The "raiding" of the Social Security Trust. What you don't know, and why you're probably an idiot.

[Toro]

Actually, other "pooled capital of retirement savings" typically involves actual money, not IOUs the pool wrote to itself.

I apologize for yelling, but I can't seem to get this across in civil discussion.

THE POOL DOES NOT WRITE IOUs TO ITSELF!

The IOUs are from the federal government not from the pools. The assets in the trusts - the government IOUs - are held for you, for the participants. The are not held for the government. That's what a trust is.

What is the difference between the IOUs of the government and the bonds of the government? An IOU is a promise to pay. A bond is an IOU with a promise to pay. Both are unsecured promises by the federal government to pay you in the future. What is the economic difference?

 

[JoeTheEconomist]

Actually, other "pooled capital of retirement savings" typically involves actual money, not IOUs the pool wrote to itself. And the amount I get paid is irrelevant to the discussion because there is no connection between the amount I will be paid and whether or not those IOUs government wrote to itself are a "trust fund" or not..

What is relevant to the discussion is that the amount we get paid has nothing to do with whether SS has a "trust fund" or not, and there is no connection between what our children will pay and whether SS has a trust fund or not.

There is no cashflow connection to anyone regarding whether the government's IOUs to itself are considered a trust fun or not.

All other financial securities as assets affect cashflow to someone somewhere somehow. Social Security's phantom "trust fund" doesn't.

Seriously, with what you do for a living, and I do believe you even if we banter sometimes, how can you possibly consider something that EX-ANTE has no effect on cashflow, positive or negative, ever, to anyone, an economic asset? How is that possible?

The trust fund does not write IOUs to itself. The government writes an IOU to the trust then the trust owes you. You keep repeating that mistake.

The "real cash flows" are your FICA taxes and the SS payments you will receive in later life.

What is the difference between that and you investing in government bonds for your retirement?

Seriously, you don't understand the difference between me loaning money to someone else, and me loaning money to myself. You actually mean that? Seriously?

And as a finance guy, you actually, truly didn't grasp my point that whether or not there is a trust changes zero cash flows ex-ante to anyone, ANYONE, EX-ANTE

you want to look someone in the eye who knows that that means and say you don't get it? I withdraw my statement that I believe you. You are full of shit. And I mean that in the most disrespectful sort of way. In a way that most who say that to you don't. I know what I am talking about. that you don't grasp that your arguement changes zero cashflows is pathetic. If you do what you say, you should be shit canned on the spot.

Cash flows is wall street, Holmes. You don't know that? You aren't Wall Street, you are a janitor, you are a canard:

Toro: There doesn't have to be any money for something to be an asset, WTF are you talking about? Yeah, there does

You're not loaning money to yourself. You keep repeating that mistake.

Tell me the difference between the two are

1. You give the government taxes and you are credited with future SS payments

2. You give the government money for a bond which you are credited for future interest and principle payments.

Tell me what the difference is?

You know nothing about finance if you actually can stand behind that a "trust fund" which effects cash flows to no one positively or negatively ex-ante is a financial asset

Assets are valued on risk adjusted expected cashflows, Holmes. Bonds, stocks, all of them. An "asset" which has zero effect on cashflows in or out of the imperial federal government therefore has a value of zero

Read a book on asset valuation and get back to me

I have. Which is why your future social security payments are an asset.

A financial asset is the value of future cash flows discounted back to the present. What is the value of your future social security payments? That's your asset. Do you understand that, "Holmes?" That's the asset that is held in trust for you at the Treasury. Then, all estimated future payments made to SS participants are pooled together in the trust, and those are the assets of the trust. These are liabilities of the government.

Now why don't you answer the question? Did you not understand it? Did you not read your book on valuation? I'll repeat it for you.

Tell me the difference between the two

1. You give the government taxes and you are credited with future SS payments

2. You give the government money for a bond which you are credited for future interest and principle payments.

What is the difference?

Legally, one is an obligation of the government and the other isn't. In fact, your future SS payments will be automatically reduced if future voters decide that they do not want to pay payroll taxes that are sufficient to cover them.

