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Re: Fixing Social Security game
Old 01-20-2007, 11:03 AM   #41
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Re: Fixing Social Security game

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So for those of you who propose eliminating MTA on the taxation side, would you still want your benefits calculated based only on wages up to the MTA? If not, then the positive effect this would have on the solvency of SS would be mitigated. How much, I don't know.
I wouldn't have a problem with them taxing me up to the limit, but not giving me benefits up to the max. Taxes SHOULD be progressive -- especially this one, which is giving money to WORKING people.

I have a view from both sides (as do many on this board). My parents struggled to get by on eighth-grade educations -- but I was lucky enough to run into the right educational and opportunities at the right time. I worked very hard myself, but the work has been mental, not physical, and the rewards have been greater.

I don't mind giving back to others making less.

The thing that frosts me the MOST about the SS debate is the idea of changing the finish line for these folks.
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Re: Fixing Social Security game
Old 01-20-2007, 12:17 PM   #42
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Re: Fixing Social Security game

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Originally Posted by donheff
What is obvious from the above is that our problem is one of generally not living within a reasonable budget (which would allow a deficit to some degree) not Social Security per se. What is most irritating to me is that rethuglicans want to blame useful programs like SS for their own refusal to live with a reasonably balanced budget. I am convinced that since Reagan there has been a concerted neo-con effort to use deficits to drive out social programs like SS despite the fact that most Americans do not support that end.
Of course it is not a SS problem at all. They just want to make it a SS problem. In all things, consider the source (and watch your pocketbook).
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Re: Fixing Social Security game
Old 01-20-2007, 05:56 PM   #43
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Re: Fixing Social Security game

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Originally Posted by Caroline
I don't mind giving back to others making less.
That is a wonderful sentiment, and a practice worthy of praise. Most folks contribute to charity--we want to help others and we derive a well-deserved sense of satisfaction from doing so.

But, I get no satisfaction from the government taking my money to give to the less fortunate. It steals the joy from giving, and demeans us when we are threatened with fines or jail for not giving. There's another good word for "compulsory charity" . . . .

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Re: Fixing Social Security game
Old 01-20-2007, 07:00 PM   #44
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Re: Fixing Social Security game

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Originally Posted by Oldbabe
I would prefer increasing the wages subject to SS tax as well as increasing the payroll tax from 6.2 to 6.7%. If our society wants a safety net for the elderly then we need to all pay for it.

I think raising the retirement age to 70 should not be an option. Just because people are living longer doesn't mean they aren't burnt out in their occupations. White collar workers do not understand how brutal the blue collar occupations are and how they wear you down. Blue collar workers are out of gas by 65 and should have the option of retiring.


I agree! On top of that, many employers are just looking for an excuse to rid themselves of highly paid, long service employees. If you're forced out before your time for SS, it might be a pretty hard row to hoe!
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Re: Fixing Social Security game
Old 01-21-2007, 02:06 AM   #45
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Re: Fixing Social Security game

The part of SS that is most annoying to me is how the benefits statements that I receive tell me that I am due to receive XX amount of benefit per month but in reality it will be means tested and I will only get a % of XX. And there are so many articles that tell me if I structure my retirement assets this way or that way, I can reduce the taxes paid on SS and increase that %. It feels like an elaborite "game" that we play to see how much of our supposed "benefit' we can keep our hands on.

In my fantasy world where we have a do-over on SS, the tax would be variable based on your income (no cap) but the benefit value would be fixed. Let's just say that number was $900 and it would allow you to rent a small room with a bed and 3 square meals a day. (assuming here that your medical needs are fully covered by Medicare or that the $900 covers the current co-pay). Okay, so you can't afford to keep living in your 4-bedroom house that you've always owned. But you will be sheltered and fed. No matter how much or how little you paid into the system, you get that $900 stipend. NOW . . . every dollar you set aside for your future can used to improve your living situation. For those who make a lot of money and spend every dollar, their retirement years will be quite sparse (or they keep working). For people like my SIL who make only $25-30K per year but carefully saves a percentage each month, she will be able to continue to live a simple but nice-to-her lifestyle that she has now.

Probably full of holes, but it appeals to my particular sense of fairness.

(Guess I'm stil grousing about the article I read in our local newpaper about a woman who had no savings, only had SS. In the article she was crying out to the public how unfair it was that she was going to have to move out of her 3-bedroom single family house because SS just wasn't covering all the expenses of maintaining the home, isn't that so VERY unfair to her?)

