start taking up serious consideration of a number of them. Chained CPI will be just one of them. If we get a handle on this NOW, we can provide for most of what the baby boom will cost us until it's dead and gone, but if we lose time, we're just headed for catastrophe.

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Response to customerserviceguy (Reply #32)

Fri Dec 28, 2012, 03:31 AM

61. did the refinance boom keep going for 70 years, btw?

 

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Response to HiPointDem (Reply #61)

Sat Dec 29, 2012, 07:38 PM

94. No, but the housing bubble did

With only a few fits and starts, it closely tracked the baby boom. Now, as the boomers don't need three and four bedroom houses, we have a bust. The demographics of this incredibly large cohort have driven American history since 1946. And they're not done with that yet.

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Response to customerserviceguy (Reply #94)

Mon Dec 31, 2012, 05:06 AM

106. You seem not to understand what a bubble is.

 

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Response to HiPointDem (Reply #106)

Tue Jan 1, 2013, 05:23 PM

108. To me, a bubble is any increase

that is not sustainable, and that's what makes it decrease, or 'pop', just like a soap bubble. What's your definition?

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Response to customerserviceguy (Reply #108)

Tue Jan 1, 2013, 06:24 PM

111. there is no your definition & my definition. there's *the* definition. buying houses to house the

 

population is not a 'bubble' & there's no such thing as a 70-year 'bubble'.

An economic bubble (sometimes referred to as a speculative bubble, a market bubble, a price bubble, a financial bubble, a speculative mania or a balloon) is "trade in high volumes at prices that are considerably at variance with intrinsic values".

http://en.wikipedia.org/wiki/Economic_bubble


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Response to HiPointDem (Reply #111)

Tue Jan 1, 2013, 07:39 PM

112. Ah, so you think my definition of the baby boom generation

doesn't meet your test of what a bubble is?

OK, then think of it as a series of bubbles. When that generation needed to be educated, there was a school-building bubble, that burst when they all graduated (or dropped out, whatever). We had crumbling schools that had to be closed down, and the staff therein needed to be either let go, or absorbed somehow by the surviving schools.

All throughout the life cycle of the baby boom, they've created bubbles that have popped as they left the ages at which things connected with those ages occurred. There was a crime bubble, a housing bubble, and now we face a retirement crisis bubble. When they went to work and started consuming from their own earnings (rather than their parents') they pumped money into the Social Security System, and taxes rose from the piddling levels they had been for thirty years (check out Social Security history for the wage caps and FICA percentages) to something that could really sustain the higher benefits (partly from COLAs) that people who had really worked (and contributed) their whole lives would be entitled to.

Now, the piper must be paid, and the cupboard is nearly bare. $2.5 trillion dollars in the Social Security Trust Fund sounds like a lot of money, but divided among at least 50 million baby boomers, it only works out to $50K per boomer. At an average monthly benefit of $1,230.00 ( http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/13/~/average-monthly-social-security-benefit-for-a-retired-worker ) that's only about ten years of benefits, and those folks will probably survive about twenty years. Yes, there will be money flowing in from current payers of FICA taxes, but add in some inflation (chained CPI or not) and you see that we face a very serious problem. In fact, the total estimated obligation (they take pains to avoid calling it a liability, that implies a "contract") is over $15 trillion dollars.

Just like the rest of the Federal government, Social Security is finally putting more out than it is taking in, and that's why there will be an entitlement reform panel, or committee, or whatever.

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Response to customerserviceguy (Reply #112)

Tue Jan 1, 2013, 11:39 PM

113. inflation-adjusted housing prices were basically flat 50's-90's, and basically flat from the turn of

 

the century, excluding the deflation of the depression era.

your story of a 70 year bubble is bullshit & so is your social security analysis.

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Response to HiPointDem (Reply #113)

Wed Jan 2, 2013, 07:15 AM

114. Your phrase "inflation-adjusted housing prices" is the weak link here

Housing prices were a major cause of inflation during most of the period that you cite. "Inflation-adjusting" them just means subtracting out the force they were on the economy.

It makes as much sense as saying that Hurricane Sandy was no big deal, once you adjust for winds, tide, and rain.

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Response to customerserviceguy (Reply #114)

Wed Jan 2, 2013, 07:28 AM

115. prove it

 

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Response to HiPointDem (Reply #28)

Fri Dec 28, 2012, 03:28 AM

59. Thanks for the good discussion.

 

Informative.

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Response to Pretzel_Warrior (Reply #59)

Fri Dec 28, 2012, 03:30 AM

60. you're welcome. who's winning?

