Social Security: Of Clouds and Silver Linings.

[alang1216]

8. Did I mention that Social Security is a scam????
Madoff would be proud of it!

“Social Security takes a whopping 12.4 percent of American workers’ [and employers'] paychecks, but a new backgrounder by The Heritage Foundation shows that workers are getting a bad deal from the program.
… Social Security typically provides very low—and in many cases, negative—rates of return.

The Heritage Foundation analysis shows that younger workers—even low-wage ones—would receive at least three times greater rates of return from private savings than Social Security will provide.”
3 Examples of How Social Security Robs Americans of Greater Income Before, During Retirement



“Heritage’s analysis compares what workers would receive if their payroll taxes were invested in personal accounts compared with what Social Security will provide under two scenarios:
1) current law, with roughly 20 percent benefit cuts beginning around 2034;
and 2) a scenario whereby payroll taxes rise immediately to a level necessary to pay the program’s prescribed benefits.

While virtually all workers—across income levels, both genders, and generations—would be far better off with personal savings than Social Security, younger workers get the worst deal from the government program.”
DailySignal, Op. Cit.


Here's where we get into exactly who Social Security actually helps.....and why it's a scam.

“The average young male worker is virtually guaranteed a negative rate of return from Social Security.”

A 23-yr-old with a salary of $60,000 “He will pay $547,088 in Social Security taxes (excluding disability insurance taxes) throughout his lifetime. In return, he will receive a monthly benefit of $2,209 in retirement.

If he instead invested that same amount—$547,088—in a conservative mix of stocks and bonds, he would accumulate more than $1.5 million in a retirement account and could use that to purchase a lifetime annuity that would pay him $6,185 per month, or nearly three times what Social Security will provide.”
3 Examples of How Social Security Robs Americans of Greater Income Before, During Retirement



But….if he had that control of the money, politicians would not be able to syphon off the money, and pretend that it goes into some ‘lock box’ reserved to pay him when he retires.
Who gets all the Social Security money.....

....and who gets a promise?

The reality is that only about 1/2 of Americans are in the stock market.

Yeah, which means that 1/2 Americans will end up impoverished, living off the government.

This is why the older generation was better. They taught people to live modestly and save for retirement.

Except many people didn't save for retirement for many reasons, that's why we SS in the first place:

• putting food on the table now vs tomorrow
• financial ignorance or folly
• bad luck with health o r loss of job
• assuming their kids will take care of them but the kids can't or won't (maybe they had to move for work)

What a dunce you are.

The entire 'welfare' system is simply a vote buying scheme.



Economist Jim Powell, in “FDR’s Folly,” notes that a disproportionate amount of FDR’s relief and public works spending “went not to the poorest states such as the South, but to western states were people were better off , apparently because there were ‘swing’ states which could yield FDR more votes in the next election.”

That basis for charity and welfare continues to this day!



Many Liberals are simply this dumb and easy to manipulate.

But far more are cowards who tremble at ever questioning their masters.....for example, asking why after half a century and $22 trillion, the poverty rate is nearly the same as it was when the 'War On Poverty' began.

You keep changing the subject from SS to welfare. They are NOT the same.

According to the US Supreme Court they are the same.

Honestly, there is no way to look at Social Security, as anything other than a general welfare benefit.

Is Social Security Welfare? – The Future of Freedom Foundation

Since the Department of Health, Education, and Welfare became the Department of Education and the Department of Health and Human Services in 1979, the term “welfare” has fallen into disuse. “Income security,” “entitlement,” or “public assistance programs” are now the usual terms for what used to...

www.fff.org

Highlights:

1. Social Security benefits not connected to how much you pay in. If you have two men, who earn the same income, one works for 45 years, and the other 35 years, both will get identical benefits.
2. According to Title XI, section 1104 of the Social Security Act, congress can change tax rates, or benefits, with zero compensation to people paying in, or those collecting benefits, whenever they please.
3. US Supreme Court case Helvering v. Davis (1937), ruled “the proceeds of both [employee and employer] taxes are to be paid into the Treasury like internal revenue taxes generally, and are not earmarked in any way.”
4. US Supreme Court case Fleming v. Nestor (1960), ruled "To engraft upon Social Security a concept of “accrued property rights” would deprive it of the flexibility and boldness in adjustment to ever-changing conditions which it demands and which Congress probably had in mind when it expressly reserved the right to alter, amend or repeal any provision of the Act.
5. Social Security benefits have zero property rights. If you don't collect, then you simply don't get the money. If I die, my bank account, my properties, my 401K and my life insurance police, will all be collected by my extended family, and passed on. If you die with no dependents under Social Security, even if paying into the system your entire life, everything you paid in, is simply gone.
6. Social Security benefits can be taxes, up to 85% of your benefits. If I put money in my account, and then withdraw it, am I taxed? If I invest in a 401K, and withdraw it at retirement, am I taxed? (only on the growth in certain situations).

So let me recap all that for you:

1. US Supreme Court says, all the money you pay in, goes in as general revenue. It is spent, and gone.
2. US Supreme Court says, you have no property rights to Social Security, anymore than a person on food stamps and welfare has property rights to those things.
3. US Social Security Act itself says, the government can change how much you are required to pay in, and how much you can get out, at will without warning or compensation. Just like any other welfare program.
4. Social Security does not pay out, based on what you pay in, like any other insurance of investment.
5. Social Security can be taxed, unlike a savings account or retirement account.
6. Social Security does not guarantee you anything. If you die without collecting, then you simply don't collect, just like any other welfare program.

Social Security is a welfare program. That *IS* what it is.

Your money, that you pay in Social Security tax, goes to the same place as the Gasoline tax, as the Corporate tax, as the Estate Tax, as your income Tax, as your Medicare Tax.

They are all general revenue taxes, sent to the Federal Government, and are spent.

Social Security benefits are paid out of General Revenue... just like the military, Food stamps, court systems, the FBI, Public House, and any other government spending.

Social Security = welfare. Fact.

and now the other sides of the coin...

