A Union's View of Social Security

[EdwardBaiamonte]

I think privatization of Social Security is a great idea as long as the government makes up any losses people might have.

too stupid of course!! Then everyone would have all the incentive in the world the make risky investments and invoice his neighbors if they did not work out.

 

[EdwardBaiamonte]

The recently released 2013 Social Security Trustees Report shows that the program has sufficient funds to pay full benefits until 2033.

?

We all know this is a huge huge liberal lie. The program is dead broke today paying out more than it takes in just as the baby boomers are beginning to retire in large numbers.

 

[Kimura]

I have a suggesttion. lets have two options. you can continue to pay into SS and take advantage of the current system, or you can opt out and utilize a private method and not be eligible for SS benefits. Conservatives will retire comfortably and liberals will retire at 75.

There are four problems with that suggestion:

1. Social Security has an insurance element. A part of your tax goes to fund disability and survivor benefits. For a worker at peak earning years, this is the equivalent of a disability policy and a life insurance policy of about $450,000 each. Private insurance could be used in conjunction with an alternative retirement system, but I have never seen proponents of such a system factor in the insurance costs BEFORE making their claims of how much better of an investment the alternative is.

2. Social Security has a subsidy element. The two inflection points in the benefit formula result in low income workers having higher relative benefits than higher income workers. Alternative systems usually ignore this and do not factor in an equivalent subsidy.

3. Social Security does not create property rights, private plans do. When a person dies, all benefits other than survivors and the $255 burial allowance terminate, and no matter how much a worker has paid in, his family has no property rights outside of those benefits. In the private alternatives, heirs get the remaining balance in any accounts.

4. Investment risk and expense is transferred to the participant. Under Social Security, the participant does not bear these expenses and risks. While intellectually we might be OK with letting grandma starve if she invests unwisely, I doubt that when the time comes we will let that happen.

I have not seen a proposal that addresses these problems meaningfully, and the partial analyses I have seen were not very palatable to the employees. This is why union busting is so important to employers. They can save money if they can reduce their Social Security contributions and shift the expenses and risks onto the employees. This is a lot easier in unorganized labor markets.

I think privatization of Social Security is a great idea as long as the government makes up any losses people might have.

Privatization of SS would be a disaster. It's one of the worst ideas in a long line of horrendous ideas. First of all, the right-wing reactionary idea of phasing in privatisation wouldn't protect Americans from market volatility or a crash. The crash of 2008 would have wiped our roughly about 60% of retirement 'investors' holdings.

I don't think the vast majority of Americans want to turn over management of their financial assets for retirement over to Wall Street. We'd be giving the program's revenue stream over to the Wall Street crew. Just from doing some cursory math, brokers would get around $300 billion in commissions from this government subsidy.

There isn't SS problem, it's a con job by the political class. All we have to do is have Congress guarantee funding into perpetuity. This can be done the same way as Medicare part B and D.

The entire SS 'debate' is based on how a federal liability is an asset to the public. This whole debate omits that there are corresponding assets so to speak. The wealth of social security of the US population is as real as the federal liabilities which support it. The assets which comprise the payroll tax revenue of the US government are a liability for all us, the same way any federal liabilities are an asset for the US public.

 

[AmazonTania]

There is only one place you can go to escape this Social Security scam: Galveston County, Texas. This county took advantage of a loophole in the tax code, allowing it to run it's own pension plan instead of participating into Social Security. Naturally, congress quickly closed the loophole so that no other county can do it. After so many years, we can easily look at the long-term results of the Galveston County model, as opposed to Social Security.

You do realize that one of the prime supporters of the Galveston County plan, Ray Holbrook, a now-retired county judge, exhausted his Alternative Plan account (which is a savings account not a social insurance plan) and now gets......

Wait for it.............

$1300 a month Social Security benefits from his earnings before Galveston public employees opted out of Social Security.

But it gets better. Who pays for Ray's SSA benefits? You do of course. And since the benefit formula has two inflection points, be gets treated like a poor ditch digger in the water department. The first $747 per month of average monthly earnings while the county was part of Social Security generates a benefit of 90% of the earnings amount. The excess (up to about $4750 where the benefit drops further to 15%) generates only a benefit of 32%.

In other words, Ray got far more out of the two systems combined than he would if the Alternate Plan had truly replaced Social Security. If he had relied solely on the Alternate Plan, he would be receiving nothing now.