 

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Response to HiPointDem (Reply #60)

Fri Dec 28, 2012, 08:40 AM

70. Not sure, but some customer service guy in Bangalore

 

keeps telling me there's no money in my account. Funny guy.

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Response to allrevvedup (Reply #70)

Sat Dec 29, 2012, 07:42 PM

95. I'm in New York

And you don't have a damned dime in any account. All you have are promises that future generations will put up with this scheme, and figure out how to tax themselves to provide you a check.

There's no bank account with your name on it at Social Security, only a record of earnings. And that's just a recitation of what happened in the past, accompanied by some mathematics that calculates a future benefit if the system manages to survive.

Figures don't lie, but liars can figure. Ask the people who put their trust in pretty pieces of paper churned out by Bernie Madoff.

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Response to customerserviceguy (Reply #95)

Mon Dec 31, 2012, 03:22 AM

102. So what does any bank have? Gold? Silver?

 

Nope, paper, backed by the US Treasury. In other words money is money is money. Nice try though.

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Response to allrevvedup (Reply #102)

Tue Jan 1, 2013, 05:35 PM

110. True enough

And when the time comes, if we cannot either borrow it, or raise it through budget surpluses, we'll simply print it. I have a feeling that by that time, we'll know what the recent "qualitative easing" measures have done to the country's inflation rate, if and when we ever have a solid economic recovery.

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Response to HiPointDem (Reply #28)

Fri Dec 28, 2012, 08:08 AM

67. But income isn't rising, There's the rub. nt

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Response to Flatulo (Reply #67)

Fri Dec 28, 2012, 03:35 PM

78. yes. that's the real problem. but i'd add that the ptb only want the solution that involves

 

weakening SS; which is why we should resist their definition of the problem & the false solution they channel us into.

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Response to HiPointDem (Reply #78)

Fri Dec 28, 2012, 09:37 PM

82. Thanks for taking so much time to post all this great info. I'm on SSDI now due

to some intractable back problems, so I have a vested interest in keeping this system running. My entire 37 year career as an engineer put me into the upper income bracket, so I always paid the max amount into the system. To some degree, the RW are working very hard to make me feel like a freeloader, but without this system we would literally be out in the street.

This has been a very helpful discussion.

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Response to Flatulo (Reply #82)

Mon Dec 31, 2012, 05:07 AM

107. Thanks for thanking me. Please talk to your friends and family about these issues.

 

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Response to customerserviceguy (Reply #21)

Sat Dec 29, 2012, 12:38 PM

87. Not all of us have falling incomes. CEO pay has risen dramatically.

http://thinkprogress.org/economy/2012/05/03/475952/ceo-pay-faster-worker-pay/?mobile=nc

Study: CEO Pay Increased 127 Times Faster Than Worker Pay Over Last 30 Years
By Travis Waldron on May 3, 2012 at 9:35 am

Compensation for chief executives at American companies grew 15 percent in 2011 after a 28 percent rise in 2010, part of a larger trend that has seen CEO pay skyrocket over the last three decades. Workers, on the other hand, have been left behind.

Since 1978, CEO pay at American firms has risen 725 percent, more than 127 times faster than worker pay over the same time period, according to new data from the Economic Policy Institute:
From 1978 to 2011, CEO compensation increased more than 725 percent, a rise substantially greater than stock market growth and the painfully slow 5.7 percent growth in worker compensation over the same period.

In 1978, CEOs took home 26.5 times more than the average worker. They now make roughly 206 times more than workers, EPI found. The pay isn’t always tied to the performance of their businesses — as ThinkProgress has noted, CEOs at companies like Bank of America often pocket huge pay increases even as the company’s stock price plummets and jobs are cut.



Seems like a massive redistribution or reallocation to me.

When we talk about balancing, we should look where the imbalance is occurring and the imbalance here is striking.

What's been stagnant are tax rates commensurate with this incredible rising income. It seems to me that people who have had a 725 percent increase in pay could afford to pay more in taxes in exchange for their dramatic increase in prosperity.

And that's just CEO pay. It doesn't take into account massive profits made by financiers whose shady dealings have plunged us into this global economic crisis and who tend to yell the loudest (along with many of those CEOs) for austerity reforms aimed at raiding pensions and Social Security funds worldwide and privatizing public assets.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x1388416#1390874

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=439&topic_id=1344099&mesg_id=1344717

All this at the same time that pensions were raided and/or outright done away with to be replaced by retirement plans that are scanty at best and while, as the OP noted, the average worker actually prepaid more into Social Security due to Reagan era changes.

To paraphrase, I'd say the doctrine here is shocking.

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Response to customerserviceguy (Reply #10)

Fri Dec 28, 2012, 01:21 AM

55. The Constitution requires our government to pay back debt.

Section 4.