Highlights:

• Social Security is mainly a means of insuring against economic risk. It is fundamentally an insurance program, not a saving program, and as such it is not welfare.
• The six major welfare programs are EITC, housing assistance, Medicaid, SNAP, SSI, and TANF. Welfare programs differ from entitlement programs like Medicare and Social Security

Social Security is *Not* Welfare
Robert Samuelson is making the same wrong argument about Social Security being welfare that he's been making for years:

Why Social Security is welfare, by Robert J. Samuelson: ...Here is how I define a welfare program: First, it taxes one group to support another group, meaning it's pay-as-you-go and not a contributory scheme where people's own savings pay their later benefits. And second, Congress can constantly alter benefits, reflecting changing needs, economic conditions and politics. Social Security qualifies on both counts.

Since he is rolling out the same old column (and apparently getting paid for it), I'll just roll out the same old response. This is from March, 2005, just a few weeks after I started this blog:

Fire Insurance is not Welfare and Neither is Social Security: Robert Samuelson, and many others, appear to believe that any time there is a transfer of income between individuals or groups it is welfare. This is wrong. According to Samuelson:

Welfare is a governmental transfer from one group to another for the benefit of those receiving. The transfer involves cash or services (health care, education). We have welfare for the poor, the old, the disabled, farmers and corporations. Social Security is mainly welfare...

Not it isn’t. Social Security is mainly a means of insuring against economic risk. It is fundamentally an insurance program, not a saving program, and as such it is not "mainly welfare."
Just because an economic activity transfers income from one person or group to another does not make it welfare. Fire insurance transfers income. Some people pay premiums for their whole lives and collect nothing. Others, the unlucky few who suffer a fire, collect far more than they contribute. Does that make it welfare? Of course not.
Social Security is no different, it is an insurance program against economic risk as I explain in this Op-Ed piece. Some people will live long lives and collect more than they contribute in premiums, some will die young and collect less. Some children will lose their parents and collect more than their parents paid into the system, others will not. But this does not make it welfare.
Is gambling welfare? Gambling transfers income from one person to another. Does that make it welfare? Loaning money transfers income when the loan is paid back with interest. Are people who receive interest income on welfare?
There is an important distinction between needing insurance ex-ante and needing it ex-post. Insurance does redistribute income ex-post, but that doesn't imply that it was a bad deal ex-ante (i.e., when people start their work lives). ...
Angry Bear agrees with me on this and the two of us have been independently saying the same thing (in fact, I first encountered AB in a Google search on Social Security, insurance, and risk). As AB said (the full text is well worth reading):

What does all of this have to do with Social Security? Those who are hard-working, fortunate, and not too profligate will have a large nest egg at retirement and Social Security will account for only a small portion of their retirement portfolio. This is tantamount to paying for insurance and then not needing it. This happens all the time -- every year someone fails to get sick or injured and, while surely happy in their good health, would have been better off not buying insurance. That's the nature of insurance: if you don't need it, then you'll always wish you hadn't purchased it. Only in the context of retirement insurance is this considered a crisis.
On the other hand, those with bad luck or insufficient income will not have a nest egg at retirement. Because of Social Security, instead of facing the risk of zero income at retirement, they are guaranteed income sufficient to subsist.
This is precisely like the insurance example I worked through above: people with good outcomes will wish they hadn't paid into the insurance fund; those with bad outcomes will be glad they did. Ex-ante, everyone benefits from the insurance. Overall, society is better off because risk is reduced; because people are risk-averse, the gains are quite large.

When I think of welfare, I think of pure money transfers from one group to another without any economic basis for the transfer. In such cases, one person’s gain arises from another’s loss. But economic activity that results in the exchange of goods and services is different. It is not a zero sum game. One person’s gain does not come at the expense of someone else.
The main feature of Social Security is not welfare as Samuelson asserts. The main feature is insurance against economic risks and as such it makes us collectively better off. Calling it welfare when it isn’t is misleading and causes unnecessary class distinctions and resentments from the losers ex-post. More importantly, it ignores and obscures the important role Social Security plays in society as insurance against the economic risks we all face.
If you think you are so rich and powerful that you don’t need such insurance, consider this. The stock market collapse of 1929 at the onset of the Great Depression wiped out substantial quantities of wealth. The typical stock was worth only one sixth its pre-crash value once the bottom was reached. Whatever insurance existed in the stock market evaporated as the crash unfolded.
It wasn’t the poor jumping out of windows on Wall street. If you think it can’t happen to you, think again.

 

[PoliticalChic]

8. Did I mention that Social Security is a scam????
Madoff would be proud of it!

“Social Security takes a whopping 12.4 percent of American workers’ [and employers'] paychecks, but a new backgrounder by The Heritage Foundation shows that workers are getting a bad deal from the program.
… Social Security typically provides very low—and in many cases, negative—rates of return.

The Heritage Foundation analysis shows that younger workers—even low-wage ones—would receive at least three times greater rates of return from private savings than Social Security will provide.”
3 Examples of How Social Security Robs Americans of Greater Income Before, During Retirement



“Heritage’s analysis compares what workers would receive if their payroll taxes were invested in personal accounts compared with what Social Security will provide under two scenarios:
1) current law, with roughly 20 percent benefit cuts beginning around 2034;
and 2) a scenario whereby payroll taxes rise immediately to a level necessary to pay the program’s prescribed benefits.

While virtually all workers—across income levels, both genders, and generations—would be far better off with personal savings than Social Security, younger workers get the worst deal from the government program.”
DailySignal, Op. Cit.


Here's where we get into exactly who Social Security actually helps.....and why it's a scam.

“The average young male worker is virtually guaranteed a negative rate of return from Social Security.”

A 23-yr-old with a salary of $60,000 “He will pay $547,088 in Social Security taxes (excluding disability insurance taxes) throughout his lifetime. In return, he will receive a monthly benefit of $2,209 in retirement.

If he instead invested that same amount—$547,088—in a conservative mix of stocks and bonds, he would accumulate more than $1.5 million in a retirement account and could use that to purchase a lifetime annuity that would pay him $6,185 per month, or nearly three times what Social Security will provide.”
3 Examples of How Social Security Robs Americans of Greater Income Before, During Retirement



But….if he had that control of the money, politicians would not be able to syphon off the money, and pretend that it goes into some ‘lock box’ reserved to pay him when he retires.
Who gets all the Social Security money.....

....and who gets a promise?

The reality is that only about 1/2 of Americans are in the stock market.

Yeah, which means that 1/2 Americans will end up impoverished, living off the government.

This is why the older generation was better. They taught people to live modestly and save for retirement.