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Re: Fixing Social Security game
Old 01-21-2007, 03:37 AM   #46
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Re: Fixing Social Security game

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Originally Posted by Linney
In my fantasy world where we have a do-over on SS, the tax would be variable based on your income (no cap) but the benefit value would be fixed. Let's just say that number was $900 and it would allow you to rent a small room with a bed and 3 square meals a day. (assuming here that your medical needs are fully covered by Medicare or that the $900 covers the current co-pay). Okay, so you can't afford to keep living in your 4-bedroom house that you've always owned. But you will be sheltered and fed. No matter how much or how little you paid into the system, you get that $900 stipend. NOW . . . every dollar you set aside for your future can used to improve your living situation. For those who make a lot of money and spend every dollar, their retirement years will be quite sparse (or they keep working). For people like my SIL who make only $25-30K per year but carefully saves a percentage each month, she will be able to continue to live a simple but nice-to-her lifestyle that she has now.
In the article she was crying out to the public how unfair it was that she was going to have to move out of her 3-bedroom single family house because SS just wasn't covering all the expenses of maintaining the home, isn't that so VERY unfair to her?)

We used to call those poor houses. I now call it dog pounds and I disagree that someone who has worked a hard labor job all their lives, paid 6.5% into SS all their lives and supported your relatives in their homes when they retired deserves such disrespect and distain. I cannot believe I am reading this. The lack of income might bring realities to people's circumstances but compassion costs nothing and is certainly more attractive.
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Re: Fixing Social Security game
Old 01-21-2007, 05:46 AM   #47
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Re: Fixing Social Security game

Any playing with the system will create more ways around it. Just take a look at what is called the Section 8 Housing. Basically, apartments for low income people. A very noble and good program for the very poor among us. But, now we see widespread "asset hiding" whereby, if you want this program what you do is take all of your assets and transfer them to some trusted person (children usually). Now, since you have no or a very small dollar amount of assets you qualify for this type of housing (rent paid, heating and cooling paid, usually qualify for surplus food programs). You pay for almost nothing except your phone, if you want one, and are not on a child's "friends and family" plan. Of course you can live "high on the hog" since virtually all expenses are paid by the taxpayer and your cash assets are safe and available for use to eat out and travel the 7 seas. Kind of like qualifying for Medicaid by divesting assets (at least this program has a 39 month waiting period).

I have ranted in various threads about the fact that no matter what the Gross SS is on those letters they send do not plan on more than about 75% of that number. Medicare premiums and Income Taxes will take about 25% off of the top if you have any other significant income.
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Re: Fixing Social Security game
Old 01-21-2007, 09:04 AM   #48
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Re: Fixing Social Security game

OAG--I haven't seen what you are talking about first hand, although I have heard stories. What I have seen is people who qualify for Sec 8 housing sub-letting a room to a friend (typically a boyfriend) for roughly the cost of all the bills. The person receiving assistance doesn't work and starts crying foul when their man leaves them. They also become very angry when the mean government people (like me) come around and report them to the powers for violating the provisions of assistance. They are kicked off the program and not allowed to receive benefits for a certain amount of time, which I guess is preferable to going to jail for fraud.
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Re: Fixing Social Security game
Old 01-21-2007, 11:24 AM   #49
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Re: Fixing Social Security game

Lets-Retire: Good to hear some of this program is being policed. I was under the impression that once one got in no one checked further. New current year cars in the parking lot ought to signal something.
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Re: Fixing Social Security game
Old 01-21-2007, 12:53 PM   #50
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Re: Fixing Social Security game

OAG--Since I didn't actually work with the program only as a police officer the policing of the program was normally a second thought. As part of the explanation of how to keep the police out of your apartment, the topic of assistance normally came up and if recipients were evicted they lost their benefits. The main way for the management to keep the complex from becoming a war zone was to evict people quickly for any violations of the law or complex rules.

IIRC two violations of complex rules within six months resulted in the rental contract not being renewed. If the resident violated the rules again the eviction process was started. After two visits from the police for any reason the occupants were given a warning the third time resulted in their contract not being renewed, and the fourth was eviction.

