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SS who to believe?
Old 04-17-2008, 12:07 PM   #1
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SS who to believe?

Well nothing like a conflicting report to come out and to make you question what shape SS is in.

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Old 04-17-2008, 12:24 PM   #2
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I think the article addresses a question that's not the most pressing one. The date that the IOU's run out isn't too important, IMO. More significant (and more likely to result in means-testing or other cuts in payments) is the fact that the system will, in a few years, start paying out more than it takes in. That's when the IOU's will start to be cashed in, and the budget pain begins. As required payments from the US Treasury mount each year, we'll have to have a national discussion about which expenses should get priority, and which should be cut. It's likely that SS payments to the wealthy (e.g. anyone with a pot to p*ss in) will not fare well.

Ants, pay your tithe to the majority of (unfortunate) grasshoppers.

Thanks for the link.
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Old 04-17-2008, 12:38 PM   #3
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Well, I think the government can't tell how much will be there for us because they don't know how much they'll take out. If they decide they need more for one stupid reason or another we all will get less.

Ya gotta figure that we need to invade some other country for no apparent reason in the future.
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Old 04-17-2008, 02:23 PM   #4
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Well, I think the government can't tell how much will be there for us because they don't know how much they'll take out. If they decide they need more for one stupid reason or another we all will get less.

Ya gotta figure that we need to invade some other country for no apparent reason in the future.
The USA started it's demise when they STOPPED TAKING what they wanted and started "negotiating"...............

Now I hard the US is harping on Iraq because we keep funding the war and they don't use their oil revenues to rebuild? Um, excuse me, maybe we should just TAKE the oil and use it for ourselves.........
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Old 04-17-2008, 02:27 PM   #5
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The USA started it's demise when they STOPPED TAKING what they wanted and started "negotiating"...............

Now I hard the US is harping on Iraq because we keep funding the war and they don't use their oil revenues to rebuild? Um, excuse me, maybe we should just TAKE the oil and use it for ourselves.........
I wonder what kind of negotiating tactics Alexander and Attila used..
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Old 04-17-2008, 02:32 PM   #6
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I wonder what kind of negotiating tactics Alexander and Attila used..
I take your women, your land, your animals, and your gold. And, I "might" let you live............
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Old 04-17-2008, 02:34 PM   #7
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Now I hard the US is harping on Iraq because we keep funding the war and they don't use their oil revenues to rebuild? Um, excuse me, maybe we should just TAKE the oil and use it for ourselves.........
It's funny how often you hear this now that oil prices are up. It is a classic case of something sounding like a good and fair idea, and which would result in a strategic disaster. If the US seized Iraqi oil or Iraqi oil revenues to fund the war (or Iraqi reconstruction), it would validate all the wacko "we only invaded to help Exxon" shouters.

There's surely a way to encourage the Iraqis to spend the money productively (and not necessarily with US contractors) without having it look like a US takeover of Iraqi natural resources.

(Note to others--careful or this thread will get dragged into the Soapbox!)
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Old 04-17-2008, 02:36 PM   #8
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"(Note to others--careful or this thread will get dragged into the Soapbox!"

Well wasn't my intention it just drifted off in that direction. I still dont know what to believe about SS and the future of it.
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Old 04-17-2008, 03:41 PM   #9
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"(Note to others--careful or this thread will get dragged into the Soapbox!"

Well wasn't my intention it just drifted off in that direction. I still dont know what to believe about SS and the future of it.
Sorry........all I have to add is that I have put the number "ZERO" in my SS calculations for retirement, as I am under 50, and any plans I have heard only "promise" full benefits for folks 50 and older........
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Old 04-17-2008, 05:15 PM   #10
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I think the article addresses a question that's not the most pressing one. The date that the IOU's run out isn't too important, IMO. More significant (and more likely to result in means-testing or other cuts in payments) is the fact that the system will, in a few years, start paying out more than it takes in. That's when the IOU's will start to be cashed in, and the budget pain begins. As required payments from the US Treasury mount each year, we'll have to have a national discussion about which expenses should get priority, and which should be cut. It's likely that SS payments to the wealthy (e.g. anyone with a pot to p*ss in) will not fare well.

