No One Voted to Destroy Social Security

[Mac1958]

People who put money in should get every cent back.

It should be ended so that no one contributes any longer.

All the ancillary liberal leaches who never paid into the system should be cut off immediately and a repayment plan created for them to return the money.

I want to be fair to the people who were fooled.....

I have bad news for you. That would be your parents and grandparents. The original collector of Social Security was Ida Mae Fuller. She paid $25 and collected more than $22000. How are you going to get that money back. She wasn't the only one. The typical retiree couple in 1960 collected $8 of benefits for every $1 contributed. How are you going to get that money back.

They were paid with money collected from current retirees in exchange for the promise of more benefits. People have talked about the coming crisis practically since inception.

If you end the contribution who will pay existing retires? Mind you at this point, many will not ever collect what they contributed in real terms.

Seems my news was bad for you.....

I am only advocating for return of what was paid in to people, and getting refunds from those who did not pay in.....

I advocate killing the tax, in its entirety....

I advocate letting the free market take care of it....

Simple, non complicated solution, centered on the individual, not the .gov....

It is not bad news any more than proposing that the tooth fairy replaces Social Security. If you end the tax, there is enough to pay existing retirees about a dime for every dollar owed. That leaves zero for returning 'what was paid in' for those people 16 to 62. If you return money where is it going to come from, dollars from heaven?

Having had this exchange before, we will trade notes and you will finally say just print the money. You want this to be an easy problem. Everyone does. My news is bad but I suspect that you aren't paying attention.

Joe I've skimmed over your plan from the site linked in your sig.

(I'm afraid "skimming over" is about the best I can do. I think I have some kind of weird internet ADD that prohibits me from spending too much time on stuff when I'm staring at a screen)

Anyway, I'm a CFP and I'm curious (of course) about how you have the funds invested in your plan. It looks like you have the funds invested in treasury debt, which makes sense given the fact that it would be (comparably) more stable while still providing better long term returns.

Have you considered putting some of those funds to work in equities, using the "target date" fund approach that decreases risk exposure with age? I suspect you have - what is your opinion on that strategy for this?
.

That is a blast from the past. That piece is about 5 years old, and I sent to the Journal of American Economics. They passed.

The gist is that we can make the system more efficient by allowing people to pick their flavor of risk. Today risk is one size fits all. If we introduce risk into the equation, some will stay put in a trade of lower return but guaranteed. For others, they will trade the certainty of return for the ability to invest their SS in the stock market. Social Security owns the principal and the worker owns the income stream of the resulting investment. Essentially, SS can participate in the market with a covered put on the downside.

The concept requires a fiduciary intermediary say fidelity to invest the money so that the president of say Enron doesn't invest in his own company. That intermediary is free to invest per the client's request. When the worker reaches retirement, the money is converted by to US treasuries creates interest for the retiree, and eventually go back to SS when the retiree dies.

At retirement the money is converted to Treasuries to protect the SS system from poor investment. The target funds could generate a higher return, but it is risk that SS as the principal owner would absorb.

I appreciate your reading...

A problem I have with the idea in general is that there are simply so many people who are terrified of finance, and they appear to be willing to trade return for simplicity, so it's easy to scare them off the idea.

So, how to deal with that. Typically, the target date funds are down to around 30% to 35% equities at retirement age, and that would be too much for something like this. So rather than putting it on individuals to make decisions, the funds could start at around 90% equities at age 21 and get down to maybe 10% by age 55 or so, maybe even less, and then just be in fixed income. Then those who always scream about market risk wouldn't have a case.

Just thinking out loud here, you may want to take a peek at how fixed indexed annuities work, too. They have zero downside risk, invest in bonds and stock options, and can average 4.0% to 5.0% over time. They would be a market alternative, take risk out of it, and still return more than SS is now.
.

 

[JoeTheEconomist]

I have bad news for you. That would be your parents and grandparents. The original collector of Social Security was Ida Mae Fuller. She paid $25 and collected more than $22000. How are you going to get that money back. She wasn't the only one. The typical retiree couple in 1960 collected $8 of benefits for every $1 contributed. How are you going to get that money back.

They were paid with money collected from current retirees in exchange for the promise of more benefits. People have talked about the coming crisis practically since inception.

If you end the contribution who will pay existing retires? Mind you at this point, many will not ever collect what they contributed in real terms.

Seems my news was bad for you.....