So during our discussions, which always happen after obtaining everyone's address, if we discovered someone not on the lease living in the apartment and the leaseholder receiving assistance we would annotate that in our report and advise our secretaries to forward it.
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Re: Fixing Social Security game
Old 01-21-2007, 01:25 PM   #51
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Re: Fixing Social Security game

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Originally Posted by Tadpole
We used to call those poor houses. I now call it dog pounds and I disagree that someone who has worked a hard labor job all their lives, paid 6.5% into SS all their lives and supported your relatives in their homes when they retired deserves such disrespect and distain. I cannot believe I am reading this. The lack of income might bring realities to people's circumstances but compassion costs nothing and is certainly more attractive.
Well Tadpole, what do you suggest for someone like this? Sleep on the street and eat at the soup kitchens and be 'free' of the poorhouse? Or are you suggesting that they get a more comfortable life with $2000 a month stipend, the extra money coming from a huge tax increase placed on the back of a still-working blue-collar laborer?

If my parents or friends need help when they get elderly my husband and I will do what we can to help make their lives better -- take them in to live with us, or help pay the bills. That's the compassion part. I worry about the elderly who are without family or have family who don't care (very very sad). I'd like to make sure they have shelter and food and do not have to live on the streets.
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Re: Fixing Social Security game
Old 01-21-2007, 02:52 PM   #52
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Re: Fixing Social Security game

FWIW, the average SS old age benefit in 2006 was $955 a month. http://www.ssa.gov/policy/docs/quick...hot/index.html
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Re: Fixing Social Security game
Old 01-21-2007, 05:10 PM   #53
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Re: Fixing Social Security game

I've re-read my posting above and it does sound harsh. But I am looking at social security as it was originally envisioned -- as a safety net. Not what it has morphed into -- a weak pseudo pension system. Given today's situation with frozen or eliminated pension plans I would prefer a system that combined this safety net with a mandatory retirement system like the government workers' TSP plan that would help ensure that Tadpole's hard-working blue collar laborers could have a reasonable retirement to count on.

--Linney (who was raised in a blue-collar family and is angry at how today's government enacts tax breaks that on their surface appear to provide some help to the poor . . . while providing extensive benefits to those well off)
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Re: Fixing Social Security game
Old 01-21-2007, 09:13 PM   #54
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Re: Fixing Social Security game

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Just take a look at what is called the Section 8 Housing. Basically, apartments for low income people. A very noble and good program for the very poor among us. But, now we see widespread "asset hiding" whereby, if you want this program what you do is take all of your assets and transfer them to some trusted person (children usually). Now... you can live "high on the hog" since virtually all expenses are paid by the taxpayer and your cash assets are safe and available for use to eat out and travel the 7 seas.
Geez. Sounds great, but I think the folks here in my neck of the woods have yet to figure this out. I live not too far away from section 8 housing and if those people are living "high on the hog" then it's news to me!

I myself wouldn't live in those icky apartments for any price. Of course, they ARE in line down at the Christian Help Center getting free day-old Wonderbread and canned beans... that's got to be good living right there!

Given the HORRIFYING school they have to send their children to, and the complete lack of an education they get as a result, I HOPE they're happy, because they sure are stuck.
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Re: Fixing Social Security game
Old 01-22-2007, 12:31 AM   #55
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Re: Fixing Social Security game

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Originally Posted by Linney
I've re-read my posting above and it does sound harsh. But I am looking at social security as it was originally envisioned -- as a safety net. Not what it has morphed into -- a weak pseudo pension system.
Actually, SS was set up as a "weak" pension system in the 1930s by FDR to get older workers to leave the workforce so there would be jobs for younger workers due to the high unemployment rate at the time. Granted it had other safety net provisions also.
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Re: Fixing Social Security game
Old 01-22-2007, 06:49 AM   #56
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Re: Fixing Social Security game

Linney--Isn't the government's TSP plan basically a 401(k)?
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Re: Fixing Social Security game
Old 01-22-2007, 10:32 AM   #57
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Re: Fixing Social Security game

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Originally Posted by lets-retire
Linney--Isn't the government's TSP plan basically a 401(k)?
I interpret that post as advocating mandatory enrollment in the TSP when first hired so that young workers will automatically begin saving unless they go through the gauntlet process of opting out.