Except many people didn't save for retirement for many reasons, that's why we SS in the first place:

• putting food on the table now vs tomorrow
• financial ignorance or folly
• bad luck with health o r loss of job
• assuming their kids will take care of them but the kids can't or won't (maybe they had to move for work)

What a dunce you are.

The entire 'welfare' system is simply a vote buying scheme.



Economist Jim Powell, in “FDR’s Folly,” notes that a disproportionate amount of FDR’s relief and public works spending “went not to the poorest states such as the South, but to western states were people were better off , apparently because there were ‘swing’ states which could yield FDR more votes in the next election.”

That basis for charity and welfare continues to this day!



Many Liberals are simply this dumb and easy to manipulate.

But far more are cowards who tremble at ever questioning their masters.....for example, asking why after half a century and $22 trillion, the poverty rate is nearly the same as it was when the 'War On Poverty' began.

You keep changing the subject from SS to welfare. They are NOT the same.

According to the US Supreme Court they are the same.

Honestly, there is no way to look at Social Security, as anything other than a general welfare benefit.

Is Social Security Welfare? – The Future of Freedom Foundation

Since the Department of Health, Education, and Welfare became the Department of Education and the Department of Health and Human Services in 1979, the term “welfare” has fallen into disuse. “Income security,” “entitlement,” or “public assistance programs” are now the usual terms for what used to...

www.fff.org

Highlights:

1. Social Security benefits not connected to how much you pay in. If you have two men, who earn the same income, one works for 45 years, and the other 35 years, both will get identical benefits.
2. According to Title XI, section 1104 of the Social Security Act, congress can change tax rates, or benefits, with zero compensation to people paying in, or those collecting benefits, whenever they please.
3. US Supreme Court case Helvering v. Davis (1937), ruled “the proceeds of both [employee and employer] taxes are to be paid into the Treasury like internal revenue taxes generally, and are not earmarked in any way.”
4. US Supreme Court case Fleming v. Nestor (1960), ruled "To engraft upon Social Security a concept of “accrued property rights” would deprive it of the flexibility and boldness in adjustment to ever-changing conditions which it demands and which Congress probably had in mind when it expressly reserved the right to alter, amend or repeal any provision of the Act.
5. Social Security benefits have zero property rights. If you don't collect, then you simply don't get the money. If I die, my bank account, my properties, my 401K and my life insurance police, will all be collected by my extended family, and passed on. If you die with no dependents under Social Security, even if paying into the system your entire life, everything you paid in, is simply gone.
6. Social Security benefits can be taxes, up to 85% of your benefits. If I put money in my account, and then withdraw it, am I taxed? If I invest in a 401K, and withdraw it at retirement, am I taxed? (only on the growth in certain situations).

So let me recap all that for you:

1. US Supreme Court says, all the money you pay in, goes in as general revenue. It is spent, and gone.
2. US Supreme Court says, you have no property rights to Social Security, anymore than a person on food stamps and welfare has property rights to those things.
3. US Social Security Act itself says, the government can change how much you are required to pay in, and how much you can get out, at will without warning or compensation. Just like any other welfare program.
4. Social Security does not pay out, based on what you pay in, like any other insurance of investment.
5. Social Security can be taxed, unlike a savings account or retirement account.
6. Social Security does not guarantee you anything. If you die without collecting, then you simply don't collect, just like any other welfare program.

Social Security is a welfare program. That *IS* what it is.

Your money, that you pay in Social Security tax, goes to the same place as the Gasoline tax, as the Corporate tax, as the Estate Tax, as your income Tax, as your Medicare Tax.

They are all general revenue taxes, sent to the Federal Government, and are spent.

Social Security benefits are paid out of General Revenue... just like the military, Food stamps, court systems, the FBI, Public House, and any other government spending.

Social Security = welfare. Fact.

and now the other sides of the coin...

Highlights:

• Social Security is mainly a means of insuring against economic risk. It is fundamentally an insurance program, not a saving program, and as such it is not welfare.
• The six major welfare programs are EITC, housing assistance, Medicaid, SNAP, SSI, and TANF. Welfare programs differ from entitlement programs like Medicare and Social Security

Social Security is *Not* Welfare
Robert Samuelson is making the same wrong argument about Social Security being welfare that he's been making for years:

Why Social Security is welfare, by Robert J. Samuelson: ...Here is how I define a welfare program: First, it taxes one group to support another group, meaning it's pay-as-you-go and not a contributory scheme where people's own savings pay their later benefits. And second, Congress can constantly alter benefits, reflecting changing needs, economic conditions and politics. Social Security qualifies on both counts.

Since he is rolling out the same old column (and apparently getting paid for it), I'll just roll out the same old response. This is from March, 2005, just a few weeks after I started this blog:

Fire Insurance is not Welfare and Neither is Social Security: Robert Samuelson, and many others, appear to believe that any time there is a transfer of income between individuals or groups it is welfare. This is wrong. According to Samuelson:

Welfare is a governmental transfer from one group to another for the benefit of those receiving. The transfer involves cash or services (health care, education). We have welfare for the poor, the old, the disabled, farmers and corporations. Social Security is mainly welfare...

Not it isn’t. Social Security is mainly a means of insuring against economic risk. It is fundamentally an insurance program, not a saving program, and as such it is not "mainly welfare."
Just because an economic activity transfers income from one person or group to another does not make it welfare. Fire insurance transfers income. Some people pay premiums for their whole lives and collect nothing. Others, the unlucky few who suffer a fire, collect far more than they contribute. Does that make it welfare? Of course not.
Social Security is no different, it is an insurance program against economic risk as I explain in this Op-Ed piece. Some people will live long lives and collect more than they contribute in premiums, some will die young and collect less. Some children will lose their parents and collect more than their parents paid into the system, others will not. But this does not make it welfare.
Is gambling welfare? Gambling transfers income from one person to another. Does that make it welfare? Loaning money transfers income when the loan is paid back with interest. Are people who receive interest income on welfare?
There is an important distinction between needing insurance ex-ante and needing it ex-post. Insurance does redistribute income ex-post, but that doesn't imply that it was a bad deal ex-ante (i.e., when people start their work lives). ...
Angry Bear agrees with me on this and the two of us have been independently saying the same thing (in fact, I first encountered AB in a Google search on Social Security, insurance, and risk). As AB said (the full text is well worth reading):