 

[billyerock1991]

it's real simple .. take the social security trust fund out of the general fund... then put in back to where it originally was ... then, each and every month the US government makes a payment to it to pay back all they money they took, interest free... the payment will come from the defense fund that we make each in our budget ... after all they're the ones that used it ... problem solved ...

 

[JoeTheEconomist]

Actually, other "pooled capital of retirement savings" typically involves actual money, not IOUs the pool wrote to itself.

I apologize for yelling, but I can't seem to get this across in civil discussion.

THE POOL DOES NOT WRITE IOUs TO ITSELF!

The IOUs are from the federal government not from the pools. The assets in the trusts - the government IOUs - are held for you, for the participants. The are not held for the government. That's what a trust is.

What is the difference between the IOUs of the government and the bonds of the government? An IOU is a promise to pay. A bond is an IOU with a promise to pay. Both are unsecured promises by the federal government to pay you in the future. What is the economic difference?

You will never win. Here is an article that you will like :

http://www.lifehealthpro.com/2015/09/25/did-bush-or-any-president-borrow-money-from-social

"There is a level of crazy in the Social Security debate that is simply not healthy for the nation. We have reached the point in this policy debate where the sound of the sound bite is more important than the facts underneath it....

This process is really no different from a private pension that buys Treasury obligations. Just as in the case of Social Security, the cash of private pensions is used by the Treasury to pay for government expenses. The most visible difference is that no one at these institutions complains about the theft, questions the IOUs, or worries about the repayment of the bonds. Why? Because these investment professionals aren’t crazy."

 

[kaz]

The trust fund does not write IOUs to itself. The government writes an IOU to the trust then the trust owes you. You keep repeating that mistake.

The "real cash flows" are your FICA taxes and the SS payments you will receive in later life.

What is the difference between that and you investing in government bonds for your retirement?

Seriously, you don't understand the difference between me loaning money to someone else, and me loaning money to myself. You actually mean that? Seriously?

And as a finance guy, you actually, truly didn't grasp my point that whether or not there is a trust changes zero cash flows ex-ante to anyone, ANYONE, EX-ANTE

you want to look someone in the eye who knows that that means and say you don't get it? I withdraw my statement that I believe you. You are full of shit. And I mean that in the most disrespectful sort of way. In a way that most who say that to you don't. I know what I am talking about. that you don't grasp that your arguement changes zero cashflows is pathetic. If you do what you say, you should be shit canned on the spot.

Cash flows is wall street, Holmes. You don't know that? You aren't Wall Street, you are a janitor, you are a canard:

Toro: There doesn't have to be any money for something to be an asset, WTF are you talking about? Yeah, there does

You're not loaning money to yourself. You keep repeating that mistake.

Tell me the difference between the two are

1. You give the government taxes and you are credited with future SS payments

2. You give the government money for a bond which you are credited for future interest and principle payments.

Tell me what the difference is?

You buy a bond at market price and you can sell it to someone else if you choose. You don't buy the FICA tax, you pay it, and, unlike the bond which has the same price no matter who buys it, the amount of FICA you pay depends on your earned income. You can't sell or transfer you Social Security account like a bond and unlike a bond, the amount in it represents the minimum to which you are entitled. Congress can raise your entitlement and or your FICA tax independently of each other. There really is nothing in Social Security that is in any way the same as the purchase of bonds or stocks. The comparison is a tendentious fallacy invented by talk radio demagogues to arouse the faux indignation of uninformed folks indignant over their marginalization. Sad, really

That's all correct.

My point though is that SS is designed as if it were a pool of government bonds. It looks like a defined contribution pension plan that invests solely in government securities. The economics are no different though, as you rightly point out, there are differences, along with others.

Well, the economics are different because the federal government isn't going to go bankrupt and default on its pension obligation. Look, this SS bashing is stale. Right wing radio was thumping this tub in Obama's first term because the Decider made privatization a GOP issue. All the scare numbers, all the talk about how much better off you'd be playing the market, that's all over now. Not even the loonies of the two dozen loons on the GOP primary slate is going there. It is instant death for any politician. Social Security is the most popular program in US history. Congress will do WHATEVER is necessary to keep it healthy because if it doesn't POOF! and we'll have a new Congress. Time to get over it.