While Social Security still provides negative returns for their investors, Ray Holbrook reaps the benefits of using a public plan he generally shouldn't be allowed to have. Think of it as collecting unemployment benefits when you are really not unemployed.

The Galveston County plan allows you to opt out anytime you want and use your retirement plan as savings. That is all that happened, which is the beauty of the Galveston County plan. You contribute to your own plan.

While Ray Halbrook is laughing all the way to the bank, we are here defending a defending a broken system and we are apparently to blind to see it. How do you feel about that?

 

[oldfart]

you do realize that if an average American puts 15% of his lifetime income in a private account he would retire with a $1.4 million estate rather than the dog food money liberals now give him as SS, assuming he lives long enough to collect a penny from is liberal dog food Social Security money account.

Well, sometimes you stumble onto something worth responding to. It happens that there is a study of the Galveston plan. It turns out that the Alternate Plan slightly underperformed Social Security in overall ROI. But the big difference was the relative effect on various earnings levels of participants. Compared to Social Security, the Alternative Plan yielded lower benefits for all earnings levels except the top 20% or so.

If there is a study of an actual plan supports your allegation that private accounts work better, I have yet to see it, and I suspect so do you.

 

[oldfart]

I think privatization of Social Security is a great idea as long as the government makes up any losses people might have.

too stupid of course!! Then everyone would have all the incentive in the world the make risky investments and invoice his neighbors if they did not work out.

At last! I find an Ed post that I can agree with without reservation, and that has sound behavior and economic reasoning behind it! We have discovered "moral risk" in investing!

 

[oldfart]

I think privatization of Social Security is a great idea as long as the government makes up any losses people might have.

Privatization of SS would be a disaster.

While I agree with you, I think Regent's tongue is firmly placed in cheek.

 

[oldfart]

we are here defending a defending a broken system and we are apparently to blind to see it. How do you feel about that?

First I believe that Social Security has been epochally successful idea economically and politically. Currently its actuarial problems are quite manageable, if we had the political inclination to fix them now. I'm happy to discuss in what sense Social Security is "broken" but I hesitate to put words in anyone's mouth. What do you think is broken about it?

 

[Kimura]

While Ray Halbrook is laughing all the way to the bank, we are here defending a defending a broken system and we are apparently to blind to see it. How do you feel about that?

Social Security isn't broken. It's a manufactured crisis, a ploy by neoliberals to destroy what's left of our middle class.

 

[EdwardBaiamonte]

While Ray Halbrook is laughing all the way to the bank, we are here defending a defending a broken system and we are apparently to blind to see it. How do you feel about that?

Social Security isn't broken. It's a manufactured crisis, a ploy by neoliberals to destroy what's left of our middle class.

How can it not be broken if it pays out more than it takes in, the trust fund was 100% stolen, and any money it pays out will have to come from a stone cold dead broke liberal government $16 trilion in debt with $50 trillion in unfunded liabilities.

See why we say liberals are not too smart?

 

[Kimura]

While Ray Halbrook is laughing all the way to the bank, we are here defending a defending a broken system and we are apparently to blind to see it. How do you feel about that?

Social Security isn't broken. It's a manufactured crisis, a ploy by neoliberals to destroy what's left of our middle class.

How can it not be broken if it pays out more than it takes in, the trust fund was 100% stolen, and any money it pays out will have to come from a stone cold dead broke liberal government $16 trilion in debt with $50 trillion in unfunded liabilities.

See why we say liberals are not too smart?

Social Security doesn't have money problems, all you need is a funding guarantee from Congress.

First of all, there's no such thing as unfunded liabilities, unless you believe the federal government can somehow run out of dollars. As long we can provide the real goods and services people need to retire, there aren't any problems whatsoever.

Secondly, everything that occurs in the future in an unfunded liability. We could make the argument clothing, shelter and food are "unfunded liabilities". We'll be able to indefinitely to produce what we need, barring the destruction of our productive capacity.

Government spending creates money and destroys or extinguishes money through taxation. The government doesn't create liabilities whenever it purchases something.

Sorry to burst your bubble, genius.

 

[jasonnfree]

While Ray Halbrook is laughing all the way to the bank, we are here defending a defending a broken system and we are apparently to blind to see it. How do you feel about that?

Social Security isn't broken. It's a manufactured crisis, a ploy by neoliberals to destroy what's left of our middle class.

