Austerity problem or something else?

[TimtheEnchanter]

I often think about how I would go about fixing social security and I always come back to the fact that it is not fixable with the traditional thinking. I would however might do the following;
announce a moratorium that;
1) Currently, people older than 50 or 45 will get the SS as it as, with some scaling built in and a "drop dead" cutoff put in place.
2) People born after the "drop dead" cut off will have the option to keep paying into the system that would be invested and fully funded from a) current payroll tax, c) special national sales tax
3) Overhaul the whole tax system to be more revenue friendly, evenly spread.
4) Implement a Chinese style system where anyone caught stealing pubic funds in high trusted position, would be a) castrated b) shot afterwards.

I like to think that without point 3 the scheme would fail, I love however point 4 as improbable that is.....

 

[MKTrader]

Quote from trefoil:

No sense of humor, eh?
Actually, as we all should know, both the WWII massive spending bulge here in the US....That the current generation of Internet Libertarian geniuses-in-their-own-minds are ignorant of history doesn't disprove this.

Or perhaps they've read Higgs, et. al, and know the comic book account of war/spending doing great things doesn't jive with the actual data.

 

[trefoil]

Quote from MKTrader:

Or perhaps they've read Higgs, et. al, and know the comic book account of war/spending doing great things doesn't jive with the actual data.

I'm always a sucker for data. Got some?

 

[piezoe]

Quote from HomelyWizzard:

I often think about how I would go about fixing social security and I always come back to the fact that it is not fixable with the traditional thinking. I would however might do the following;
announce a moratorium that;
1) Currently, people older than 50 or 45 will get the SS as it as, with some scaling built in and a "drop dead" cutoff put in place.
2) People born after the "drop dead" cut off will have the option to keep paying into the system that would be invested and fully funded from a) current payroll tax, c) special national sales tax
3) Overhaul the whole tax system to be more revenue friendly, evenly spread.
4) Implement a Chinese style system where anyone caught stealing pubic funds in high trusted position, would be a) castrated b) shot afterwards.

I like to think that without point 3 the scheme would fail, I love however point 4 as improbable that is.....

Why not spend some time on the Social Security Web site. There is nothing that needs to be fixed about social security! It works beautifully as designed. It is the deficit spending in the discretionary budget that needs fixing! Social Security just needs a routine adjustment in the contribution rate. This is a normal periodic adjustment needed for changes in demographics. The reason it is not being done is because there is a very effective lobby that is trying to kill or weaken social security.

 

[trefoil]

Quote from piezoe:

Why not spend some time on the Social Security Web site. There is nothing that needs to be fixed about social security! It works beautifully as designed. It is the deficit spending in the discretionary budget that needs fixing! Social Security just needs a routine adjustment in the contribution rate. This is a normal periodic adjustment needed for changes in demographics. The reason it is not being done is because there is a very effective lobby that is trying to kill or weaken social security.

I'd argue their productivity assumptions are way low, but eh, whatevs. Same thing for all practical purposes. It's the envy of the world, though you'd never know it from hangin around here.

 

[TimtheEnchanter]

No, there IS a demographic problem and the fact that payroll taxes are supposed to cover it all whereas I THINK in other countries general tax revenue is also used for pensions. If you deny the demographic issue that you are looking at the wrong websites or living in denial. Anyways there are better sources than some government website to get impartial information. Simply because of unemployment rise the pension balance forecast is changing.
Plus this F's up ways we must accept 12 million illegal Mexicans because of the ill fated SS scheme. IT NEEDS fixing. IMHO

Quote from piezoe:

Why not spend some time on the Social Security Web site. There is nothing that needs to be fixed about social security! It works beautifully as designed. It is the deficit spending in the discretionary budget that needs fixing! Social Security just needs a routine adjustment in the contribution rate. This is a normal periodic adjustment needed for changes in demographics. The reason it is not being done is because there is a very effective lobby that is trying to kill or weaken social security.