Give me an example of something you leftists just get over with and move on from

 

[kaz]

Actually, other "pooled capital of retirement savings" typically involves actual money, not IOUs the pool wrote to itself. And the amount I get paid is irrelevant to the discussion because there is no connection between the amount I will be paid and whether or not those IOUs government wrote to itself are a "trust fund" or not..

What is relevant to the discussion is that the amount we get paid has nothing to do with whether SS has a "trust fund" or not, and there is no connection between what our children will pay and whether SS has a trust fund or not.

There is no cashflow connection to anyone regarding whether the government's IOUs to itself are considered a trust fun or not.

All other financial securities as assets affect cashflow to someone somewhere somehow. Social Security's phantom "trust fund" doesn't.

Seriously, with what you do for a living, and I do believe you even if we banter sometimes, how can you possibly consider something that EX-ANTE has no effect on cashflow, positive or negative, ever, to anyone, an economic asset? How is that possible?

The trust fund does not write IOUs to itself. The government writes an IOU to the trust then the trust owes you. You keep repeating that mistake.

The "real cash flows" are your FICA taxes and the SS payments you will receive in later life.

What is the difference between that and you investing in government bonds for your retirement?

Seriously, you don't understand the difference between me loaning money to someone else, and me loaning money to myself. You actually mean that? Seriously?

And as a finance guy, you actually, truly didn't grasp my point that whether or not there is a trust changes zero cash flows ex-ante to anyone, ANYONE, EX-ANTE

you want to look someone in the eye who knows that that means and say you don't get it? I withdraw my statement that I believe you. You are full of shit. And I mean that in the most disrespectful sort of way. In a way that most who say that to you don't. I know what I am talking about. that you don't grasp that your arguement changes zero cashflows is pathetic. If you do what you say, you should be shit canned on the spot.

Cash flows is wall street, Holmes. You don't know that? You aren't Wall Street, you are a janitor, you are a canard:

Toro: There doesn't have to be any money for something to be an asset, WTF are you talking about? Yeah, there does

You're not loaning money to yourself. You keep repeating that mistake.

Tell me the difference between the two are

1. You give the government taxes and you are credited with future SS payments

2. You give the government money for a bond which you are credited for future interest and principle payments.

Tell me what the difference is?

You know nothing about finance if you actually can stand behind that a "trust fund" which effects cash flows to no one positively or negatively ex-ante is a financial asset

Assets are valued on risk adjusted expected cashflows, Holmes. Bonds, stocks, all of them. An "asset" which has zero effect on cashflows in or out of the imperial federal government therefore has a value of zero

Read a book on asset valuation and get back to me

I have. Which is why your future social security payments are an asset.

A financial asset is the value of future cash flows discounted back to the present. What is the value of your future social security payments? That's your asset. Do you understand that, "Holmes?" That's the asset that is held in trust for you at the Treasury. Then, all estimated future payments made to SS participants are pooled together in the trust, and those are the assets of the trust. These are liabilities of the government.

Now why don't you answer the question? Did you not understand it? Did you not read your book on valuation? I'll repeat it for you.

Tell me the difference between the two

1. You give the government taxes and you are credited with future SS payments

2. You give the government money for a bond which you are credited for future interest and principle payments.

What is the difference?

Moving the goalposts.

I never argued that social security is not an asset, I said the trust fund isn't. The trust fund has zero to do with how much you get, that is set by congress based on politics. And it has zero to do with what your children pay, that is set by congress based on politics.

The trust fund, ex-ante, has zero affect on cash flows. That isn't an asset, and if you were a fund manager, you'd know that.

 

[kaz]

Actually, other "pooled capital of retirement savings" typically involves actual money, not IOUs the pool wrote to itself.

I apologize for yelling, but I can't seem to get this across in civil discussion.

THE POOL DOES NOT WRITE IOUs TO ITSELF!

The IOUs are from the federal government not from the pools. The assets in the trusts - the government IOUs - are held for you, for the participants. The are not held for the government. That's what a trust is.

What is the difference between the IOUs of the government and the bonds of the government? An IOU is a promise to pay. A bond is an IOU with a promise to pay. Both are unsecured promises by the federal government to pay you in the future. What is the economic difference?