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any state shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

http://www.law.cornell.edu/constitution/amendmentxiv

The Social Security Trust Fund is the responsibility of the Secretary of the Treasury.

Social Security is not a pyramid. Taxes on the rich have to go back up to the levels where they were under Clinton. We who are on Social Security paid taxes at the rates under Clinton. If we return to the rates we paid at that time, the money that is owed to seniors that was borrowed from the Social Security Trust Fund can be repaid.

It is a question of returning to fair tax rates.

People today pay much lower taxes than we did when we were young.

Here is the text of the statute that established the Trust Fund:

Sec. 201. (a) There is hereby created on the books of the Treasury of the United States a trust fund to be known as the “Federal Old-Age and Survivors Insurance Trust Fund”. The Federal Old-Age and Survivors Insurance Trust Fund shall consist of the securities held by the Secretary of the Treasury for the Old-Age Reserve Account and the amount standing to the credit of the Old-Age Reserve Account on the books of the Treasury on January 1, 1940, which securities and amount the Secretary of the Treasury is authorized and directed to transfer to the Federal Old-Age and Survivors Insurance Trust Fund, and, in addition, such gifts and bequests as may be made as provided in subsection (i)(1), and such amounts as may be appropriated to, or deposited in, the Federal Old-Age and Survivors Insurance Trust Fund as hereinafter provided. There is hereby appropriated to the Federal Old-Age and Survivors Insurance Trust Fund for the fiscal year ending June 30, 1941, and for each fiscal year thereafter, out of any moneys in the Treasury not otherwise appropriated, amounts equivalent to 100 per centum of—

(1) the taxes (including interest, penalties, and additions to the taxes) received under subchapter A of chapter 9 of the Internal Revenue Code of 1939 (and covered into the Treasury) which are deposited into the Treasury by collectors of internal revenue before January 1, 1951; and

(2) the taxes certified each month by the Commissioner of Internal Revenue as taxes received under subchapter A of chapter 9 of such Code which are deposited into the Treasury by collectors of internal revenue after December 31, 1950, and before January 1, 1953, with respect to assessments of such taxes made before January 1, 1951; and

(3) the taxes imposed by subchapter A of chapter 9 of such Code with respect to wages (as defined in section 1426 of such Code), and by chapter 21 (other than sections 3101(b) and 3111(b)) of the Internal Revenue Code of 1954 with respect to wages (as defined in section 3121 of such Code) reported to the Commissioner of Internal Revenue pursuant to section 1420(c) of the Internal Revenue Code of 1939 after December 31, 1950, or to the Secretary of the Treasury or his delegates pursuant to subtitle F of the Internal Revenue Code of 1954 after December 31, 1954, as determined by the Secretary of the Treasury by applying the applicable rates of tax under such subchapter or chapter 21 (other than sections 3101(b) and 3111(b)) to such wages, which wages shall be certified by the Commissioner of Social Security on the basis of the records of wages established and maintained by such Commissioner in accordance with such reports, less the amounts specified in clause (1) of subsection (b) of this section; and

(4) the taxes imposed by subchapter E of chapter 1 of the Internal Revenue Code of 1939, with respect to self-employment income (as defined in section 481 of such Code), and by chapter 2 (other than section 1401(b)) of the Internal Revenue Code of 1954 with respect to self-employment income (as defined in section 1402 of such Code) reported to the Commissioner of Internal Revenue on tax returns under such subchapter or to the Secretary of the Treasury or his delegate on tax returns under subtitle F of such Code, as determined by the Secretary of the Treasury by applying the applicable rate of tax under such subchapter or chapter (other than section 1401(b)) to such self-employment income, which self-employment income shall be certified by the Commissioner of Social Security on the basis of the records of self-employment income established and maintained by the Commissioner of Social Security in accordance with such returns, less the amounts specified in clause (2) of subsection (b) of this section.

The amounts appropriated by clauses (3) and (4) shall be transferred from time to time from the general fund in the Treasury to the Federal Old-Age and Survivors Insurance Trust Fund, and the amounts appropriated by clauses (1) and (2) of subsection (b) shall be transferred from time to time from the general fund in the Treasury to the Federal Disability Insurance Trust Fund, such amounts to be determined on the basis of estimates by the Secretary of the Treasury of the taxes, specified in clauses (3) and (4) of this subsection, paid to or deposited into the Treasury; and proper adjustments shall be made in amounts subsequently transferred to the extent prior estimates were in excess of or were less than the taxes specified in such clauses (3) and (4) of this subsection. All amounts transferred to either Trust Fund under the preceding sentence shall be invested by the Managing Trustee in the same manner and to the same extent as the other assets of such Trust Fund. Notwithstanding the preceding sentence, in any case in which the Secretary of the Treasury determines that the assets of either such Trust Fund would otherwise be inadequate to meet such Fund’s obligations for any month, the Secretary of the Treasury shall transfer to such Trust Fund on the first day of such month the amount which would have been transferred to such Fund under this section as in effect on October 1, 1990; and such Trust Fund shall pay interest to the general fund on the amount so transferred on the first day of any month at a rate (calculated on a daily basis, and applied against the difference between the amount so transferred on such first day and the amount which would have been transferred to the Trust Fund up to that day under the procedures in effect on January 1, 1983) equal to the rate earned by the investments of such Fund in the same month under subsection (d).