What does all of this have to do with Social Security? Those who are hard-working, fortunate, and not too profligate will have a large nest egg at retirement and Social Security will account for only a small portion of their retirement portfolio. This is tantamount to paying for insurance and then not needing it. This happens all the time -- every year someone fails to get sick or injured and, while surely happy in their good health, would have been better off not buying insurance. That's the nature of insurance: if you don't need it, then you'll always wish you hadn't purchased it. Only in the context of retirement insurance is this considered a crisis.
On the other hand, those with bad luck or insufficient income will not have a nest egg at retirement. Because of Social Security, instead of facing the risk of zero income at retirement, they are guaranteed income sufficient to subsist.
This is precisely like the insurance example I worked through above: people with good outcomes will wish they hadn't paid into the insurance fund; those with bad outcomes will be glad they did. Ex-ante, everyone benefits from the insurance. Overall, society is better off because risk is reduced; because people are risk-averse, the gains are quite large.

When I think of welfare, I think of pure money transfers from one group to another without any economic basis for the transfer. In such cases, one person’s gain arises from another’s loss. But economic activity that results in the exchange of goods and services is different. It is not a zero sum game. One person’s gain does not come at the expense of someone else.
The main feature of Social Security is not welfare as Samuelson asserts. The main feature is insurance against economic risks and as such it makes us collectively better off. Calling it welfare when it isn’t is misleading and causes unnecessary class distinctions and resentments from the losers ex-post. More importantly, it ignores and obscures the important role Social Security plays in society as insurance against the economic risks we all face.
If you think you are so rich and powerful that you don’t need such insurance, consider this. The stock market collapse of 1929 at the onset of the Great Depression wiped out substantial quantities of wealth. The typical stock was worth only one sixth its pre-crash value once the bottom was reached. Whatever insurance existed in the stock market evaporated as the crash unfolded.
It wasn’t the poor jumping out of windows on Wall street. If you think it can’t happen to you, think again.

"The lady doth protest too much, methinks"

 

[Andylusion]

8. Did I mention that Social Security is a scam????
Madoff would be proud of it!

“Social Security takes a whopping 12.4 percent of American workers’ [and employers'] paychecks, but a new backgrounder by The Heritage Foundation shows that workers are getting a bad deal from the program.
… Social Security typically provides very low—and in many cases, negative—rates of return.

The Heritage Foundation analysis shows that younger workers—even low-wage ones—would receive at least three times greater rates of return from private savings than Social Security will provide.”
3 Examples of How Social Security Robs Americans of Greater Income Before, During Retirement



“Heritage’s analysis compares what workers would receive if their payroll taxes were invested in personal accounts compared with what Social Security will provide under two scenarios:
1) current law, with roughly 20 percent benefit cuts beginning around 2034;
and 2) a scenario whereby payroll taxes rise immediately to a level necessary to pay the program’s prescribed benefits.

While virtually all workers—across income levels, both genders, and generations—would be far better off with personal savings than Social Security, younger workers get the worst deal from the government program.”
DailySignal, Op. Cit.


Here's where we get into exactly who Social Security actually helps.....and why it's a scam.

“The average young male worker is virtually guaranteed a negative rate of return from Social Security.”

A 23-yr-old with a salary of $60,000 “He will pay $547,088 in Social Security taxes (excluding disability insurance taxes) throughout his lifetime. In return, he will receive a monthly benefit of $2,209 in retirement.

If he instead invested that same amount—$547,088—in a conservative mix of stocks and bonds, he would accumulate more than $1.5 million in a retirement account and could use that to purchase a lifetime annuity that would pay him $6,185 per month, or nearly three times what Social Security will provide.”
3 Examples of How Social Security Robs Americans of Greater Income Before, During Retirement



But….if he had that control of the money, politicians would not be able to syphon off the money, and pretend that it goes into some ‘lock box’ reserved to pay him when he retires.
Who gets all the Social Security money.....

....and who gets a promise?

The reality is that only about 1/2 of Americans are in the stock market.

Yeah, which means that 1/2 Americans will end up impoverished, living off the government.

This is why the older generation was better. They taught people to live modestly and save for retirement.

Except many people didn't save for retirement for many reasons, that's why we SS in the first place:

• putting food on the table now vs tomorrow
• financial ignorance or folly
• bad luck with health o r loss of job
• assuming their kids will take care of them but the kids can't or won't (maybe they had to move for work)

What a dunce you are.

The entire 'welfare' system is simply a vote buying scheme.



Economist Jim Powell, in “FDR’s Folly,” notes that a disproportionate amount of FDR’s relief and public works spending “went not to the poorest states such as the South, but to western states were people were better off , apparently because there were ‘swing’ states which could yield FDR more votes in the next election.”

That basis for charity and welfare continues to this day!



Many Liberals are simply this dumb and easy to manipulate.

But far more are cowards who tremble at ever questioning their masters.....for example, asking why after half a century and $22 trillion, the poverty rate is nearly the same as it was when the 'War On Poverty' began.

You keep changing the subject from SS to welfare. They are NOT the same.

According to the US Supreme Court they are the same.

Honestly, there is no way to look at Social Security, as anything other than a general welfare benefit.

Is Social Security Welfare? – The Future of Freedom Foundation

Since the Department of Health, Education, and Welfare became the Department of Education and the Department of Health and Human Services in 1979, the term “welfare” has fallen into disuse. “Income security,” “entitlement,” or “public assistance programs” are now the usual terms for what used to...

www.fff.org

Highlights:

1. Social Security benefits not connected to how much you pay in. If you have two men, who earn the same income, one works for 45 years, and the other 35 years, both will get identical benefits.
2. According to Title XI, section 1104 of the Social Security Act, congress can change tax rates, or benefits, with zero compensation to people paying in, or those collecting benefits, whenever they please.
3. US Supreme Court case Helvering v. Davis (1937), ruled “the proceeds of both [employee and employer] taxes are to be paid into the Treasury like internal revenue taxes generally, and are not earmarked in any way.”
4. US Supreme Court case Fleming v. Nestor (1960), ruled "To engraft upon Social Security a concept of “accrued property rights” would deprive it of the flexibility and boldness in adjustment to ever-changing conditions which it demands and which Congress probably had in mind when it expressly reserved the right to alter, amend or repeal any provision of the Act.
5. Social Security benefits have zero property rights. If you don't collect, then you simply don't get the money. If I die, my bank account, my properties, my 401K and my life insurance police, will all be collected by my extended family, and passed on. If you die with no dependents under Social Security, even if paying into the system your entire life, everything you paid in, is simply gone.
6. Social Security benefits can be taxes, up to 85% of your benefits. If I put money in my account, and then withdraw it, am I taxed? If I invest in a 401K, and withdraw it at retirement, am I taxed? (only on the growth in certain situations).