It's all the Federal government, and the Federal government is loaning money to itself. There is no effect on either those receiving social security welfare checks or how much our children pay the government to write them. I still can't believe a fund manager doesn't grasp the significance of that

 

[Wildman]

Government stole the money, they spent it, they can't pay us back so now they want to screw us over.

LBJ, the guy who had kennedy killed, stole the $$$$$$$$$$$ to fund the Viet Nam war, he never had any intention of any "pay back"

 

[Toro]

The trust fund does not write IOUs to itself. The government writes an IOU to the trust then the trust owes you. You keep repeating that mistake.

The "real cash flows" are your FICA taxes and the SS payments you will receive in later life.

What is the difference between that and you investing in government bonds for your retirement?

Seriously, you don't understand the difference between me loaning money to someone else, and me loaning money to myself. You actually mean that? Seriously?

And as a finance guy, you actually, truly didn't grasp my point that whether or not there is a trust changes zero cash flows ex-ante to anyone, ANYONE, EX-ANTE

you want to look someone in the eye who knows that that means and say you don't get it? I withdraw my statement that I believe you. You are full of shit. And I mean that in the most disrespectful sort of way. In a way that most who say that to you don't. I know what I am talking about. that you don't grasp that your arguement changes zero cashflows is pathetic. If you do what you say, you should be shit canned on the spot.

Cash flows is wall street, Holmes. You don't know that? You aren't Wall Street, you are a janitor, you are a canard:

Toro: There doesn't have to be any money for something to be an asset, WTF are you talking about? Yeah, there does

You're not loaning money to yourself. You keep repeating that mistake.

Tell me the difference between the two are

1. You give the government taxes and you are credited with future SS payments

2. You give the government money for a bond which you are credited for future interest and principle payments.

Tell me what the difference is?

You know nothing about finance if you actually can stand behind that a "trust fund" which effects cash flows to no one positively or negatively ex-ante is a financial asset

Assets are valued on risk adjusted expected cashflows, Holmes. Bonds, stocks, all of them. An "asset" which has zero effect on cashflows in or out of the imperial federal government therefore has a value of zero

Read a book on asset valuation and get back to me

I have. Which is why your future social security payments are an asset.

A financial asset is the value of future cash flows discounted back to the present. What is the value of your future social security payments? That's your asset. Do you understand that, "Holmes?" That's the asset that is held in trust for you at the Treasury. Then, all estimated future payments made to SS participants are pooled together in the trust, and those are the assets of the trust. These are liabilities of the government.

Now why don't you answer the question? Did you not understand it? Did you not read your book on valuation? I'll repeat it for you.

Tell me the difference between the two

1. You give the government taxes and you are credited with future SS payments

2. You give the government money for a bond which you are credited for future interest and principle payments.

What is the difference?

Legally, one is an obligation of the government and the other isn't. In fact, your future SS payments will be automatically reduced if future voters decide that they do not want to pay payroll taxes that are sufficient to cover them.

Yeah, that's true. I'm trying to show how cash flows move and the liabilities of the government. SS effectively mimics a defined contribution pension plan or an annuity backed by a pool of government securities. SS is constructed as if it were a pool of government bonds without actually buying and selling any securities.

It should be noted that the US government could also stop paying Treasury securities, i.e. default, like they could stop paying SS, or alter the terms of both. Of course, as I mentioned earlier in this thread, the responses to both would be dramatically different.

 

[Toro]

Actually, other "pooled capital of retirement savings" typically involves actual money, not IOUs the pool wrote to itself.

I apologize for yelling, but I can't seem to get this across in civil discussion.

THE POOL DOES NOT WRITE IOUs TO ITSELF!

The IOUs are from the federal government not from the pools. The assets in the trusts - the government IOUs - are held for you, for the participants. The are not held for the government. That's what a trust is.

What is the difference between the IOUs of the government and the bonds of the government? An IOU is a promise to pay. A bond is an IOU with a promise to pay. Both are unsecured promises by the federal government to pay you in the future. What is the economic difference?

It's all the Federal government, and the Federal government is loaning money to itself. There is no effect on either those receiving social security welfare checks or how much our children pay the government to write them. I still can't believe a fund manager doesn't grasp the significance of that

The Federal government is not loaning money to itself, at least through the trusts. That's your misconception. You are "loaning," i.e. being taxed, money through the trusts to the government. The government will then pay you back in SS payments through the trusts in the future. The Treasury owes the trusts, which owe you. The US government "owes itself" only in that it owes the trusts, which owes you - kaz specifically, and all the other participants.