And many working class repubs buy into this propaganda. Like how many of them would like their senior citizen parents moving in with them if the government programs stopped? This is how rand paul and paul ryan want to set everybody free.

 

[boedicca]

To ensure that Social Security can pay full benefits in the future, most people in every generation surveyed by the National Academy of Social Insurance prefer the following package of changes:

• Gradually, over 10 years, eliminate the cap on earnings taxed for Social Security so that the 5 percent of workers who earn more than the cap, currently $113,700, pay into Social Security throughout the year, as other workers do.

• Gradually, over 20 years, raise the Social Security tax rate that workers and employers each pay from 6.2 percent of earnings to 7.2 percent.

• Increase Social Security’s basic minimum payment so that a person who has paid into Social Security for 30 years can retire at age 62 or later and not be poor.
• Increase Social Security’s cost-of-living adjustment to more accurately reflect the level of inflation experienced by seniors. (This is the opposite of a proposed change to a “chained” cost-of-living measure that would grow more slowly than the current calculation.)
Social Security benefits us all | United Federation of Teachers




So.....ya' got a problem wit' dat?

Yes, I do. We have a highly progressive income tax system. Adding 6.2% onto the top rate of 39.6%. There is already a .9% added tax for Medicare. If SS is added to this, the overall federal marginal tax burden is 48%. Add on state income taxes, and the burden is over 50%.

Nobody should be taxed at such a high rate. The only way SS should apply to all earned income is if we move to a low, flat tax.

 

[jasonnfree]

To ensure that Social Security can pay full benefits in the future, most people in every generation surveyed by the National Academy of Social Insurance prefer the following package of changes:

• Gradually, over 10 years, eliminate the cap on earnings taxed for Social Security so that the 5 percent of workers who earn more than the cap, currently $113,700, pay into Social Security throughout the year, as other workers do.

• Gradually, over 20 years, raise the Social Security tax rate that workers and employers each pay from 6.2 percent of earnings to 7.2 percent.

• Increase Social Security’s basic minimum payment so that a person who has paid into Social Security for 30 years can retire at age 62 or later and not be poor.
• Increase Social Security’s cost-of-living adjustment to more accurately reflect the level of inflation experienced by seniors. (This is the opposite of a proposed change to a “chained” cost-of-living measure that would grow more slowly than the current calculation.)
Social Security benefits us all | United Federation of Teachers




So.....ya' got a problem wit' dat?

Yes, I do. We have a highly progressive income tax system. Adding 6.2% onto the top rate of 39.6%. There is already a .9% added tax for Medicare. If SS is added to this, the overall federal marginal tax burden is 48%. Add on state income taxes, and the burden is over 50%.

Nobody should be taxed at such a high rate. The only way SS should apply to all earned income is if we move to a low, flat tax.

Are there any major countries that use the flat tax? I don't think so.

 

[PoliticalChic]

To ensure that Social Security can pay full benefits in the future, most people in every generation surveyed by the National Academy of Social Insurance prefer the following package of changes:

• Gradually, over 10 years, eliminate the cap on earnings taxed for Social Security so that the 5 percent of workers who earn more than the cap, currently $113,700, pay into Social Security throughout the year, as other workers do.

• Gradually, over 20 years, raise the Social Security tax rate that workers and employers each pay from 6.2 percent of earnings to 7.2 percent.

• Increase Social Security’s basic minimum payment so that a person who has paid into Social Security for 30 years can retire at age 62 or later and not be poor.
• Increase Social Security’s cost-of-living adjustment to more accurately reflect the level of inflation experienced by seniors. (This is the opposite of a proposed change to a “chained” cost-of-living measure that would grow more slowly than the current calculation.)
Social Security benefits us all | United Federation of Teachers




So.....ya' got a problem wit' dat?

Yes, I do. We have a highly progressive income tax system. Adding 6.2% onto the top rate of 39.6%. There is already a .9% added tax for Medicare. If SS is added to this, the overall federal marginal tax burden is 48%. Add on state income taxes, and the burden is over 50%.

Nobody should be taxed at such a high rate. The only way SS should apply to all earned income is if we move to a low, flat tax.

1. As a starting point: Who is to decide what is fair, and what is too much? Some religions suggest tithing, and government demands taxes.

a. Joseph gathered very much grain: It seems it was customary for Pharaoh to take 10% of the grain in Egypt as a tax. Essentially, Joseph doubled the taxes over the next seven years (Genesis 41:34 mentions one-fifth, that is, 20%).