So let me recap all that for you:

1. US Supreme Court says, all the money you pay in, goes in as general revenue. It is spent, and gone.
2. US Supreme Court says, you have no property rights to Social Security, anymore than a person on food stamps and welfare has property rights to those things.
3. US Social Security Act itself says, the government can change how much you are required to pay in, and how much you can get out, at will without warning or compensation. Just like any other welfare program.
4. Social Security does not pay out, based on what you pay in, like any other insurance of investment.
5. Social Security can be taxed, unlike a savings account or retirement account.
6. Social Security does not guarantee you anything. If you die without collecting, then you simply don't collect, just like any other welfare program.

Social Security is a welfare program. That *IS* what it is.

Your money, that you pay in Social Security tax, goes to the same place as the Gasoline tax, as the Corporate tax, as the Estate Tax, as your income Tax, as your Medicare Tax.

They are all general revenue taxes, sent to the Federal Government, and are spent.

Social Security benefits are paid out of General Revenue... just like the military, Food stamps, court systems, the FBI, Public House, and any other government spending.

Social Security = welfare. Fact.

and now the other sides of the coin...

Highlights:

• Social Security is mainly a means of insuring against economic risk. It is fundamentally an insurance program, not a saving program, and as such it is not welfare.
• The six major welfare programs are EITC, housing assistance, Medicaid, SNAP, SSI, and TANF. Welfare programs differ from entitlement programs like Medicare and Social Security

Social Security is *Not* Welfare
Robert Samuelson is making the same wrong argument about Social Security being welfare that he's been making for years:

Why Social Security is welfare, by Robert J. Samuelson: ...Here is how I define a welfare program: First, it taxes one group to support another group, meaning it's pay-as-you-go and not a contributory scheme where people's own savings pay their later benefits. And second, Congress can constantly alter benefits, reflecting changing needs, economic conditions and politics. Social Security qualifies on both counts.

Since he is rolling out the same old column (and apparently getting paid for it), I'll just roll out the same old response. This is from March, 2005, just a few weeks after I started this blog:

Fire Insurance is not Welfare and Neither is Social Security: Robert Samuelson, and many others, appear to believe that any time there is a transfer of income between individuals or groups it is welfare. This is wrong. According to Samuelson:

Welfare is a governmental transfer from one group to another for the benefit of those receiving. The transfer involves cash or services (health care, education). We have welfare for the poor, the old, the disabled, farmers and corporations. Social Security is mainly welfare...

Not it isn’t. Social Security is mainly a means of insuring against economic risk. It is fundamentally an insurance program, not a saving program, and as such it is not "mainly welfare."
Just because an economic activity transfers income from one person or group to another does not make it welfare. Fire insurance transfers income. Some people pay premiums for their whole lives and collect nothing. Others, the unlucky few who suffer a fire, collect far more than they contribute. Does that make it welfare? Of course not.
Social Security is no different, it is an insurance program against economic risk as I explain in this Op-Ed piece. Some people will live long lives and collect more than they contribute in premiums, some will die young and collect less. Some children will lose their parents and collect more than their parents paid into the system, others will not. But this does not make it welfare.
Is gambling welfare? Gambling transfers income from one person to another. Does that make it welfare? Loaning money transfers income when the loan is paid back with interest. Are people who receive interest income on welfare?
There is an important distinction between needing insurance ex-ante and needing it ex-post. Insurance does redistribute income ex-post, but that doesn't imply that it was a bad deal ex-ante (i.e., when people start their work lives). ...
Angry Bear agrees with me on this and the two of us have been independently saying the same thing (in fact, I first encountered AB in a Google search on Social Security, insurance, and risk). As AB said (the full text is well worth reading):

What does all of this have to do with Social Security? Those who are hard-working, fortunate, and not too profligate will have a large nest egg at retirement and Social Security will account for only a small portion of their retirement portfolio. This is tantamount to paying for insurance and then not needing it. This happens all the time -- every year someone fails to get sick or injured and, while surely happy in their good health, would have been better off not buying insurance. That's the nature of insurance: if you don't need it, then you'll always wish you hadn't purchased it. Only in the context of retirement insurance is this considered a crisis.
On the other hand, those with bad luck or insufficient income will not have a nest egg at retirement. Because of Social Security, instead of facing the risk of zero income at retirement, they are guaranteed income sufficient to subsist.
This is precisely like the insurance example I worked through above: people with good outcomes will wish they hadn't paid into the insurance fund; those with bad outcomes will be glad they did. Ex-ante, everyone benefits from the insurance. Overall, society is better off because risk is reduced; because people are risk-averse, the gains are quite large.

When I think of welfare, I think of pure money transfers from one group to another without any economic basis for the transfer. In such cases, one person’s gain arises from another’s loss. But economic activity that results in the exchange of goods and services is different. It is not a zero sum game. One person’s gain does not come at the expense of someone else.
The main feature of Social Security is not welfare as Samuelson asserts. The main feature is insurance against economic risks and as such it makes us collectively better off. Calling it welfare when it isn’t is misleading and causes unnecessary class distinctions and resentments from the losers ex-post. More importantly, it ignores and obscures the important role Social Security plays in society as insurance against the economic risks we all face.
If you think you are so rich and powerful that you don’t need such insurance, consider this. The stock market collapse of 1929 at the onset of the Great Depression wiped out substantial quantities of wealth. The typical stock was worth only one sixth its pre-crash value once the bottom was reached. Whatever insurance existed in the stock market evaporated as the crash unfolded.
It wasn’t the poor jumping out of windows on Wall street. If you think it can’t happen to you, think again.

I'm assuming you didn't read the link you posted, or you would see how absurd it is.