I am only advocating for return of what was paid in to people, and getting refunds from those who did not pay in.....

I advocate killing the tax, in its entirety....

I advocate letting the free market take care of it....

Simple, non complicated solution, centered on the individual, not the .gov....

It is not bad news any more than proposing that the tooth fairy replaces Social Security. If you end the tax, there is enough to pay existing retirees about a dime for every dollar owed. That leaves zero for returning 'what was paid in' for those people 16 to 62. If you return money where is it going to come from, dollars from heaven?

Having had this exchange before, we will trade notes and you will finally say just print the money. You want this to be an easy problem. Everyone does. My news is bad but I suspect that you aren't paying attention.

Joe I've skimmed over your plan from the site linked in your sig.

(I'm afraid "skimming over" is about the best I can do. I think I have some kind of weird internet ADD that prohibits me from spending too much time on stuff when I'm staring at a screen)

Anyway, I'm a CFP and I'm curious (of course) about how you have the funds invested in your plan. It looks like you have the funds invested in treasury debt, which makes sense given the fact that it would be (comparably) more stable while still providing better long term returns.

Have you considered putting some of those funds to work in equities, using the "target date" fund approach that decreases risk exposure with age? I suspect you have - what is your opinion on that strategy for this?
.

That is a blast from the past. That piece is about 5 years old, and I sent to the Journal of American Economics. They passed.

The gist is that we can make the system more efficient by allowing people to pick their flavor of risk. Today risk is one size fits all. If we introduce risk into the equation, some will stay put in a trade of lower return but guaranteed. For others, they will trade the certainty of return for the ability to invest their SS in the stock market. Social Security owns the principal and the worker owns the income stream of the resulting investment. Essentially, SS can participate in the market with a covered put on the downside.

The concept requires a fiduciary intermediary say fidelity to invest the money so that the president of say Enron doesn't invest in his own company. That intermediary is free to invest per the client's request. When the worker reaches retirement, the money is converted by to US treasuries creates interest for the retiree, and eventually go back to SS when the retiree dies.

At retirement the money is converted to Treasuries to protect the SS system from poor investment. The target funds could generate a higher return, but it is risk that SS as the principal owner would absorb.

I appreciate your reading...

A problem I have with the idea in general is that there are simply so many people who are terrified of finance, and they appear to be willing to trade return for simplicity, so it's easy to scare them off the idea.

So, how to deal with that. Typically, the target date funds are down to around 30% to 35% equities at retirement age, and that would be too much for something like this. So rather than putting it on individuals to make decisions, the funds could start at around 90% equities at age 21 and get down to maybe 10% by age 55 or so, maybe even less, and then just be in fixed income. Then those who always scream about market risk wouldn't have a case.

Just thinking out loud here, you may want to take a peek at how fixed indexed annuities work, too. They have zero downside risk, invest in bonds and stock options, and can average 4.0% to 5.0% over time. They would be a market alternative, take risk out of it, and still return more than SS is now.
.

You are 100% right - and that is part of the point in the piece. The average person doesn't want to know the difference between the income and principal portfolios. In those 4 words, about 90% of the work force will shrug and move on. That is intended.

Typically reform targets everyone in a highly inefficient way. Here if you get more than 5% of the public involved, the cost of participating is not right. People who participate likely will lose money. They are getting something a guarantee that has value. They will lose likely lose something in exchange. It should be possible that delivering normal economic returns of the market that the worker could almost break even. Fidelity isn't going to manage the account of average Americans who take 20 years to accumulate $30,000. By narrowing the audience, you concentrate the value of the change.

I actually write highly of annuities, albeit I have concerns about their fees.

The first people who would join are those people who are 62 and over. Today these people who continue to work draw a 'penalty' on the earnings test. In reality the revenue is recycled into higher benefits but people think that it is a tax. Instead of calling it an earnings-test and tax, it is a increasing annuity that people can see. This type of plan would encourage people to work longer - something that the experts just don't get.

 

[Nia88]

Oh well! People should know by now that when you vote republican, they will cut social programs. I don't feel bad for any old geezer that voted Trump. This is what you get. People tried to tell you he was a con man and bad fkr this country but t

 

[JoeTheEconomist]

Oh well! People should know by now that when you vote republican, they will cut social programs. I don't feel bad for any old geezer that voted Trump. This is what you get. People tried to tell you he was a con man and bad fkr this country but t

Oh the irony of your post. If you read the legislation, you would know that all of the old geezers are protected. It is future retirees who get massacred.