2. If, as was the case prior to the Imperial Presidency of King Franklin the First, we used the enumerated powers in Article I, section 8, as the rule, taxes could be much lower.

 

[boedicca]

To ensure that Social Security can pay full benefits in the future, most people in every generation surveyed by the National Academy of Social Insurance prefer the following package of changes:

• Gradually, over 10 years, eliminate the cap on earnings taxed for Social Security so that the 5 percent of workers who earn more than the cap, currently $113,700, pay into Social Security throughout the year, as other workers do.

• Gradually, over 20 years, raise the Social Security tax rate that workers and employers each pay from 6.2 percent of earnings to 7.2 percent.

• Increase Social Security’s basic minimum payment so that a person who has paid into Social Security for 30 years can retire at age 62 or later and not be poor.
• Increase Social Security’s cost-of-living adjustment to more accurately reflect the level of inflation experienced by seniors. (This is the opposite of a proposed change to a “chained” cost-of-living measure that would grow more slowly than the current calculation.)
Social Security benefits us all | United Federation of Teachers




So.....ya' got a problem wit' dat?

Yes, I do. We have a highly progressive income tax system. Adding 6.2% onto the top rate of 39.6%. There is already a .9% added tax for Medicare. If SS is added to this, the overall federal marginal tax burden is 48%. Add on state income taxes, and the burden is over 50%.

Nobody should be taxed at such a high rate. The only way SS should apply to all earned income is if we move to a low, flat tax.

Are there any major countries that use the flat tax? I don't think so.

Does that really matter? Shouldn't we do what is right for our country?

Russia (13%), Hong Kong (15%) and Singapore (20%) have much lower income tax rates. In much of the developing world, countries have much simpler and less burdensome tax structures, with high economic growth.

We have a mess that's designed to do two things: transfer money from one group to another...and social engineering, which are both POLITICAL in nature. The true function of taxes is to fund a properly functioning government. Period. The two political purposes inject a great deal of fraud, abuse, and moral hazard...with the added detriment of hurting the economy.

 

[boedicca]

To ensure that Social Security can pay full benefits in the future, most people in every generation surveyed by the National Academy of Social Insurance prefer the following package of changes:

• Gradually, over 10 years, eliminate the cap on earnings taxed for Social Security so that the 5 percent of workers who earn more than the cap, currently $113,700, pay into Social Security throughout the year, as other workers do.

• Gradually, over 20 years, raise the Social Security tax rate that workers and employers each pay from 6.2 percent of earnings to 7.2 percent.

• Increase Social Security’s basic minimum payment so that a person who has paid into Social Security for 30 years can retire at age 62 or later and not be poor.
• Increase Social Security’s cost-of-living adjustment to more accurately reflect the level of inflation experienced by seniors. (This is the opposite of a proposed change to a “chained” cost-of-living measure that would grow more slowly than the current calculation.)
Social Security benefits us all | United Federation of Teachers




So.....ya' got a problem wit' dat?

Yes, I do. We have a highly progressive income tax system. Adding 6.2% onto the top rate of 39.6%. There is already a .9% added tax for Medicare. If SS is added to this, the overall federal marginal tax burden is 48%. Add on state income taxes, and the burden is over 50%.

Nobody should be taxed at such a high rate. The only way SS should apply to all earned income is if we move to a low, flat tax.

1. As a starting point: Who is to decide what is fair, and what is too much? Some religions suggest tithing, and government demands taxes.

a. Joseph gathered very much grain: It seems it was customary for Pharaoh to take 10% of the grain in Egypt as a tax. Essentially, Joseph doubled the taxes over the next seven years (Genesis 41:34 mentions one-fifth, that is, 20%).


2. If, as was the case prior to the Imperial Presidency of King Franklin the First, we used the enumerated powers in Article I, section 8, as the rule, taxes could be much lower.

Medieval serfs revolted when their total taxes exceed 1/3 of their income. I'd call that bright line not to cross.

 

[EdwardBaiamonte]

I really cannot see a valid objection to measuring a cost of living for retired workers and using in COLA for retirement benefits.

Again, good topic!

what liberal sun worshipers cant understand is that Republican capitalism made us all rich and then liberals stole the money. If an average American deposited 15% of his lifetime earnings in a private account, free from liberal theft, he would retire with an estate of $1.4 million, rather than with no estate and the dog food money from SS.