First, you'll notice that neither you, nor your link, contradicted a single documented fact that I posted. That includes the fact that the Supreme Court of the US, itself, said that Social Security is effectively a welfare program.

So, you can't argue with anything I said. You can only post a link, and your link doesn't even make a logical argument. From your link:

"Not it isn’t. Social Security is mainly a means of insuring against economic risk. It is fundamentally an insurance program, not a saving program, and as such it is not "mainly welfare."

Stop....

Do you not see the problem inherent from the opening statement?

Using his own qualifications, by that standard Welfare itself, isn't welfare.

Welfare is just an insurance program, insuring against economic risk.
Food stamps is just an insurance program, insuring against economic risk.
Public housing is just an insurance program, insuring against economic risk.
SSI is just an insurance program, insuring against economic risk.
Pell Grants is just an insurance program, insuring against economic risk of not being able to afford college.
Obama Phones is just an insurance program, insuring against economic risk of not being able to afford a phone.
LIHEAP is just an insurance program, insuring against economic risk.

By his standard, there is no such thing as welfare in the entire world.

Welfare - Wikipedia

en.wikipedia.org

​

Welfare is a type of government support for the citizens of that society. Welfare may be provided to people of any income level, as with social security (and is then often called a social safety net), but it is usually intended to ensure that people can meet their basic human needs such as food and shelter. Welfare attempts to provide a minimal level of well-being, usually either a free- or a subsidized-supply of certain goods and social services, such as healthcare, education, and vocational training.​

By any intellectually honest position, Social Security is, by the text book definition.... Welfare. It's not just welfare because the Supreme Court said it is, it's welfare because it meets the definition of the word "welfare".

Further, comparing insurance to Social Security, is Apple and Oranges.

With any insurance of any kind, the insurance company runs numbers through an actuary table. The amount of money you pay into the policy, determine how much the policy is worth if activated. Meaning, that if I want more coverage, even if my income is low, I can pay more money to get more coverage. I had a million dollar policy on my car, during a year where I had barely made $15,000 for the year. (I had a reason for doing this, long story).

Additionally, the money that I pay in premiums, are used by the company to invest. The company will invest the money, to make a return on investments, that are used to pay claims against the insurance policies.

Social Security on the other hand, is completely different. The money you pay in, is just a tax, and is spent by the Federal Government, and gone.

There are no investments at all. None.

Further, how much you pay in, has little to do with how much you get out. This is why people who pay in the least, often get the most back, while people who pay in the most, get the least back.

Again, name one insurance policy where the pay in more, to get less relative benefit? Name one life insurance policy, where if you pay in $100 a month, you get a $500,000 policy, and if you pay in $500 a month, you get a $1 Million dollar policy?

No such system exists, and yet this is how Social Security works. Your relative return from social security, is lower the more you pay in.

And worse, if you earn money after your retirement age, you benefits are taxed, and you lose benefits relative to how much money you earn.

Name one insurance policy that if you earn more money, you get less benefits?

So there is nothing at all similar between the two.

For that matter, name one insurance policy where they can jack up your premiums, and cut your benefits? Of course not. Only Social Security does that.

It is welfare. You can deny that, but that just make you wrong.

 

[alang1216]

Further, how much you pay in, has little to do with how much you get out. This is why people who pay in the least, often get the most back, while people who pay in the most, get the least back.

Name one insurance policy that if you earn more money, you get less benefits?

I pay for my health insurance. I've paid in way more over years than I've gotten back. Happily. Other get much greater benefits which means they are in worse health. When I was making far less I essentially paid the same premium and used the same benefits. At that time, those expenses were a much larger percent of my income than they are today. Just another way of looking at the same numbers.

 

[Andylusion]

Further, how much you pay in, has little to do with how much you get out. This is why people who pay in the least, often get the most back, while people who pay in the most, get the least back.

Name one insurance policy that if you earn more money, you get less benefits?

I pay for my health insurance. I've paid in way more over years than I've gotten back. Happily. Other get much greater benefits which means they are in worse health. When I was making far less I essentially paid the same premium and used the same benefits. At that time, those expenses were a much larger percent of my income than they are today. Just another way of looking at the same numbers.

Right, that would be my point. Your benefits, are not dependent on how much you make, but on the contractual agreement you engage in, when you are dealing with real insurance.

With Social Security, the more you make, your payment goes up, but relative benefits go down.

Equally if you continue to earn money, you will forfeit your benefits.

With any other insurance, as long as you keep making the contractual payment, which will not increase or decrease with your wage, you will get benefits agreed to in the contract.

Just another way of looking at the same numbers.

If you want another way of looking at the numbers, here's some numbers I'd suggest.

Minimum wage is $7.25/hour. That's $15,080 a year.

Social Security is just a tax, but let us pretend in an alternate reality, that you could take that money from the Social Security, and put it into your own private retirement.

The Social Security tax right now is 12.4%.

That means that someone earning $15K minimum wage, are paying $1,869.92 per year into Social Security, or $155 a month.

Say you put that $155 per month into a Roth IRA, into a growth stock mutual fund. One of the funds that I purchase has a 13% Return of investment over the life of the fund.

$155 per month, 13% ROI, for 40 years.

With a minimum wage income, just a minimum wage income, if you invested the money that is sucked into Socialist Insecurity, you would have $2.5 Million dollars.

Or full retirement at age 67 on Social Security...... $866.

Social Security, and you can live on $866 in poverty until you die... or $2.5 Million dollars.

Let's even say that you are skeptical of Stock Mutual funds. You don't like the risk of them going up and down.

Ok..... My investment company, has a US Government bond fund. Invests only, and exclusively in US Government Bonds. Rate of return is 5.5%.

So $155 per month, invested in US Government bond funds, for 40 years.....

You still end up with a quarter of a million dollars.... or... Social Security where you live on $866 a month until you die. Basically, object poverty until you die.

And again.... this is for people earning minimum wage their entire lives.

If you dare to look at Median income, the numbers are way worse. The Median income in 2017, was $60K. That's $7,440 a year, or $620 a month, which would end up with $1 Million if you invested in crappy government bonds, or up to $10 Million if you invested in stocks like I do.

So do you want $1,700 a month from Social Security, or $1 Million dollars, or $10 Million dollars?

So if you want another way to look at the numbers, there's a few to think about.