http://www.ssa.gov/OP_Home/ssact/title02/0201.htm#act-201-a

In the 1980s, special taxes were imposed on working people to provide a surplus in the Trust Fund for the retirement of the baby boomers. But the basic idea of the Trust Fund is a solemn promise of the government to American working people. To betray the trust of America's working people would be a terrible thing. I don't think that the government could expect people to trust it if it did that. And the chained CPI is such a betrayal.

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Response to HiPointDem (Original post)

Thu Dec 27, 2012, 05:58 PM

12. It should go into the SS Fund, draw interest & be left the hell alone!!

 

In CA we have a prop 99 tobacco law that spells out who can use that money, and those sources only. 3 governors have tried to raid that to balance budgets & the state courts won't let them. I suggest SS law needs to be written the same way.

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Response to HiPointDem (Original post)

Thu Dec 27, 2012, 06:12 PM

15. Bookkeeping 101. The balance sheet shows a positive balance of $2.7 trillion in the SS column.

It also shows in the Iraq and Afghanistan War column a debt of $2 trillion dollars.

We dont need to raise revenues to pay for SS but to pay for our wars.

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Response to HiPointDem (Original post)

Thu Dec 27, 2012, 06:14 PM

16. If they think it's been "looted", who did it?

If the answer is Congress and they refuse to repay, then they have committed a crime. They should be punished and all former congressmen and Senators should be forced to repay all "looted" money from the trust fund. Cancelling their pensions and seizing their assets would be a good first step!!!

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Response to tonybgood (Reply #16)

Thu Dec 27, 2012, 06:22 PM

18. yeah, people like forbes never tell you who 'looted' it. just that some nefarious but unnamed

 

agents of evil have already done the dirty deed, so the money's gone & don't touch steve forbes' money.

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Response to HiPointDem (Original post)

Thu Dec 27, 2012, 06:38 PM

20. Yes, that's exactly why Grandpa Simpson gets so testy at the 2:20 minute mark of this video...

Because the interviewer calls him out on exactly this issue.

Watch at the 2:20 minute mark where the interviewer points out that the Social Security Trust Fund has a SURPLUS...and Grandpa Simpson says "There IS no surplus, that's just a bunch-a IOUs in there. It's just a bunch a IOUs!"




Of course, I'd like to point out to him that all that's in a BANK is "a bunch-a IOUs" and everybody seems to take THOSE types of IOUs seriously.

And it begs the question: Why are politicians specifically trying to float the idea that the IOUs in the Social Security Trust Fund DO NOT have to be paid back???

Very simple! Because they're trying to soften the idea in the public mind that we can pay off part of our National Debt BY 'looting the trust fund surplus.'

I'm not a big fan of conspiracy theories, but if the Plutocrats and the GOP, who've wanted to destroy Social Security since it's inception, but knew they'd suffer for it politically if they just did it, wanted to destroy it stealthfully, THIS is how they could do it:

1. Borrow the money that's in it.
2. Run up a scary amount of debt elsewhere.
3. Then claim that one of they ways to get out of that debt would be to simply WRITE OFF the portion of the National Debt that we owe to OURSELVES (or to our senior citizens).



THIS IS THE IDEA WE HAVE TO PREVENT FROM TAKING ROOT!
THE MONEY WE OWE OURSELVES (that we borrowed from the SS TRUST FUND) MUST BE PAID BACK. PERIOD.
Why the hell should the money we borrowed from regular bond holders be taken more seriously than the money we borrowed from our own senior citizens???




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Response to TrollBuster9090 (Reply #20)

Thu Dec 27, 2012, 06:56 PM

24. Why the hell should the money we borrowed from regular bond holders be taken more seriously than the

money we borrowed from our own senior citizens???


Good question.


It shouldn't.

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Response to abelenkpe (Reply #24)

Thu Dec 27, 2012, 07:14 PM

27. We know, of course, what THEY think the answer to that question is.

Q: Why should the money we borrowed from regular bond holders be taken more seriously than the money we LITERALLY borrowed from our own Senior Citizens?