Ants, pay your tithe to the majority of (unfortunate) grasshoppers.

Thanks for the link.
I don't understand what you mean by "IOUs." I thought that the current Social Security surplus was being spent by other areas of the government. The government spends takes in taxes, and spends the money as a whole (ie. There is not pot of social security money building anywhere). The problem is a gradual decay, until sometime in the next 20-30 years when the SS program starts running deficits (benefits exceed payments). There are no IOUs. This is just a program that will gradually implode without changes in benefits, payments, or unforeseen population shifts.
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Old 04-17-2008, 07:11 PM   #11
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I still dont know what to believe about SS and the future of it.
SS is in great shape, COLA's set at a around 3% below actual inflation, Gov can't lose. Happy days are here again.
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Old 04-17-2008, 08:10 PM   #12
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I don't understand what you mean by "IOUs." I thought that the current Social Security surplus was being spent by other areas of the government. The government spends takes in taxes, and spends the money as a whole (ie. There is not pot of social security money building anywhere). The problem is a gradual decay, until sometime in the next 20-30 years when the SS program starts running deficits (benefits exceed payments). There are no IOUs. This is just a program that will gradually implode without changes in benefits, payments, or unforeseen population shifts.
You are correct in that there is no pot of excess SS money that is in an account waiting to be paid to retirees. But, there are "IOUs." The excess money that SS has taken in has been used by the government, but all of it was accounted for and there's a precise figure of how much the general fund owes to SS. These are the IOUs, collectively known as the Social Security Trust Fund. When SS begins to pay out more than it receives in taxes (in approx 2017) the government will begin to pay the IOUs to SS, and the balance of the trust fund will begin to decline. The problem is forecast to grow every year until the trust fund is exhausted (the date the trust fund IOUs are exhausted was what the linked article was about). But, starting with the first payment from the general fund to SS in approx 2017, taxes will have to increase, spending will have to be cut in other areas, or the deficit will have to balloon in order to make the payments to SS. And, at that time, we'll hear more about the need to cut SS spending--especially to those who aren't destitute. This pressure to cut payments from the general fund to SS will happen long before the IOUs run out.
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Old 04-17-2008, 10:14 PM   #13
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Off-topic........
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Now I hard the US is harping on Iraq because we keep funding the war and they don't use their oil revenues to rebuild? Um, excuse me, maybe we should just TAKE the oil and use it for ourselves.........
It may come as no surprise that most of the world thinks we are doing that already.
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Old 04-18-2008, 02:47 PM   #14
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Well nothing like a conflicting report to come out and to make you question what shape SS is in.

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Yep. Obviously, all sides in most issues will spin the data as best they can.

I'll try to avoid the politics still write out my opinion.

We "know" that the ratio of active workers to retirees is going down, and will drop quickly if baby boomers retire on schedule.

(1) This is a problem for our entire economy (not just SS) because all economic goods are produced by active workers, but we have a culture that thinks former workers should be able to continue to consume (I like this culture). For example, returns on stocks could go down if a "shortage" of workers means that workers are able to get a higher share of corporate income, leaving a smaller share for owners and lenders. Somehow, workers will need to contribute more of their output for the care and feeding of retirees, or retirees will need to get along on less.

(2) The Trustees report includes three dates, but economically these are just milestones. The stress comes on gradually.

(3) The "Trust Fund" is a political agreement, pretty much like the "Highway Trust Fund". It's a spreadsheet that lets us compare the revenue from a certain tax, which was supposed to be dedicated to a certain program, to the money we're actually spending on that program. For SS, we've had more tax money than expenses for the last 20 years, so the spreadsheet shows a pretty big balance.

(4) The "Trust Fund" also has legal standing under current law. The Treasury has the legal authority to continue sending SS checks even when the annual SS benefits exceed the annual SS taxes. However, the Treasury does not have the authority to continue to send checks after the spreadsheet says the Trust Fund has run out of money.

(5) The "Trust Fund" doesn't exist in macro-economic terms.