And by the way, unlike social security, if you keep working, you don't lose that $1 Million, or $10 Million in a real retirement account.
And by the way, if you die, you don't lose the money either. It goes into your estate and is passed on to the next generation.

By every possible measure, Social Security is a welfare program, and a private retirement by any perspective is better.

 

[alang1216]

Further, how much you pay in, has little to do with how much you get out. This is why people who pay in the least, often get the most back, while people who pay in the most, get the least back.

Name one insurance policy that if you earn more money, you get less benefits?

I pay for my health insurance. I've paid in way more over years than I've gotten back. Happily. Other get much greater benefits which means they are in worse health. When I was making far less I essentially paid the same premium and used the same benefits. At that time, those expenses were a much larger percent of my income than they are today. Just another way of looking at the same numbers.

Right, that would be my point. Your benefits, are not dependent on how much you make, but on the contractual agreement you engage in, when you are dealing with real insurance.

With Social Security, the more you make, your payment goes up, but relative benefits go down.

Equally if you continue to earn money, you will forfeit your benefits.

With any other insurance, as long as you keep making the contractual payment, which will not increase or decrease with your wage, you will get benefits agreed to in the contract.

Just another way of looking at the same numbers.

If you want another way of looking at the numbers, here's some numbers I'd suggest.

Minimum wage is $7.25/hour. That's $15,080 a year.

Social Security is just a tax, but let us pretend in an alternate reality, that you could take that money from the Social Security, and put it into your own private retirement.

The Social Security tax right now is 12.4%.

That means that someone earning $15K minimum wage, are paying $1,869.92 per year into Social Security, or $155 a month.

Say you put that $155 per month into a Roth IRA, into a growth stock mutual fund. One of the funds that I purchase has a 13% Return of investment over the life of the fund.

$155 per month, 13% ROI, for 40 years.

View attachment 331834

With a minimum wage income, just a minimum wage income, if you invested the money that is sucked into Socialist Insecurity, you would have $2.5 Million dollars.

Or full retirement at age 67 on Social Security...... $866.

Social Security, and you can live on $866 in poverty until you die... or $2.5 Million dollars.

Let's even say that you are skeptical of Stock Mutual funds. You don't like the risk of them going up and down.

Ok..... My investment company, has a US Government bond fund. Invests only, and exclusively in US Government Bonds. Rate of return is 5.5%.

So $155 per month, invested in US Government bond funds, for 40 years.....

View attachment 331838

You still end up with a quarter of a million dollars.... or... Social Security where you live on $866 a month until you die. Basically, object poverty until you die.

And again.... this is for people earning minimum wage their entire lives.

If you dare to look at Median income, the numbers are way worse. The Median income in 2017, was $60K. That's $7,440 a year, or $620 a month, which would end up with $1 Million if you invested in crappy government bonds, or up to $10 Million if you invested in stocks like I do.

So do you want $1,700 a month from Social Security, or $1 Million dollars, or $10 Million dollars?

So if you want another way to look at the numbers, there's a few to think about.

I would agree that, if we all behaved responsibly we'd have no need for SS. We don't behave that way so a little coercion is valid. How many people do you know that seriously play the lottery? Do you think they will be responsible or try to get rich quick in pork bellies and then become societies problem?

As for you 13% return, that may be in it's past but the present probably looks much bleaker.

 

[Andylusion]

Further, how much you pay in, has little to do with how much you get out. This is why people who pay in the least, often get the most back, while people who pay in the most, get the least back.

Name one insurance policy that if you earn more money, you get less benefits?

I pay for my health insurance. I've paid in way more over years than I've gotten back. Happily. Other get much greater benefits which means they are in worse health. When I was making far less I essentially paid the same premium and used the same benefits. At that time, those expenses were a much larger percent of my income than they are today. Just another way of looking at the same numbers.

Right, that would be my point. Your benefits, are not dependent on how much you make, but on the contractual agreement you engage in, when you are dealing with real insurance.

With Social Security, the more you make, your payment goes up, but relative benefits go down.

Equally if you continue to earn money, you will forfeit your benefits.

With any other insurance, as long as you keep making the contractual payment, which will not increase or decrease with your wage, you will get benefits agreed to in the contract.

Just another way of looking at the same numbers.

If you want another way of looking at the numbers, here's some numbers I'd suggest.

Minimum wage is $7.25/hour. That's $15,080 a year.

Social Security is just a tax, but let us pretend in an alternate reality, that you could take that money from the Social Security, and put it into your own private retirement.

The Social Security tax right now is 12.4%.

That means that someone earning $15K minimum wage, are paying $1,869.92 per year into Social Security, or $155 a month.

Say you put that $155 per month into a Roth IRA, into a growth stock mutual fund. One of the funds that I purchase has a 13% Return of investment over the life of the fund.

$155 per month, 13% ROI, for 40 years.

View attachment 331834

With a minimum wage income, just a minimum wage income, if you invested the money that is sucked into Socialist Insecurity, you would have $2.5 Million dollars.

Or full retirement at age 67 on Social Security...... $866.

Social Security, and you can live on $866 in poverty until you die... or $2.5 Million dollars.

Let's even say that you are skeptical of Stock Mutual funds. You don't like the risk of them going up and down.

Ok..... My investment company, has a US Government bond fund. Invests only, and exclusively in US Government Bonds. Rate of return is 5.5%.

So $155 per month, invested in US Government bond funds, for 40 years.....

View attachment 331838

You still end up with a quarter of a million dollars.... or... Social Security where you live on $866 a month until you die. Basically, object poverty until you die.

And again.... this is for people earning minimum wage their entire lives.

If you dare to look at Median income, the numbers are way worse. The Median income in 2017, was $60K. That's $7,440 a year, or $620 a month, which would end up with $1 Million if you invested in crappy government bonds, or up to $10 Million if you invested in stocks like I do.

So do you want $1,700 a month from Social Security, or $1 Million dollars, or $10 Million dollars?

So if you want another way to look at the numbers, there's a few to think about.

I would agree that, if we all behaved responsibly we'd have no need for SS. We don't behave that way so a little coercion is valid. How many people do you know that seriously play the lottery? Do you think they will be responsible or try to get rich quick in pork bellies and then become societies problem?

As for you 13% return, that may be in it's past but the present probably looks much bleaker.

Every time the stock market dives, people say it will be bleak in the future. After 2008, people said "you'll never get that again!".

