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Sun Dec 30, 2012, 04:40 PM

 

I can make Social Security solvent in perpetutity with three words.

Remove the cap.

23 replies, 2739 views

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Arrow 23 replies Author Time Post
Reply I can make Social Security solvent in perpetutity with three words. (Original post)
RomneyLies Dec 2012 OP
Panasonic Dec 2012 #1
Angry Dragon Dec 2012 #2
toddwv Dec 2012 #12
democrattotheend Dec 2012 #3
Demo_Chris Dec 2012 #7
democrattotheend Dec 2012 #8
Major Nikon Dec 2012 #9
democrattotheend Dec 2012 #18
Major Nikon Dec 2012 #19
democrattotheend Dec 2012 #20
Major Nikon Dec 2012 #23
pnwmom Dec 2012 #22
Jim Lane Dec 2012 #21
Freddie Dec 2012 #4
JDPriestly Dec 2012 #15
Sancho Dec 2012 #5
freshwest Dec 2012 #6
Curmudgeoness Dec 2012 #10
former9thward Dec 2012 #11
pasto76 Dec 2012 #13
JDPriestly Dec 2012 #17
JDPriestly Dec 2012 #16
JDPriestly Dec 2012 #14

Response to RomneyLies (Original post)

Sun Dec 30, 2012, 04:41 PM

1. And let the rich attack it?

 

No thanks.

A cap of $500,000 is good enough for me.

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Response to Panasonic (Reply #1)

Sun Dec 30, 2012, 04:45 PM

2. that is a good place to start

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Response to Panasonic (Reply #1)

Sun Dec 30, 2012, 07:16 PM

12. Yeah, seriously because they aren't going after it now.

Where have you been for the past few decades?

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Response to RomneyLies (Original post)

Sun Dec 30, 2012, 04:50 PM

3. The problem with that

Is that it would turn SS into a welfare program and make it a bullseye target for the rich and powerful.

I support raising the cap, but eliminating it entirely would be unfair unless you remove the cap on benefits, which would not save any money and would probably cost more.

We cannot have it both ways, arguing that SS is a social insurance program rather than a welfare program but having high earners receive a miniscule benefit compared to what they pay in.

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Response to democrattotheend (Reply #3)

Sun Dec 30, 2012, 06:06 PM

7. It already is (nt)

 

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Response to Demo_Chris (Reply #7)

Sun Dec 30, 2012, 06:08 PM

8. Already is what?

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Response to democrattotheend (Reply #8)

Sun Dec 30, 2012, 07:08 PM

9. It's already that way, at least to some degree

Wage earners at or above the SS maximum receive less benefit dollar for dollar compared to those at the bottom end.

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Response to Major Nikon (Reply #9)

Sun Dec 30, 2012, 08:23 PM

18. True, but scrapping the cap would make it way out of whack

To the point where nobody could credibly argue that SS is social insurance rather than a welfare program.

We cannot have it both ways. We cannot argue that there can be no cuts to SS benefits because retirees have paid for them and are thus entitled to them, and at the same time have people getting back only a tiny fraction of what they paid in.

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Response to democrattotheend (Reply #18)

Sun Dec 30, 2012, 08:36 PM

19. What about Medicare?

No cap there.

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Response to Major Nikon (Reply #19)

Sun Dec 30, 2012, 08:50 PM

20. True, but Medicare is different

Because everyone gets the same benefits regardless of how much they paid in (as long as they paid in the minimum). Social Security benefits are supposed to provide retirement replacement income tied to the amount people paid in.

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Response to democrattotheend (Reply #20)

Sun Dec 30, 2012, 09:38 PM

23. That argument would seem to work in favor for eliminating the cap on SS

Higher wage earners would still derive more benefit from SS for more money paid in, vs Medicare which they don't.

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Response to Demo_Chris (Reply #7)

Sun Dec 30, 2012, 09:00 PM

22. No, it's not welfare.

It's a retirement insurance program -- because of the way it was set up.

If you eliminate the cap, then it's just another income tax.

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Response to democrattotheend (Reply #3)

Sun Dec 30, 2012, 08:53 PM

21. Your assumption is incorrect.

You write that removing the caps on taxable earnings and on benefits, then we "would not save any money and would probably cost more."

What you've missed is that the formula for calculating a retiree's initial Social Security benefit, based on the person's earnings history, has progressivity built into it. For example, changing one year at $40,000 to one year at $60,000 would increase your benefit, but not as much as if you changed one year at $20,000 to one year at $40,000. That's why, as Major Nikon pointed out (in #9), "Wage earners at or above the SS maximum receive less benefit dollar for dollar compared to those at the bottom end."