(6) Note that the date the trust fund runs out is very sensitive to the imputed interest in the spreadsheet. Again, the interest has legal but not economic significance.

(7) The article focuses on when the Trust Fund runs out. This is a crude indicator of how future SS taxes and future SS benefits are related, but "crude" is an important word. Better milestones would be the first year that benefits exceed taxes, or the ratio of benefits to taxes at some fixed point such as 2040. These numbers are more stable from one report to the next.

(8.) The author claims that the "low cost" or "optimistic" set of assumptions are more realistic than the "intermediate" set. He provides only one reason - projected GDP increases are less than past GDP increases. In the actuaries model, GDP is not an input. It is the result of: (number of workers) x (productivity per worker).

The number of workers is the output of a bunch of demographic assumptions. If you look at growth in the labor force from 1960 to 2005, you'll see the the entire baby boom generation moving into the workforce. You'll also see a major increase in the percent of women who work outside the home. These two things increased the labor force and therefore increased the GDP. The actuaries don't believe these two factors will repeat over the next 40 years (duh). Therefore, it's not surprising that the intermediate numbers have slower growth in the labor force, and this generates slower growth in the GDP.

(One thing that could happen is a lot more immigrantion. However, note that we want "highly productive" immigrants if we are going to increase the GDP in a way that's really beneficial. Our current immigration policies seem to produce a high proportion of low-skill workers.)

So my opinion is that people who say SS's projected financial difficulties are just the imagination of overly-conservative techies aren't making a persuasive case.
OTOH, I'd say that the people who say SS is "going bankrupt, and should be replaced with private accounts" have an even weaker case, but that's another post.
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Old 04-18-2008, 04:44 PM   #15
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You could cut our SS to 0 IF we were exempt from all taxes (except utility and sales). That would mainly mean Federal Income Taxes, State Income Taxes, MEDICARE Premiums and Real Estate taxes on ONE home. I think I would be loser in this but would do it mainly for the fact that if would eliminate the current unknowns and the aggravating politics involved.
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Old 04-18-2008, 06:07 PM   #16
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Sooo - at age 65 this summer I continue to take my early SS checks and pay $4/gal for my 23 mpg SUV and totally piss off a bunch of people.

- 15th year of ER. Are we having fun yet??

And Medicare starts this year - which I hear is in even worst shape than SS.

heh heh heh - I'm old enough to remember the 'early' part of the year when they stopped deducting SS from my paycheck..
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The midcost estimate is overly conservative
Old 04-19-2008, 07:53 PM   #17
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The midcost estimate is overly conservative

This has been shown by the delay in the trust fund exhaustion date. Over the last 10 years it has been delayed 13 years. Not very stable at all. The most likely estimate is that it will become exhausted sometime between midcost and lowcost estimates, that is, between 2041 and never. Obviously that isn't too helpful, but that is the truth. We may have a problem but until we know more about how fast and how completely boomers retire, we really won't know. In ten years we should be in a better position to judge. The good news is that even if becomes exhausted, it will still be possible to pay out 75% of benefits in perpetuity, as accurately as we can know anything about the distant future anyway. This has improved since last year. The earlier date, 2018, is largely meaningless as SS debt will be rolled over to public debt. Since there is little politicians like more than debt, this shouldn't represent any obstacle.
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Old 04-19-2008, 08:01 PM   #18
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it will become exhausted sometime between midcost and lowcost estimates, that is, between 2041 and never.
If I'm still alive in 2041, I'll be 93 ...

Guess I won't worry about it for awhile...

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Old 04-19-2008, 08:07 PM   #19
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Sorry........all I have to add is that I have put the number "ZERO" in my SS calculations for retirement, as I am under 50, and any plans I have heard only "promise" full benefits for folks 50 and older........
Ok, now I feel much better about being 50. ....not...
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So pessimistic in fact
Old 04-19-2008, 08:26 PM   #20
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So pessimistic in fact

that add-on accounts wouldn't help because the economy would perform so poorly, they wouldn't be able to generate enough revenue. In fact, reductions in population growth may spur productivity somewhat if you compare the US and the UK for example. BTW, the CBO estimates trust fund exhaustion in 2057.
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