So I don't want to give too much of my personal information, but here's ROI data from 2008 to present day, returns by year for my investments.

In 10 years, I had 5 which had rate of return over 20%. One year, I had a growth of 35%. Only two years, in the past 10 had a negative growth.

They said the same thing in 2001, when the market crash "Oh you'll never have good returns again!" and they said the same in the 80s, 70s, 60s, 50s, 40s, and 30s.

There is only one way the market does not keep having good rates of return, and that's if the companies that make the money, all fold. Apple, Walmart, Google, Ford, Whirlpool, they call close, and go out of business. Not happening.

The only other way, is if the US government screws up the economy.... like for example, trying to tax enough to pay the $23 Trillion in unfunded liabilities for Social Security and Medicare.

In that case, I have a backup plan. I own stock in foreign companies as well. Never keep all your eggs in one basket. I have stocks in Europe, and other stocks in Asia.

I would agree that, if we all behaved responsibly we'd have no need for SS. We don't behave that way so a little coercion is valid. How many people do you know that seriously play the lottery? Do you think they will be responsible or try to get rich quick in pork bellies and then become societies problem?

So I have three different points to be made.

One, Social Security will decline. Whether we need it or not, doesn't matter. You can't vote to change math. Social Security, as I said before, has trillions on trillions in unfunded liabilities. It simply can't continue. You can argue we need it because people are irresponsible until the end of time.

You know who else said that? Greece. And they tried to tax and spend endlessly, until you had pensioners on the street, absolutely impoverished, because the government simply didn't have the money.

So you can justify bad programs until the end of time, that doesn't magically make them work. Social Security has to be reformed. Taxes will have to go up, and benefits will have to go down, and when society decides they don't want to pay the high taxes anymore, the system will crumble.

The second point I would make is....

I do have a compromise. It's not a new idea, but it does work, and it has been proposed before. Namely by GWB. Privatize Social Security.

In the 1980s, they allowed people in Texas to put their Social Security money into private accounts. The system worked perfectly, and everyone ended up better off who had taken advantage of it.

Chile and Argentina now both have a privatized system, and it is working.
Singapore also have a privatized system.

So there are numerous examples of privatized systems, that can be used to replace our socialized nightmare of doom we are engaged in right now.

Again, I personally would prefer freedom. Freedom means it's my money, and if I choose to do with it as I please, that shouldn't be any of your business. I shouldn't have you dictating what I do with my own money.

So if I blow all my money, and have to work until I'm 80... that's my choice. None of your business. Similarly, you blow your money, and have to work until your 80, that shouldn't be levied as taxes against me, to pay for your irresponsible behavior.

However, if we are going to have a system forced on the public, by self-righteous do-gooders, who simply don't want to deal with consequences of their own choices in not saving for retirement.... Ok...

I would at least prefer to have control over my money, and invest it in US bonds over Social Security.

By the way, what I said above is yet more proof of how absolutely terrible Social Security is. It's going broke.... while pay out so little.... that you can earn more money investing in Government bonds, than pay into the government run program. That's really pathetic.

And last of all.....

You mention people are completely irresponsible, and this is why we need Social Security.

I would reverse that.... It is because of Social Security, that people live utterly irresponsibly.

You know how many old people were engaged in mass death prior to the 1930s? None.

Why was that? Because old people saved for retirement. In fact, I have seen a teachers manual from the 1910s, where in their instructions on how to be a teacher, they said in the manual to put aside money for retirement, so that when they were old, they would not be a burden on society.

The idea of saving for retirement was a fundamental virtue throughout the American Culture of the 1800s and first part of the 1900s.

Now today, people specifically do not save for retirement, specifically because "Well Social Security will take care of me". I've heard people say that, verbatim.

It's directly because of Social Security, people don't save money. Specifically because of Social Security, that children believe they have no duty to their parents. Specifically because of Social Security, that people are irresponsible.

Social Security has caused more harm than good, by far.

 

[HenryBHough]

I'm simply the contemporary version of Karma.

I don't wait for it to catch up with you.

Why does Boy George come to mind...

There's a loving in your eyes all the way​

If I listen to your lies, would you say​

I'm a man without conviction​

I'm a man who doesn't know​

How to sell a contradiction​

You come and go, you come and go​

Karma, karma, karma, karma, karma chameleon​

You come and go, you come and go​

Loving would be easy if your colors were like my dreams​

Red, gold, and green, red, gold, and green​

Didn't you hear your wicked words every day​

And you used to be so sweet, I heard you say​

That my love was an addiction​

When we cling, our love is strong​

When you go, you're gone forever​

You string along, you string along​

Karma, karma, karma, karma, karma chameleon​

You come and go, you come and go​

Loving would be easy if your colors were like my dreams​

Red, gold, and green, red, gold, and green​

Every day is like survival (survival)​

You're my lover, not my rival​

Every day is like survival (survival)​

You're my lover, not my rival​

I'm a man without conviction​

I'm a man who doesn't know​

How to sell a contradiction​

You come and go, you come and go​

Karma, karma, karma, karma, karma chameleon​

You come and go, you come and go​

Loving would be easy if your colors were like my dreams​

Red, gold, and green, red, gold, and green​

Karma, karma, karma, karma, karma chameleon​

You come and go, you come and go​

Loving would be easy if your colors were like my dreams​

Red, gold, and green, red, gold, and green​

Karma, karma, karma, karma, karma chameleon​

You come and go, you come and go​

Loving would be easy if your colors were like my dreams​

Red, gold, and green, red, gold, and green​

Karma, karma, karma, karma, karma chameleon​

You come and go, you come and go​

Loving would be easy if your colors were like my dreams​

Red, gold, and green, red, gold, and green​

Hated that song until it happened.

A long-time friend in Caracas (this is when Venezuela hadn't gone Communist) put an FM radio station on the air. For the first week they "stunted" - Claiming to 100% Karma Chameleon all the time!

It drew a lot of attention and once the stunting was over it became very popular - a commercial success.

He made so much money he bought an airplane. Then he rented it to a movie producer and rode with his family (wife and two young children) to the jungle location where they filmed. Then for the return flight the plane was improperly loaded, tail-heavy. It crashed and burned and all aboard were killed.

Now when I hear - or read - that song my eyes still get wet.