 

[flacaltenn]

The ones who paid in? Give them what's theirs....

From whom would you take the money? There is only $2.8 trillion in the system today. The system has accrued benefits owed of $30 trillion - well that is only the ones that paid in.

But how much is being pulled constantly from someone's pay? A LOT.

Agreed. The problem is that every penny of that "LOT" is used to pay benefits of existing retirees. For every dollar diverted away from SS has to be replaced by a dollar of a different tax. The question becomes on whom.

Just stop SPENDING. Cut the waste. Slash the agencies back to manageable and responsible proportions. No "tax" required.

If it becomes an entitlement for needy seniors, The size of the pool will be a third of what it currently is. MUCH more easily supportable by EXISTING (reduced) FICA taxes. Others not entitled, get a SUBSTANTIAL tax for the entirety of their working lives. Maybe with the provisions that they HAVE a portable retirement account that get PERSONALLY funded.

Congress can cut spending any time they want. It doesn't require some new excuse. Suggesting "just stop spending" doesn't work. Someone has to actually find spending to cut and then get congress to agree.

Means testing isn't all that easy, as determining someone's wealth isn't easy.

Everyone already needs investments toward retirement. It's not as if SS is enough. And, people raid their 401k and other such accounts on a regular basis. Plus, it hasn't been that long since people had their homes stolen.

The largest screw current seniors have had is the evil money supply and interest policies of the Fed. Seniors PLANNED for retirement by assuming that their cash and investments would accrue interest and value. And in the economy of the past 10 years -- the money VANISHED from this wise planning far exceeds the personal "raiding" of their IRA/SEP/401Ks.. Washington has FLEECED seniors of $Trills in personal retirement portfolios because of no interest, no growth policy.

SS is not enough. But if you are in need, there are other resources. If the Fed application for student aid could be simplified, that would be the model for means testing. SHOULDN'T REQUIRE the sale of businesses and property and farms that are in estates for their children and grandchildren.

Spending could be reduced enough to almost cover the SS deficits. And they should. But BOOSTING the economy would help just as much.. .

 

[flacaltenn]

It was Bush that put forward the plan to privatize Social Security.

That's a fucking lie. It's the propaganda and distortion of a plan that was EXCELLENT and would have STOPPED the theft of the SS surplus.

The plan was to allow volunteers to ignore a small portion of their FICA taxes (somewhere about 10 to 12% -- which was a TRIVIAL amount) and place it into approved personal retirement assets in their own names.

In exchange, these volunteers would get REDUCED FUTURE benefits of SS. It was to funded out of the SS surpluses that EXISTED at that time. Instead of letting CONGRESS STEAL it and squander it without ANY BENEFIT to the SSA.

 

[flacaltenn]

From whom would you take the money? There is only $2.8 trillion in the system today. The system has accrued benefits owed of $30 trillion - well that is only the ones that paid in.

There is NOTHING "in the system today".. Other than phony bookkeeping and fairy tales. Every SS deficit $ is a new bond on the backs of future taxpayers.

Existing retirees and those close to retirement should not be affected in any way. It's too late to "fix" the boom. We are in the crisis we warned about for 4 decades. All efforts should be underwriting either a stably funded future UNIVERSAL program or turn Soc Sec into a welfare entitlement in the future. Which is what most of the proposals do anyways.

It is IMMORAL to tell a roofer to work til they are 68 or 70 years to receive benefits. Folks making those kind of suggestions don't have an ounce of sense or a heart.

Really sad. And if this is the case, WHY are they still forcing people to pay into SS?

Democrats turned it into a tax now, which is why I have no problem killing it....

Not exactly sure what you mean. I just do not want it taken from people getting and needing it now........like my mom for example. Many people.

People who put money in should get every cent back.

It should be ended so that no one contributes any longer.

All the ancillary liberal leaches who never paid into the system should be cut off immediately and a repayment plan created for them to return the money.

I want to be fair to the people who were fooled.....

I'm not aware that anyone who never met the FICA contributions EVER got any SS benefit or SS Disability for that matter. UNLESS -- they are the child or spouse of someone deceased who DID pay into FICA.

 

[Claudette]

Not a single candidate in 2016 campaigned on a promise to repeal and replace Social Security or Medicare. Anyone who did would have been soundly defeated. Indeed, unlike the Republican opponents he beat, Donald Trump promised not to touch Social Security, Medicare, or Medicaid. But now that the Republicans will soon be in charge of all branches of government, destroying Social Security and Medicare is on the top of their agenda.