A: Because Bond Holders are 'politically important' (and have political clout), and senior citizens trying to avoid having to eat cat food in their twilight years are not. Maybe they had political clout 30 years ago, when there were a lot more of them, and represented a sizable voting block, but not anymore. If a few seniors are forced to eat cat food instead of hamburger, it's not going to crash the stock market, or cause China to rip up trade agreements, or Japan to block U.S. car imports, or cause plutocrats in Dubai to switch to German Bonds from U.S. Bonds etc.

So screw them. We can write off the debt we owe to them, and hardly anybody will notice. And politics is all about what people NOTICE is happening, not what's actually happening.

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Response to TrollBuster9090 (Reply #20)

Thu Dec 27, 2012, 07:23 PM

29. I personally think that some of the people behind the 1983 Social security amendments, allan

 

fuckspan in particular, deliberately pushed the idea of raising SS taxes above historical rates needed to fund then-current retirees with just this end in mind.

Because it's quite similar to the process through which the super-rich looted the railroads, the utilities, and every 'boom' industry in history.

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Response to HiPointDem (Reply #29)

Thu Dec 27, 2012, 10:31 PM

50. Yep, it's in the same vein as the Norquist style "Starve the beast" ideas for destroying government.

Fact is, most people LIKE Government intervention when it came to A) stopping business from screwing us (aka 'making sure business' remain good corporate citizens), and B) Providing senior citizens with a solid pension fund and affordable medical care.

The Plutocratic class doesn't benefit from these programs. They don't need them. REGULAR people do.

Still, the plutocratic class OWNS CONGRESS. That's never been more apparent than it is now. Not even during the gilded age. So, why hasn't the plutocratic class told their Congressional puppets to kill these programs? Because they know it would be political suicide, and if the Congressmen they own get thrown out of power, they'll lose influence.

So, they've done something much more stealthful. Found a way to LOOT these programs, while leaving them alone in name only (so as not to suffer from the political fallout), and simultaneously causing them to collapse under their own weight.

1. DON'T DISMANTLE regulatory agencies like the SEC. Simply stack them with cronies that don't believe Wall Street should be regulated, and then starve them of resources until they can't actually DO the job they're supposed to do. Then when the whole system falls apart, say "LOOK, the SEC didn't do anything to prevent that from happening, so we may as well get rid of it."

2. Rather than repealing gun laws, simply add amendments, and cripple the ATF, and make it impossible for them to actually ENFORCE the laws they're supposed to be enforcing. Then, when there's a mass shooting, and more gun laws are called for, say "there are already lots of laws on the books that didn't do anything to prevent this, why would MORE useless laws help?"

3. LOOT the social security trust fund by borrowing the money that's in it, and then getting your political henchmen to float the idea that it doesn't have to be paid back. That's GENIUS! Not only have you DESTROYED social security without suffering ANY of the political ramifications, but you also got to LOOT IT while you were destroying it, given that all that money was probably paid out to political cronies for whatever projects were being funded.

Thomas Frank illustrated how this racket works pretty well in his book THE WRECKING CREW.

http://en.wikipedia.org/wiki/The_Wrecking_Crew_(book)

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Response to TrollBuster9090 (Reply #50)

Fri Dec 28, 2012, 03:32 AM

62. +1

 

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Response to HiPointDem (Original post)

Thu Dec 27, 2012, 07:34 PM

30. The original assertion by steve forbes? Gee, THAT guy doesn't have an agenda or anything...

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Response to HiPointDem (Original post)

Thu Dec 27, 2012, 08:11 PM

34. Pay it back with what? This Govt is broke broke broke.

 

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Response to dkf (Reply #34)

Thu Dec 27, 2012, 08:32 PM

38. Pay it back by confiscating the wealth of the 400 richest......

families. That would be a start.

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Response to dkf (Reply #34)

Thu Dec 27, 2012, 08:53 PM

42. leave it to you. how are we paying for war on 5 continents, then, green stamps? is congress

 

Last edited Thu Dec 27, 2012, 09:28 PM - Edit history (1)

getting green stamps too? and those war contractors?

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Response to HiPointDem (Reply #42)

Thu Dec 27, 2012, 09:42 PM

47. Wow are you not aware have reached our debt limit again?

 

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Response to dkf (Reply #47)

Fri Dec 28, 2012, 03:08 AM

57. i presume we'll be cutting off the military contractors & bringing the troops home any day, then.

 

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Response to dkf (Reply #34)

Thu Dec 27, 2012, 08:58 PM

43. Our government is broke - really?

Should we find a new country to live in?