You may not get back in SS payments owed to you, that's true. I think they're going to change SS at some point. But if SS were privatized as a defined contribution pension plan that only held Treasury securities, the economics would be no different.

 

[Sun Devil 92]

Social Security is a "safety net" - a valuable lesson learned from the Great Depression. It's "insurance" - that is totally paid for by those who paid into it during their working years. It doesn't cost the government anything - other than the interest it must pay on the loan (like China, Japan and others). Social Security is by far the largest holder of U.S. debt.

The lesson learned from the Great Depression ?

The Great Depression isn't the only reason we have it.

Industrialization marginalized the elderly worker. Prior to that, most people worked in the family business and on the family farm....and just faded (stayed useful, but reduced activity). Additionally, people took care of their elders.

Industrialization took that away.

While I don't believe it is a great program, I believe it is a necessary program.

And it could be a whole lot better.

 

[kaz]

Actually, other "pooled capital of retirement savings" typically involves actual money, not IOUs the pool wrote to itself.

I apologize for yelling, but I can't seem to get this across in civil discussion.

THE POOL DOES NOT WRITE IOUs TO ITSELF!

The IOUs are from the federal government not from the pools. The assets in the trusts - the government IOUs - are held for you, for the participants. The are not held for the government. That's what a trust is.

What is the difference between the IOUs of the government and the bonds of the government? An IOU is a promise to pay. A bond is an IOU with a promise to pay. Both are unsecured promises by the federal government to pay you in the future. What is the economic difference?

It's all the Federal government, and the Federal government is loaning money to itself. There is no effect on either those receiving social security welfare checks or how much our children pay the government to write them. I still can't believe a fund manager doesn't grasp the significance of that

The Federal government is not loaning money to itself, at least through the trusts. That's your misconception. You are "loaning," i.e. being taxed, money through the trusts to the government. The government will then pay you back in SS payments through the trusts in the future. The Treasury owes the trusts, which owe you. The US government "owes itself" only in that it owes the trusts, which owes you - kaz specifically, and all the other participants.

You may not get back in SS payments owed to you, that's true. I think they're going to change SS at some point. But if SS were privatized as a defined contribution pension plan that only held Treasury securities, the economics would be no different.

That would not be meaningful privatization any more than the current plan involves an actual trust fund. You have created a distinction without a difference, and it still doesn't make the trust fund an economic asset, which by definition involves expected cash flows.

Maybe you can mention to your buds at your company who actually know finance that you believe an economic asset can ex-ante produce zero effect on cash flows to anyone. That should be good for a laugh, for them

 

[healthmyths]

Actually, other "pooled capital of retirement savings" typically involves actual money, not IOUs the pool wrote to itself.

I apologize for yelling, but I can't seem to get this across in civil discussion.

THE POOL DOES NOT WRITE IOUs TO ITSELF!

The IOUs are from the federal government not from the pools. The assets in the trusts - the government IOUs - are held for you, for the participants. The are not held for the government. That's what a trust is.

What is the difference between the IOUs of the government and the bonds of the government? An IOU is a promise to pay. A bond is an IOU with a promise to pay. Both are unsecured promises by the federal government to pay you in the future. What is the economic difference?

It's all the Federal government, and the Federal government is loaning money to itself. There is no effect on either those receiving social security welfare checks or how much our children pay the government to write them. I still can't believe a fund manager doesn't grasp the significance of that

The Federal government is not loaning money to itself, at least through the trusts. That's your misconception. You are "loaning," i.e. being taxed, money through the trusts to the government. The government will then pay you back in SS payments through the trusts in the future. The Treasury owes the trusts, which owe you. The US government "owes itself" only in that it owes the trusts, which owes you - kaz specifically, and all the other participants.

You may not get back in SS payments owed to you, that's true. I think they're going to change SS at some point. But if SS were privatized as a defined contribution pension plan that only held Treasury securities, the economics would be no different.