Although there are some special-case situations for making extra TSP contributions, the military has still managed to avoid matching TSP contributions. The match's "enforced savings" really makes a difference between the civil-service & military versions of the TSP.
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Re: Fixing Social Security game
Old 01-22-2007, 11:13 AM   #58
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Re: Fixing Social Security game

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If boomers work longer than the projections assume, the economy trucks along as it has in the past, OR any other of the adjustable parameters comes in better than the intermediate estimate with all else being the same, the trust fund may not need to be tapped at all. Who knows? The assumptions used in the models are extremely conservative. If the estimates short range or so bad, are the long range ones better? It's all a crapshoot and I find it unconscionable that people would just decide to reduce benefits based on this long-range model that was moving out in time each year. The fund has been getting so flush so fast that they had to go to a more pessimistic future economy in order to keep it in crisis. Perhaps this estimate of the future is a better one; perhaps not. Besides, if benefits are reduced now, the trust fund just gets larger without bound. Remember that as long as it is not used, the interest is reinvested and earns interest, which is reinvested and earns interests, etc. That is what should scare people if the fund keeps over- performing. (Note, I have not independently confirmed all of what I have just written; I have just seen it referenced in many economic conversations. I think, though, the fact that the date of trust fund exhaustion which has moved from 2029 to 2042 and then back to 2041 last year seems to support these observations.)
Tadpole - You can check the long-term assumptions yourself. They are in table II C-1 in the 2006 Trustees report on the SSA website. I'll try posting a link here:

www.ssa.gov/OACT/TR/TR06/II_assump.html#wp95492

The most important assumptions are the demographic ones, because they determine the ratio of workers to retirees.

I think that the date when the "trust fund" runs out is less important than the date when SS first attempts to cash in some of those bonds. This is projected as 2017, and this date isn't so sensitive to a lot of long term assumptions.

At that point, we have the political problem of determining how the "general fund" part of government is going to repay "social security" for the $2 trillion of accumulated borrowing.

I agree with all the people who say that the real problem isn't Social Security, it is the rest of government that has been running big deficits for a long time. I think the big political issue around the "trust fund" is that Social Security is funded by a mildly "regressive" payroll tax, and the General Fund is funded primarily by "progressive" income taxes. The people who pay income taxes have been borrowing from the people who pay SS taxes since the SS tax rate was raised in the mid-80's. At some point before 2017, I hope we face up to that.

So when SS taxes don't completely cover SS benefits, will we: (1) Raise income taxes, or cut General Fund programs, so the General Fund can repay SS? or (2) Cut SS benefits, or raise SS taxes, so the General Fund taxpayers don't have to repay the debt?

Of course, a lot of people around the upper middle pay about the same SS tax as they pay FIT, so if it's a tax increase they really don't care if it's on the payroll tax or on FIT. But high income, and median to low income, people do care (or should, if they understand the issue).
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Re: Fixing Social Security game
Old 01-22-2007, 01:45 PM   #59
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Re: Fixing Social Security game

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Originally Posted by Independent

So when SS taxes don't completely cover SS benefits, will we: (1) Raise income taxes, or cut General Fund programs, so the General Fund can repay SS? or (2) Cut SS benefits, or raise SS taxes, so the General Fund taxpayers don't have to repay the debt?
Actually, as I posted earlier, when the SSA redeems their bonds the Federal government will raise money elsewhere...

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Originally Posted by jdw_fire
The money will come from the same place it comes from when you cash in a US gov treasury/bill/bond. The answer depends on when the cashing in takes place. If you cash in your treasury/bill/bond now the money will come from another investor (maybe even the SSA since right now they are still a net buyer) who is buying a treasury/bill/bond at this time. When the SSA starts cashing in their bonds the money will either come from another investor or if the US gov's budget is in surplus they can be redeemed out of said surplus.
Now this may increase the budget if the interest rate the US gov has to pay on the new bonds/notes/bills is higher then the interest the US gov is paying on the SSA bonds, however in reality the US gov will just be finding a new lender. (For the sake of this discussion my previous sentance of course assumes the US gov's budget in not in surplus.) Therefore neither 1) or 2) from the first quote is required.
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Re: Fixing Social Security game
Old 01-22-2007, 02:11 PM   #60
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Re: Fixing Social Security game

Unfortunately, you are probably correct. The politically expedient thing will be to borrow even more money. That will probably mean that the interest rates we pay on all of our national debt will go up. (Simple supply and demand says that in order to find that "other investor", who isn't buying our bonds today, we will definitely need to pay higher rates than "what we would have paid, if our deficits had been lower").

I would like to believe that the disappearance of the annual SS surpluses, together with the reasonable projections that SS will run a deficit in all future years, would cause a lot of people to say "We can't stay on this course and keep on borrowing more and more money each year". But I'll admit that there is nothing in the current political culture to suggest that alternative is likely.
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