Two days after the election, Paul Ryan said, “With a unified Republican government, we can actually get things done.” One of those things is ending Medicare as we know it, as I and others have spotlighted. It turns out that Social Security is in the Republicans’ cross hairs, as well. This is not a surprise. Ending Social Security, Medicare, and Medicaid is Republican-elite orthodoxy.

What is surprising is that the Republican establishment is so eager, it can’t wait to unveil its plans. In some ways, you can’t blame the Republican elites. They have been waiting a long time.

In the 1936 election campaign, repealing and replacing Social Security was the Republican battle cry. That year, the Republican presidential standard bearer, Alf Landon, claimed, “To get a workable old age pension plan we must repeal [Social Security].” What did he and his fellow Republicans want to replace it with? Instead of Social Security’s pension plan, which replaces wages so that people can retire with dignity and maintain their standard of living as they age, the Republicans proposed paying all seniors an identical subsistence-level amount.

Now, just before Congress left town, the powerful Chairman of the Social Security Subcommittee of the House Ways and Means Committee unveiled a proposal that would radically transform Social Security. It takes a long time to phase in, but when it does, what would Social Security provide? An essentially flat, subsistence level benefit, independent of how much a worker contributed, just as the 1936 Republican Party proposed.

Unlike 1936, when straightforward repeal was possible, because Social Security hadn’t yet begun, today it has been around for over eighty years. So, to get back to what the Republicans wanted then and now, you have to slash benefits – and the Republican plan does so with gusto.

Much More: No One Voted to Destroy Social Security

People of all ages should fight this - because it would affect ALL of us - young and old.

No one voted for the politicians to rob it blind either.

The damned thing is full of IOU's. You can bet Congress doesn't rob their SS because they have one separate from the rest of Americans.

You want to bitch about SS then bitch about that you fucking idiot.

 

[JoeTheEconomist]

Not a single candidate in 2016 campaigned on a promise to repeal and replace Social Security or Medicare. Anyone who did would have been soundly defeated. Indeed, unlike the Republican opponents he beat, Donald Trump promised not to touch Social Security, Medicare, or Medicaid. But now that the Republicans will soon be in charge of all branches of government, destroying Social Security and Medicare is on the top of their agenda.

Two days after the election, Paul Ryan said, “With a unified Republican government, we can actually get things done.” One of those things is ending Medicare as we know it, as I and others have spotlighted. It turns out that Social Security is in the Republicans’ cross hairs, as well. This is not a surprise. Ending Social Security, Medicare, and Medicaid is Republican-elite orthodoxy.

What is surprising is that the Republican establishment is so eager, it can’t wait to unveil its plans. In some ways, you can’t blame the Republican elites. They have been waiting a long time.

In the 1936 election campaign, repealing and replacing Social Security was the Republican battle cry. That year, the Republican presidential standard bearer, Alf Landon, claimed, “To get a workable old age pension plan we must repeal [Social Security].” What did he and his fellow Republicans want to replace it with? Instead of Social Security’s pension plan, which replaces wages so that people can retire with dignity and maintain their standard of living as they age, the Republicans proposed paying all seniors an identical subsistence-level amount.

Now, just before Congress left town, the powerful Chairman of the Social Security Subcommittee of the House Ways and Means Committee unveiled a proposal that would radically transform Social Security. It takes a long time to phase in, but when it does, what would Social Security provide? An essentially flat, subsistence level benefit, independent of how much a worker contributed, just as the 1936 Republican Party proposed.

Unlike 1936, when straightforward repeal was possible, because Social Security hadn’t yet begun, today it has been around for over eighty years. So, to get back to what the Republicans wanted then and now, you have to slash benefits – and the Republican plan does so with gusto.

Much More: No One Voted to Destroy Social Security

People of all ages should fight this - because it would affect ALL of us - young and old.

No one voted for the politicians to rob it blind either.

The damned thing is full of IOU's. You can bet Congress doesn't rob their SS because they have one separate from the rest of Americans.

You want to bitch about SS then bitch about that you fucking idiot.

No one 'robbed' "it" blind. Social Security was a pay as you go system for 4 decades - there was nothing to rob. Most of what is in the Trust Fund is interest which is there because the money was 'robbed'. Once you strip-out the interest the system hasn't generated enough money to pay for the subsidies that went to the system.