Right...if "privatized" only meant self directed to Treasury securities. BUT that's not the plan.
Privatization like most of us understand, would be accumulation of assets under SS totally for the beneficiary.
Consider that since the Dow Jones Industrial Average (DJIA) first appeared on May 26, 1896, The starting point for the DJIA was 40.94, a far cry from the 17,910 average in November 6,2015.
An average annual growth rate of the DJIA of 376%!!!

www.businessnewsdaily.com/3342-dow-jones-industrial-average.html

And so for me from when I began paying in AS WELL AS MY EMPLOYER that matched...(People forget that and they don't seem to understand 13% of gross
pay being withheld.)
Based on my excel spreadsheet and my earnings from 1967 to when I took SS in 2008 using this calculator
Dow Jones Industrial Average Return Calculator - Don't Quit Your Day Job...

I would have accumulated over the 40 years $945,242.
Now in retirement I would have taken $500,000 and bought an annuity that would pay me not the $1,739 I get but $2,525.21 tax free.
With $200,000 set up health care expense fund.
Still have $245,000 to live on.
After I die, my Annuity is part of my estate as well as what funds remain of the $445,000.
Annuity Calculator - Bankrate.com

 

[healthmyths]

And as I stated above, my privatized SS would allow me to leave the remaining portion to my son and granddaughter.
College education, start up a business... all could be done with say a remaining $50,000 for example.
Now consider if just 10% of the 43 million currently on SS Americans would be able to leave an estate for their offspring.. that would be 4.3 million times $50,000 or
$215 billion a year left to accumulate, start a business, and ALL doing something to increase the GDP and hence tax revenue.

 

[NYcarbineer]

Actually, other "pooled capital of retirement savings" typically involves actual money, not IOUs the pool wrote to itself.

I apologize for yelling, but I can't seem to get this across in civil discussion.

THE POOL DOES NOT WRITE IOUs TO ITSELF!

The IOUs are from the federal government not from the pools. The assets in the trusts - the government IOUs - are held for you, for the participants. The are not held for the government. That's what a trust is.

What is the difference between the IOUs of the government and the bonds of the government? An IOU is a promise to pay. A bond is an IOU with a promise to pay. Both are unsecured promises by the federal government to pay you in the future. What is the economic difference?

It's all the Federal government, and the Federal government is loaning money to itself. There is no effect on either those receiving social security welfare checks or how much our children pay the government to write them. I still can't believe a fund manager doesn't grasp the significance of that

The Federal government is not loaning money to itself, at least through the trusts. That's your misconception. You are "loaning," i.e. being taxed, money through the trusts to the government. The government will then pay you back in SS payments through the trusts in the future. The Treasury owes the trusts, which owe you. The US government "owes itself" only in that it owes the trusts, which owes you - kaz specifically, and all the other participants.

You may not get back in SS payments owed to you, that's true. I think they're going to change SS at some point. But if SS were privatized as a defined contribution pension plan that only held Treasury securities, the economics would be no different.

That would not be meaningful privatization any more than the current plan involves an actual trust fund. You have created a distinction without a difference, and it still doesn't make the trust fund an economic asset, which by definition involves expected cash flows.

Maybe you can mention to your buds at your company who actually know finance that you believe an economic asset can ex-ante produce zero effect on cash flows to anyone. That should be good for a laugh, for them

If the Trust Fund has no value, why was it able to use earned interest in the last two years to pay some of its recipient benefits?

 

[NYcarbineer]

Government stole the money, they spent it, they can't pay us back so now they want to screw us over.

LBJ, the guy who had kennedy killed, stole the $$$$$$$$$$$ to fund the Viet Nam war, he never had any intention of any "pay back"

That's a myth. A classic RWnut myth.

btw, we paid off much of the Vietnam War with a 10% income tax surcharge. Just like we should be doing for the last 2 wars.

"The Revenue and Expenditure Control Act of 1968, signed by Johnson on June 28, 1968, imposed a 10 percent surcharge on individual and corporate income taxes. Low-income taxpayers were entirely exempt. As Johnson pointed out in his statement when signing the bill, a family of four earning less than $5,000 (about $28,000 in 2005 dollars) would pay nothing additional. A family making $10,000 (about $57,000 in 2005 dollars) would pay just $2 extra per week (about $11.50 in 2005 dollars).