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Response to dkf (Reply #34)

Fri Dec 28, 2012, 09:42 AM

72. Sorry to disagree but WE ARE NOT BROKE!!!

How can we be broke with our tax rates at historic lows? It's bulls*** and it's a lie!!!

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Response to HiPointDem (Original post)

Thu Dec 27, 2012, 08:11 PM

35. Eliminate the caps.

Since congress has been spending social security funds as if they were general revenue, shouldn't the caps on contributions be eliminated? Otherwise this has become a quite regressive tax.

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Response to Conium (Reply #35)

Thu Dec 27, 2012, 08:52 PM

41. "become"? it's always been regressive in one aspect and progressive in another. eliminating the

 

caps = turning it into welfare & undermining the universal support it has historically had.

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Response to HiPointDem (Reply #41)

Thu Dec 27, 2012, 09:00 PM

44. How is 'removing the cap=turning it into welfare'?

How could that be welfare?

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Response to TheProgressive (Reply #44)

Thu Dec 27, 2012, 09:24 PM

45. because of the way income is structured. you've heard the stories about how the rich pay

 

most of the income taxes?

remove the cap on wage income subject to ss taxes & the same thing happens: the richest wage earners will pay the majority of SS taxes.

say there's one guy who makes 2 million in salary & 99 guys who average $50K.

The 99 guys combined make $4.95 million; the 1 guy alone makes 2 million.

That one guy will pay 30% of all social security taxes if rates are uncapped.

but he'll get about 1% of the benefits.

why would he want to pay? he doesn't need social security, and it's taking over 6% of his income for one program that he doesn't need. meanwhile, he's funding 17% of benefits for everyone else.

the strength of social security has historically been its universality; everyone paid in; benefits were roughly comparable to what you paid in (you got a little more on the low end, a little less on the high end). This is what made a majority support the program.

If the cap is removed, SS will be demagogued as 'welfare' & that traditional universal support will fracture. Even some of those people making $50K will cease to support the program because it's perceived as 'welfare'.

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Response to HiPointDem (Reply #45)

Thu Dec 27, 2012, 09:43 PM

48. The Republican talking point that the rich pay most of the taxes...

...always fail to say that the rich also make the most money as well...

Thom Hartmann, I believe, was quoting Congressman Alan Greyson saying that 'a dollar is a dollar'.
Meaning that all dollars should be treated equal and taxed equally. I agree with this.

It is time to stop worrying about those poor-poor multi- millionaires and what they think about when they start
paying their fair share of taxes. The 'rich' get rich because America provides the 'sandbox' in which to *earn*
their huge incomes. It all comes on the shoulders of giants.

The strength of SS is that people pay into SS all their lives (FICA) and when they retire, they receive their earned
benefits.

It is a joke to think that 'removing the cap' will demagogue SS as welfare. Just silly.

It would only be viewed as welfare if we start putting conditions on receiving payments, like means testing.

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Response to TheProgressive (Reply #48)

Fri Dec 28, 2012, 03:12 AM

58. that's the way income is structured. and that's why the original SS legislation made the pay-in

 

for SS 'regressive' -- so that SS couldn't be demagogued as a welfare program in which the rich subsidized everyone else.


"It is a joke to think that 'removing the cap' will demagogue SS as welfare."

The income tax + things like welfare, food stamps, and other social benefits are demagogued in just that way -- because those who receive them didn't pay for them, the rich did.

Why would you think it would be any different if SS were structured so that the rich paid most of the cost? Of course it would be demagogued. The joke is your contention that it wouldn't.

Means testing is irrelevant: the fact that they can say: "5% pay more than half the cost, you didn't pay for your benefits, *I* did," is enough.

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Response to HiPointDem (Reply #45)

Fri Dec 28, 2012, 07:32 AM

66. The cap has been raised before

Without the rich having a meltdown. It needs to be done again.

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Response to newfie11 (Reply #66)

Fri Dec 28, 2012, 02:30 PM

77. The cap is raised nearly every year. The poster wasn't talking about raising the cap, but

 

eliminating it.

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Response to HiPointDem (Original post)

Thu Dec 27, 2012, 08:12 PM

36. They can do what they want to do if the people's biggest response is

 

emails to Bernie Sanders. They are not afraid of the people at all.

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Response to plethoro (Reply #36)

Thu Dec 27, 2012, 09:28 PM

46. +1

 

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Response to HiPointDem (Original post)

Thu Dec 27, 2012, 08:37 PM

39. That's it in a nutshell

Thanks for your post, HiPointDem!