The long explanation is in my article with links to the SSA.

The Myth of the Missing Social Security Trust Fund

 

[Claudette]

Oh so they never took money out of SS because they needed money??

 

[JoeTheEconomist]

It was Bush that put forward the plan to privatize Social Security.

That's a fucking lie. It's the propaganda and distortion of a plan that was EXCELLENT and would have STOPPED the theft of the SS surplus.

The plan was to allow volunteers to ignore a small portion of their FICA taxes (somewhere about 10 to 12% -- which was a TRIVIAL amount) and place it into approved personal retirement assets in their own names.

In exchange, these volunteers would get REDUCED FUTURE benefits of SS. It was to funded out of the SS surpluses that EXISTED at that time. Instead of letting CONGRESS STEAL it and squander it without ANY BENEFIT to the SSA.

No.

Bush never put forward a plan so without knowing which version of the program you are talking about it is difficult to tell you which aspect of your memory is missing. Largely his plan was to change the way that we pay for benefit from financed revenue to flat tax revenue. Which version of the legislation are you trying to recall?

 

[JoeTheEconomist]

Oh so they never took money out of SS because they needed money??

Here is the simple fact - and the article provides all of the links - the amount of money put into SS from the general fund is larger than what was borrowed from it. Most of the Trust Fund is interest and interest on interest. Next you get general fund subsidies Next you get excess payroll tax revenue.

The article has all of the links that you need.

 

[WillReadmore]

From whom would you take the money? There is only $2.8 trillion in the system today. The system has accrued benefits owed of $30 trillion - well that is only the ones that paid in.

But how much is being pulled constantly from someone's pay? A LOT.

Agreed. The problem is that every penny of that "LOT" is used to pay benefits of existing retirees. For every dollar diverted away from SS has to be replaced by a dollar of a different tax. The question becomes on whom.

Just stop SPENDING. Cut the waste. Slash the agencies back to manageable and responsible proportions. No "tax" required.

If it becomes an entitlement for needy seniors, The size of the pool will be a third of what it currently is. MUCH more easily supportable by EXISTING (reduced) FICA taxes. Others not entitled, get a SUBSTANTIAL tax for the entirety of their working lives. Maybe with the provisions that they HAVE a portable retirement account that get PERSONALLY funded.

Congress can cut spending any time they want. It doesn't require some new excuse. Suggesting "just stop spending" doesn't work. Someone has to actually find spending to cut and then get congress to agree.

Means testing isn't all that easy, as determining someone's wealth isn't easy.

Everyone already needs investments toward retirement. It's not as if SS is enough. And, people raid their 401k and other such accounts on a regular basis. Plus, it hasn't been that long since people had their homes stolen.

The largest screw current seniors have had is the evil money supply and interest policies of the Fed. Seniors PLANNED for retirement by assuming that their cash and investments would accrue interest and value. And in the economy of the past 10 years -- the money VANISHED from this wise planning far exceeds the personal "raiding" of their IRA/SEP/401Ks.. Washington has FLEECED seniors of $Trills in personal retirement portfolios because of no interest, no growth policy.

SS is not enough. But if you are in need, there are other resources. If the Fed application for student aid could be simplified, that would be the model for means testing. SHOULDN'T REQUIRE the sale of businesses and property and farms that are in estates for their children and grandchildren.

Spending could be reduced enough to almost cover the SS deficits. And they should. But BOOSTING the economy would help just as much.. .

You say that "Washington has fleeced seniors of $$Trills", but that's not true.

The fleecers were banks, firms like Country Wide, and others. We should have made rules to block that activity and we should have held these criminals responsible. But, Republicans have fought hard not to do either.

The private account thing is a different issue, of course, but it shows what happens when we provide programs for people to invest pre-tax dollars. The real catch is that these accounts belong to the individual, and when people get economically stressed in some way, they suck money out of these accounts, regardless of the penalties. Plus, individuals living pay check to pay check can not afford to deposit money in retirement accounts, health accounts, education accounts, etc., etc. while still doing the things necessary to remain functional in today's economy.

The health care account proposal is an especially galling example, as that proposal suggests people can pay for their own health care while ALSO paying into health care savings for future health care. So, at a time when low income people are finding it hard to pay for health care even once, it is suggested that they would be better off if we let them pay twice!?!