Individual taxpayers completed their returns as usual, but a new line appeared on Form 1040. After entering tax due on line 12a, an individual taxpayer was prompted by line 12b to consult a special surcharge table and add the appropriate amount to his or her regular tax liability. For tax year 1968, the surcharge amounted to 7.5 percent of a taxpayer's regular tax liability. (The 10 percent levy was prorated since it was in place for only nine months of the calendar year.) For corporations, the process was similar: A new line on Schedule J of Form 1120 required companies to add 10 percent to their regular tax bills (or a prorated amount, depending on the corporation's tax year)."

Historical Perspective: Sacrifice and Surcharge (Copyright, 2005, Tax Analysts)

 

[kaz]

Actually, other "pooled capital of retirement savings" typically involves actual money, not IOUs the pool wrote to itself.

I apologize for yelling, but I can't seem to get this across in civil discussion.

THE POOL DOES NOT WRITE IOUs TO ITSELF!

The IOUs are from the federal government not from the pools. The assets in the trusts - the government IOUs - are held for you, for the participants. The are not held for the government. That's what a trust is.

What is the difference between the IOUs of the government and the bonds of the government? An IOU is a promise to pay. A bond is an IOU with a promise to pay. Both are unsecured promises by the federal government to pay you in the future. What is the economic difference?

It's all the Federal government, and the Federal government is loaning money to itself. There is no effect on either those receiving social security welfare checks or how much our children pay the government to write them. I still can't believe a fund manager doesn't grasp the significance of that

The Federal government is not loaning money to itself, at least through the trusts. That's your misconception. You are "loaning," i.e. being taxed, money through the trusts to the government. The government will then pay you back in SS payments through the trusts in the future. The Treasury owes the trusts, which owe you. The US government "owes itself" only in that it owes the trusts, which owes you - kaz specifically, and all the other participants.

You may not get back in SS payments owed to you, that's true. I think they're going to change SS at some point. But if SS were privatized as a defined contribution pension plan that only held Treasury securities, the economics would be no different.

Right...if "privatized" only meant self directed to Treasury securities. BUT that's not the plan.
IT like most of us who understand that accumulation of assets under SS is totally possible for the beneficiary.
Consider that since the Dow Jones Industrial Average (DJIA) first appeared on May 26, 1896, The starting point for the DJIA was 40.94, a far cry from the 17,910 average in November 6,2015.
An average annual growth rate of the DJIA of 376%!!!

www.businessnewsdaily.com/3342-dow-jones-industrial-average.html

And so for me from when I began paying in AS WELL AS MY EMPLOYER that matched...(People forget that and they don't seem to understand 13% of gross
pay being withheld.)
Based on my excel spreadsheet and my earnings from 1967 to when I took SS in 2008 using this calculator
Dow Jones Industrial Average Return Calculator - Don't Quit Your Day Job...

I would have accumulated over the 40 years $945,242.
Now in retirement I would have taken $500,000 and bought an annuity that would pay me not the $1,739 I get but $2,525.21 tax free.
With $200,000 set up health care expense fund.
Still have $245,000 to live on.
After I die, my Annuity is part of my estate as well as what funds remain of the $445,000.
Annuity Calculator - Bankrate.com
View attachment 55055

Toro said his defined contribution plan would be like social security is now. Which means he's assuming:

1) While the money is invested in "treasury securities" there is no connection between the return on those securities and the amount of your check, your check would be based on arbitrary rules defined by congress

2) There is no option to cash out your account and when you die your heirs get nothing from it

3) The same people would be taxed the same amount to actually pay the money you get and the existence or non-existence of that plan would have zero effect on how much they pay

Toro, the "fund manager," doesn't realize that financial assets have expected cash flows by definition. He's created an account for you that has zero effect on what you get and zero effect on the people who are actually paying for it. You know, like the so called trust fund is now

 

[JoeTheEconomist]

it's real simple .. take the social security trust fund out of the general fund... then put in back to where it originally was ... then, each and every month the US government makes a payment to it to pay back all they money they took, interest free... the payment will come from the defense fund that we make each in our budget ... after all they're the ones that used it ... problem solved ...

You may have a different source, but for what it is worth, the Trustees of the Social Security Trust Funds say that when the government repays every penny ever borrowed with interest the system is nearly $26 trillion short of solved. But what do they know.