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Response to HiPointDem (Original post)

Thu Dec 27, 2012, 10:14 PM

49. Precisely. But I still say that when Bush gave his super-tax-cuts to the super-rich and waged

two wars without paying for them by raising taxes, he was looting the SS Trust Fund.

That was, I suspect, his intent, his plan. And, if it was, he did not think it up by himself.

That's why the rich must pay back the taxes they took from the SS Trust Fund. That is owed to the baby boomers and the war babies.

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Response to JDPriestly (Reply #49)

Fri Dec 28, 2012, 03:00 AM

56. i agree that the SS surplus helped make those cuts politically viable. & yeah, i agree that's why

 

taxes need to be increased on the wealthy to pay off the SS debt. payoff shouldn't come from increases on the working class or from cuts.

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Response to HiPointDem (Original post)

Fri Dec 28, 2012, 12:02 AM

52. Meh

This entire "Deficit" debate is a charade. The business tycoons know perfectly well their largesse have finally left the private economy significantly less efficient then the public sector, and are scrambling to prevent the market from adjusting.

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Response to lrellok (Reply #52)

Fri Dec 28, 2012, 07:00 AM

65. yes. too bad so many people believe it's real.

 

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Response to HiPointDem (Original post)

Fri Dec 28, 2012, 08:18 AM

68. The claim about the looting of Social Security Trust fund is an excuse to justify privatizing Social

Security. The GOP really want to end social security and to set up private accounts. These private accounts would be then be invested in the stock market which would make wall street happy. The claim that social security trust fund has been looted is simply false but will continued to be made in order for the GOP to justify their plan for privatization and elimination of the most successful government program in history.

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Response to Gothmog (Reply #68)

Fri Dec 28, 2012, 08:32 AM

69. A lot of people bought into that lie.

It was as transparent as ever: The claim that Social Security was depleted was to create the impression of a flawed and unsustainable program, one that needed to be rescued by the free market.



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Response to HiPointDem (Original post)

Fri Dec 28, 2012, 10:02 AM

73. No, it's not that "Rich people and corporations don't want to repay it."

When it comes time that the trust fund needs to draw on that money Treasury merely sells other, general obligation, bonds to replace them. The national debt is not increased, so they don't need "room under the debt ceiling" in order to do that. They don't need permission from Congress. For every dollar that need to be redeemed by Social Security, the Treasury sells a dollar of general obligation bond to replace it.

There is something else at work here, something idealogical. The people trying to cut Social Security are against it for reasons of ideology. They think it represents creeping communism, and they want to see it gone.

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Response to HiPointDem (Original post)

Fri Dec 28, 2012, 11:09 AM

74. And the Truth Shall Set You Free

Thanks HD, I wasn't sure how that worked, and now I'm more angry than before. Now, what can we do about it?

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Response to HiPointDem (Original post)

Fri Dec 28, 2012, 05:06 PM

79. yet

Simpson

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Response to HiPointDem (Original post)

Fri Dec 28, 2012, 05:18 PM

80. According to....

According to the Parliamentary Budget Office and also the Auditor General of Canada, Canada Pension (equivalent to US Social Security) is solvent for a minimum of 75 years. Of course all Canadians, regardless of income, get Old Age Security Pension over and above Canada Pension, taken directly from tax revenue (it's not all, or even half health care, Canadian taxes fund Old Age Security Pension - $500+ per month to those 65+, and Family Allowance - $112 per month per child under age 18).

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Response to murphyj87 (Reply #80)

Fri Dec 28, 2012, 08:13 PM

81. ...not quite.

 

he Canada Pension Plan (CPP) is a contributory, earnings-related social insurance program. It forms one of the two major components of Canada's public retirement income system, the other component being Old Age Security (OAS)

The CPP program mandates all employed Canadians who are 18 years of age and over to contribute a prescribed portion of their earnings income to a nationally administered pension plan.

The CPP is funded on a "steady-state" basis, with its current contribution rate set so that it will remain constant for the next 75 years, by accumulating a reserve fund sufficient to stabilize the asset/expenditure and funding ratios over time. Such a system is a hybrid between a fully funded one and a "pay-as-you-go" plan. In other words, assets held in the CPP fund are by themselves insufficient to pay for all future benefits accrued to date but sufficient to prevent contributions from rising any further.

In 2012, the prescribed contribution rate is 4.95% of a salaried worker's gross employment income between $3,500 and $50,100, up to a maximum contribution of $2,306.70 . The employer matches the employee contribution, effectively doubling the contributions of the employee. If a worker is self-employed, he/she must pay both halves of the contribution. The rate of 4.95% has been in effect since 2003.

http://en.wikipedia.org/wiki/Canada_Pension_Plan


CPP taxes workers only, just like the US plan. CPP taxes have a cap, just like the US plan. The main difference between CPP & US SS is that Canada's reserves are at least partly 'invested' and the Canadian tax rate is lower. Only those who've paid into this plan get its benefits.