 

[Norman]

Social Security doesn't have money problems, all you need is a funding guarantee from Congress.

Oh really? So I guess there is no such thing as a "money problem" then. All you need is funding from the government!

First of all, there's no such thing as unfunded liabilities, unless you believe the federal government can somehow run out of dollars. As long we can provide the real goods and services people need to retire, there aren't any problems whatsoever.

Unfunded liability is a liability that isn't funded. Such liabilities can exist and not only in SS, but in any other defined benefit pension schemes (public or private) as well. For example state pensions are funded, but unfortunately they made a mistake in calculation and didn't collect enough premiums to fund the current retirees their promised benefits and now it appears for example 50% of illionoi's state pensions are unfunded. Social security of course isn't funded at all as it's "pay as you go"-scheme.

Just because government can tax doesn't mean it's liabilities disappear

Secondly, everything that occurs in the future in an unfunded liability. We could make the argument clothing, shelter and food are "unfunded liabilities". We'll be able to indefinitely to produce what we need, barring the destruction of our productive capacity.

No, it appears you don't understand what an unfunded liability is. Which makes it just that much more amazing you are arguing in this thread. An unfunded liability is a liability that you need to pay in the future to SOME OTHER accounting entity. It has nothing to do with buying clothing or shelter to yourself. It's quite an interesting though to think that you even can owe yourself things

Government spending creates money and destroys or extinguishes money through taxation. The government doesn't create liabilities whenever it purchases something.

Sorry to burst your bubble, genius.

I have made many posts detailing why that's completely wrong as well. For starters it's the FED that creates or destroys money. And government just like any booking entity can have liabilities (be it funded or unfunded) unless you do your accounting in outer space. Sorry to bust your bubble.

 

[Kimura]

Oh really? So I guess there is no such thing as a "money problem" then. All you need is funding from the government!

Yes, monetarily sovereign governments can never run out of the currency they issue, whether it's the US, Japan, Canada, Australia, etc.

Unfunded liability is a liability that isn't funded. Such liabilities can exist and not only in SS, but in any other defined benefit pension schemes (public or private) as well. For example state pensions are funded, but unfortunately they made a mistake in calculation and didn't collect enough premiums to pay out the current retirees their promise benefits and now it appears for example 50% of illionoi's state pensions are unfunded. Social security of course isn't funded at all as it's "pay as you go"-scheme.

I'm talking about the federal government, not a state pensions fund, which can be fixed through a revenue sharing program with the federal government. Side issue.

There isn't a nominal crisis with Social Security.

No, it appears you don't understand what an unfunded liability is. Which makes it just that much more amazing you are arguing in this thread. An unfunded liability is a type of DEBT that you need to pay in the future, that you owe to SOMEONE ELSE. It has nothing to do with buying clothing or shelter to yourself. It's quite interesting though to think that you even can owe yourself things :

The inconvenient reality is that anything which occurs in the future that has to paid for is an "unfunded liability". The only way we could have literal "unfunded liabilities" is if the US government could run of out of dollars. Is that what you're saying?

In terms of SS, we'd be better off just to abolish the trust fund and pay SS straight out of the general revenue. The very existence of the SS trust fund gives Malthusian nut jobs a target, and the ability to complain whether or not the fund is in a deficit or surplus. In the event the trust fund is projected to be in deficit down the road, we're told Social Security has "unfunded liabilities". This borders on retarded.

If any and all future spending obligations were in the general fund, and there was a projected deficit at some point in the future, then all the obligations of the federal government would be "unfunded liabilities", including the military, the Pentagon, NASA, farm subsidies, infrastructure, etc. Do you see where I'm going with this?

I have made many posts detailing why that's completely wrong as well. For starters it's the FED that creates or destroys money. And government just like any booking entity can have liabilities (be it funded or unfunded) unless you do your accounting in outer space. Sorry to bust your bubble.

No, it doesn't. The Treasury spends bases money into existence, while the FED lends base money into existence. Money creation is inherently a balance sheet operation at the end of the day and should be viewed through a consolidated government model, in terms of interactions between the Treasury and FED.

Yes, there are federal liabilities, in the form of currency and bonds, which are assets for the public. For every liability, there is a corresponding asset. The nature of the assets even change between the private sector and government sector when funds are shifted between reserve accounts and US securities.

These misunderstandings ultimately stem from a lack of knowledge about monetary operations.