Several years ago, the report of the Social Security Trustees contained an analysis of how eliminating the cap would affect the then-projected shortfall in the system. Their conclusion was that, if benefits were not raised, this change would eliminate the entire projected shortfall; BUT, even if benefits did go up based on the new higher payments, the change would still eliminate something like three-fourths of the projected shortfall.

There's a further factor that I think wasn't considered by the Trustees. The formula for income taxation of Social Security benefits also has progressivity built into it. Thus, if we eliminate both caps, some retired CEO's will be receiving staggeringly large monthly benefit checks -- but a good portion of those increased benefits will then be paid into the general fund as income taxes. This won't directly affect the finances of the Social Security system but will help the general fund (and will give nonretirees another reason to support the system).

What I favor:
(1) Remove the cap on taxable earnings (probably need to phase this in over a few years).
(2) Extend the formula for computing the initial benefit to account for the higher earnings that will now be showing up in people's histories, but continue the principle that the higher amounts contribute less to one's eventual benefit (while still contributing something).

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Response to RomneyLies (Original post)

Sun Dec 30, 2012, 04:52 PM

4. Yes. Remove the wage cap but keep the cap on benefits

Yeah I know it changes the nature of SS, etc. Too bad. Rich people will still get their SS, just a capped amount. Simplest way of means-testing and will make the program solvent forever.
On a personal note, I'm a payroll administrator. I truly don't care what the highly paid executives earn--it's none of my business, I'm just the number cruncher--but when they get an even bigger paycheck mid-year thanks to the cap...grrrr. A privilege for the already privileged. If I have to pay that 6.2% on every penny I earn, so should my boss.

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Response to Freddie (Reply #4)

Sun Dec 30, 2012, 07:52 PM

15. Right.

Thanks, Freddie.

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Response to RomneyLies (Original post)

Sun Dec 30, 2012, 05:15 PM

5. I can solve the budget problem for everything more easily....

Unless a military force of a recognized nation attacks the US, defense spending will never exceed 25% of the annual budget without a referendum vote of the populace.

A few more words, but you get the idea...

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Response to Sancho (Reply #5)

Sun Dec 30, 2012, 05:17 PM

6. I like that one. But the billionaires who are making a killing off it won't like it, haha!

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Response to Sancho (Reply #5)

Sun Dec 30, 2012, 07:10 PM

10. Have you seen the way the populace votes?

That might be a problem. Scare tactics of how the commies will take over this country without an increase, and too many voters will fold. I prefer to leave the "populace" out of it and just cap defense spending, period.

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Response to Sancho (Reply #5)

Sun Dec 30, 2012, 07:12 PM

11. I think the 25% is too high.

For Fiscal 2010 the DOD budget was 20% of the total budget. http://en.wikipedia.org/wiki/File:U.S._Federal_Spending_-_FY_2010.svg

Take it down to 15%.

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Response to Sancho (Reply #5)

Sun Dec 30, 2012, 07:30 PM

13. a referendum vote of the populace?

dont forget we live in a republic, not a democracy. I used to be on a mountain rescue team. we wanted to get a team jacket for the first time ever. the debate was democratic, and took 12 fucking hours - 2 hours a night for 6 meetings. no thanks.

plus, any enemy that would attack us - your 'recognized nation' is an easy thing to get around, would have the speed, not only to surprise us, but to remain dynamic enough to stymie our counter attack capabilities. In other words we would need the OK to go ahead like -now-. not in 6 months.

- say 'africonia' (we get made up names for army exercises like this) arms, funds, trains, and deploys a non uniformed, possibly non paid force of combatants...easy to say that they are not the army of africonia. Listen Bush and CO made a huge fucking mess of going after the taliban and al queada, but there will always be non uniformed, armed militants that are harbored by some nation...you really want to sit back and do nothing?

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Response to pasto76 (Reply #13)

Sun Dec 30, 2012, 07:55 PM

17. We had a referendum to raise taxes in California last November. We voted to raise them

on the rich.

Our military is bloated. We would probably have a more effective defense force if we cut its budget. They have a lot of obsolete equipment, and they are stationing troops and equipment in places where they are not needed.

We need a strong defense, but we need a lean defense.

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Response to Sancho (Reply #5)

Sun Dec 30, 2012, 07:53 PM

16. Excellent idea.

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Response to RomneyLies (Original post)

Sun Dec 30, 2012, 07:51 PM

14. Common sense. That's what Obama promised in 2008.

And then Pete Peterson and Tim Geithner moved in. The rest is history.

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