 

[JoeTheEconomist]

Government stole the money, they spent it, they can't pay us back so now they want to screw us over.

LBJ, the guy who had kennedy killed, stole the $$$$$$$$$$$ to fund the Viet Nam war, he never had any intention of any "pay back"

That's a myth. A classic RWnut myth.

btw, we paid off much of the Vietnam War with a 10% income tax surcharge. Just like we should be doing for the last 2 wars.

"The Revenue and Expenditure Control Act of 1968, signed by Johnson on June 28, 1968, imposed a 10 percent surcharge on individual and corporate income taxes. Low-income taxpayers were entirely exempt. As Johnson pointed out in his statement when signing the bill, a family of four earning less than $5,000 (about $28,000 in 2005 dollars) would pay nothing additional. A family making $10,000 (about $57,000 in 2005 dollars) would pay just $2 extra per week (about $11.50 in 2005 dollars).

Individual taxpayers completed their returns as usual, but a new line appeared on Form 1040. After entering tax due on line 12a, an individual taxpayer was prompted by line 12b to consult a special surcharge table and add the appropriate amount to his or her regular tax liability. For tax year 1968, the surcharge amounted to 7.5 percent of a taxpayer's regular tax liability. (The 10 percent levy was prorated since it was in place for only nine months of the calendar year.) For corporations, the process was similar: A new line on Schedule J of Form 1120 required companies to add 10 percent to their regular tax bills (or a prorated amount, depending on the corporation's tax year)."

Historical Perspective: Sacrifice and Surcharge (Copyright, 2005, Tax Analysts)

Yes LBJ and SS is an urban myth. So is story about (Kennedy, Nixon, Ford, Carter, Reagan, BushI and II, Clinton, and Obama) stealing money from SS. Obama has had a negative cashflow from the system so there was nothing to steal.

Given your comment about increasing taxes in 1968, I thought I would ask about the Alternative Minimum Tax which was created in 1969 I think. If we were increasing taxes in 1968 why was it necessary to pass a law that said the highest income earners had to pay at least something.

 

[NYcarbineer]

Government stole the money, they spent it, they can't pay us back so now they want to screw us over.

LBJ, the guy who had kennedy killed, stole the $$$$$$$$$$$ to fund the Viet Nam war, he never had any intention of any "pay back"

That's a myth. A classic RWnut myth.

btw, we paid off much of the Vietnam War with a 10% income tax surcharge. Just like we should be doing for the last 2 wars.

"The Revenue and Expenditure Control Act of 1968, signed by Johnson on June 28, 1968, imposed a 10 percent surcharge on individual and corporate income taxes. Low-income taxpayers were entirely exempt. As Johnson pointed out in his statement when signing the bill, a family of four earning less than $5,000 (about $28,000 in 2005 dollars) would pay nothing additional. A family making $10,000 (about $57,000 in 2005 dollars) would pay just $2 extra per week (about $11.50 in 2005 dollars).

Individual taxpayers completed their returns as usual, but a new line appeared on Form 1040. After entering tax due on line 12a, an individual taxpayer was prompted by line 12b to consult a special surcharge table and add the appropriate amount to his or her regular tax liability. For tax year 1968, the surcharge amounted to 7.5 percent of a taxpayer's regular tax liability. (The 10 percent levy was prorated since it was in place for only nine months of the calendar year.) For corporations, the process was similar: A new line on Schedule J of Form 1120 required companies to add 10 percent to their regular tax bills (or a prorated amount, depending on the corporation's tax year)."

Historical Perspective: Sacrifice and Surcharge (Copyright, 2005, Tax Analysts)

Yes LBJ and SS is an urban myth. So is story about (Kennedy, Nixon, Ford, Carter, Reagan, BushI and II, Clinton, and Obama) stealing money from SS. Obama has had a negative cashflow from the system so there was nothing to steal.

Given your comment about increasing taxes in 1968, I thought I would ask about the Alternative Minimum Tax which was created in 1969 I think. If we were increasing taxes in 1968 why was it necessary to pass a law that said the highest income earners had to pay at least something.

I don't know but Vietnam was the last war we paid for as an extraordinary expense. That has been our fiscal downfall.