Canada's other old-age security plan is "Old Age Security". It's the one that's available to everyone, AND IT'S FUNDED OUT OF CANADA'S INCOME TAX, NOT A TAX ON ONLY WORKERS. IT'S MEANS-TESTED. It's the equivalent of US SSI (Supplental security income) & it's basically a welfare-type program.

Funding: The Old Age Security program is financed from Government of Canada general tax revenues.

http://www.servicecanada.gc.ca/eng/isp/oas/oasoverview.shtml


I have no objection to a welfare program being funded out of general revenues, with the rich/capital paying most of the freight.

I have a big objection to turning social security into a welfare program funded ONLY by workers, and not by capital.

Get the difference?

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Response to HiPointDem (Reply #81)

Mon Dec 31, 2012, 12:23 AM

100. Who do you believe?

Who do you believe? Wikipedia or the Auditor General of Canada and the Parliamentary Budget Office?

You seem to fail to realize that Neithefr Canada Pension nor Old Age Security Pension is a "welfare" program. Neither OAS, Family Allowance, or Employment Insurance is considered "welfare" by Canadians. These are all benefits that we are entitled to. Every Canadian gets OAS. What is means tested is if some of it is clawed back through taxation. Basically, anyone making less than $60,000 in pension income a year gets full OAS with no clawback. Obviously, since Americans get almost no benefits at at all, it is no wonder that Americans like you are envious of the benefits that we Canadians get (also universal health care - not "welfare" either, it is universal, as OAS and Family Allowance are. All are universal, meaning everyone gets them once they quality by age or by having children etc.) .

Social Security is not welfare, and never was, and always has been funded by workers (I know, BECAUSE when I WORKED in the US I paid into Social Security as a - non citizen - WORKER AND ONLY BECAUSE I WAS A WORKER, IF I WERE NOT A WORKER I WOULD NOT HAVE BEEN PAYING INTO SOCIAL SECURITY, GET THE DIFFERENCE????), other than interest earned on investments, just as there is on CPP and OAS. (are you telling me that stay at home mothers and the unemployed pay into Social Security, or just workers???) You think that half reading a little about Canada lets you know more about Canada than a Canadian does? Typical arrogant American who knows it all (NOT). Americans like you think you know all about Canada, but even half reading a few lines still leaves you knowing nothing at all factual about Canada.

Obviously you will be forgoing Social Security since you, and only you dumb Americans, think that such things are welfare, since only workers pay into them.

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Response to murphyj87 (Reply #100)

Mon Dec 31, 2012, 01:09 AM

101. I believe the link I posted on the funding of OAS, which was not wikipedia.

 

Funding: The Old Age Security program is financed from Government of Canada general tax revenues.

http://www.servicecanada.gc.ca/eng/isp/oas/oasoverview.shtml

It's funded from general revenues, which means it's funded from both capital & wage income, not just by workers, & Canada's income tax is progressive, so the rich pay more.

Benefits are means-tested through the tax code:

Like most other retirement income, your basic Old Age Security pension is taxable income. Pensioners who earn individual net income of $66,335 or more as of 2009 (including the Old Age Security pension) have to repay part of their pension benefits (see our Web page about The Repayment of Old Age Security Pension Benefits). These repayments are normally deducted each month from your pension payment. Each year we adjust the maximum income amount to account for inflation.

http://www.servicecanada.gc.ca/eng/isp/pub/oas/oas.shtml

So the rich get less.

It doesn't matter that you, or canadians generally don't consider it welfare: by definition, it's a welfare transfer in which those with more money pay most, get least.

The CPP, OTOH, is funded by workers. It's pretty much like US Social security except it has an investment component.

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Response to HiPointDem (Original post)

Sat Dec 29, 2012, 07:55 PM

96. Pay no attention to that man behind the curtain, proletariat motherfuckers...

This is some kind of bullshit, isn't it America?

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Response to HiPointDem (Original post)

Sat Dec 29, 2012, 10:57 PM

99. Interesting use of the word "loot"

Loot
verb
Definition of LOOT
transitive verb
1 a : to plunder or sack in war
b : to rob especially on a large scale and usually by violence or corruption

2 a: to seize and carry away by force especially in war
intransitive verb
b: to engage in robbing or plundering especially in war


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Response to HiPointDem (Original post)

Mon Dec 31, 2012, 04:04 AM

104. Big K&R. I wish I could commit this entire thread to memory. Great points made in support of the OP.

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