 

[Ed Breen]

Piezoe, achilles is basically correct in his comments on Social Security and you are completely wrong. There is no real assets in the Social Security Trust Account. All social security taxes that are collected are deposited in the general account and all social security benefits are paid from the general account. To the extent that in the past there was a surplus of social security taxes collected over what was concurrently paid out then Special Government Bonds' were issued to make an accounting representation of the money that the Treasury owed the Social Security. The head of the Treasury is also the head of the Social Security Trust fund (Tim Gietner right now). Speical Government Securities that are issue as assets in the Social Security Acccount and entered as liabilities in the Treasury Acccount are not the same as Treasury bonds. Speical Government Securities are actually IOUs from one part of the Government to another part of the government. By statute these are not marketable securities and the terms of the seucrities can be changed at will by Treasury. What this real boils down to is that the revenues paid into social security were never invested but instead they were used to reduce the need for the Federal Government to borrow money to fund deficit spending in the general account. All the years when the Social Security Trust fund should have been accumulating surplus and investing the surplus in assets that would provide future funding, there was no investment. The Government spent the money on its overhead just as Achilles suggested. The Special Securities that are in the Trust fund are simply accounting IOUs that represent a promise to go to the public markets and borrow money to fund Social Security benefits at such time, like now, when the revenues for Scoial Security are less than the cost of the benefits. Properly understood, the Treasury has used the Social Security revenues to reduce past issuance of Public Treasury debt and in exchange has promised to increase future issuance of Public Treasury debt to fund the cost of benefits in excess of current revenues when they become due.

So, when you say its all funded and sound you are simply full of it. The government has promised to borrow the money when it needs to pay the benefits. There is no guarantee that it can afford to borrow the money when it needs it. There is no surplus that has been saved or invested outside of the government ability to borrow that can fund the benefits. The 'bonds' that the social security site says are in the fund are a fiction, they are not real bonds, they are not real contracts that can be enforced, they are accounting entries to document that the government took the money, spent the money and now owes money it does not have in any reserve, but promises to borrow them money when the time comes. The time is coming.

I have been through this with you on these pages before. I can't believe you are spouting the same old crap when you know it isn't true. Those 'Special Government Bonds' are not bonds in any real sense. The government has a contract at will with itself.

 

[piezoe]

Quote from HomelyWizzard:

No, there IS a demographic problem and the fact that payroll taxes are supposed to cover it all whereas I THINK in other countries general tax revenue is also used for pensions. If you deny the demographic issue that you are looking at the wrong websites or living in denial. Anyways there are better sources than some government website to get impartial information. Simply because of unemployment rise the pension balance forecast is changing.
Plus this F's up ways we must accept 12 million illegal Mexicans because of the ill fated SS scheme. IT NEEDS fixing. IMHO

I'm using the official Social Security website. That is the site you should use. You should also read the annual reports, or at least the summaries, if you want a correct understanding of social security. Most of what you have posted Re S.S. has been incorrect. You are not alone. Most of the information Re S.S. posted on ET is incorrect.

 

[Ed Breen]

You read the reports and you look at the SS site Piezoe bu you don't know what you are reading, or if you do then you intentionally misrepresent. There are not real assets there; its all Orwelian language deceit.

 

[piezoe]

Quote from Ed Breen:

Piezoe, achilles is ... blah blah blah ...

Ed, my friend, you and I have discussed this elsewhere ad nauseam.

There is no need to repeat other than to note that this is another of those issues where you tend to go bonkers. I say that in all seriousness because it would be no easier for the U.S. to renege on its obligations to the Trust than it would be to renege on its obligation to you, were you to own a U.S. Treasury bond. Reneging on either is not politically possible, and we both agree that each dollar paid to you, or the Trust, when the bonds are redeemed ^*** will likely buy less than each dollar would buy when it was borrowed.
__________
^*** Don't bother reminding me that the Trust's bonds are not the same as your bond. I know that. The terms of the bonds held by the Trust have been tailored to meet the specific requirements of the Trustees.