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Let's Just Raid Social Security
Out of one side of its mouth, our political system talks about reforming Social Security to preserve it for a few more years, and out of the other side of its mouth, it proposes to expedite its demise. As rational observer, you'd just like to get a big roll of duct tape and close off all these orifices for a while.
There are rumblings everywhere about a one-year extension of the "temporary" payroll-tax cut. Effective for all of 2011, it reduces the employee portion of the Social Security tax from 6.2% to 4.2%, thus giving us a little extra spending money. And collectively, it's more than a little: $100 billion for the year. The idea is that we'd spend this extra money, which would nudge up GDP and create jobs somehow somewhere. Yep, GDP and consumer spending are up a bit, despite dropping real wages and sagging consumer confidence. Yes, the inexplicable American consumer.
However, the mind-boggling U.S. trade deficit, particularly in consumer goods, sees to it that much of this extra money is going overseas. And it certainly hasn't created many jobs in the U.S., as we know from our dismal jobs reports.
But here is one thing the payroll-tax cut has done very effectively: It has raided Social Security by $100 billion. And now, they're proposing to raid it again. But to be fair, let's include an employer portion. Combined, it would amount to $200 billion for next year. And why not make it permanent? Because letting it expire would be decried, much like today, as a huge jobs-destroying "tax hike," while the $2.6 trillion Social Security Trust Fund just sits there, fat and plump with all this "money."
So, if we want to phase out our Social Security Trust Fund, that's one way of doing it. After a decade or so, it'll be gone. China would have a quarter or more of it, and the rest would be spread around. End of story. We'd finally be rid of it.
It's like raiding your 401k. Just clean it out, buy some stuff, and go on. Don't worry about later. To heck with retirement. Sure, that's one way to proceed. And if that's what we want, let's say it outright. Let's state clearly that we want to phase out our Social Security Trust Fund, that we want to bankrupt the Social Security system on an expedited time line, and that this payroll-tax cut is a way to accomplish that in an efficient manner.
But assuming we want to preserve our Social Security system, we need to keep inflows and outflows in balance over time. When inflation, job losses, and demographics throw the system out of whack, we need to adjust it. Alas, that adjusting is called the "third rail" of politics. How much easier and politically more expedient it is to raid it! So, let's just go do that instead.
Wolf Richter - www.testosteronepit.com
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Stupid Libtard, there is no "trust fund". There's nothing but a big pile of IOUs. The Congress raided the fund long ago.
Dirtbagger wrote:
There are contractual obligations for the insurer to pay the insured.
The FASAB is the accounting advisor for the federal government.
Ina paper entitled "Accounting for Social Insurance, Revised:"
Page 85 "Social insurance is not an employee benefit. The accounting methods for employee retirement benefits reflect the fact that employees voluntarily exchange lower wages during their working years to receive certain future benefits. Such an exchange does not occur with social insurance benefits."
Page 87 "A nonexchange transaction arises when one party receives value without directly giving or promising value in return. In regards to social insurance benefits the federal government gives value to beneficiaries WITHOUT RECEIVING VALUE IN RETURN. The fact that benefits paid are not based on the amount of taxes paid confirms the nonexchange nature of social insurance."
Does that sound like a contractual obligation from an insurance company?
www.fasab.gov
Click on Exposure Drafts and Documents for Comment
Landrew wrote:
Social Security is owed $2.6 trillion. Social Security is in surplus.
Your first statment is correct. The second statement implies there are gold ingots in the trust fund just waiting to be liquidated for $2.6 trillion.
The trust fund consists of IOUs, correct, But, they are unfunded IOUs.
Paying the benefits from the trust fund is just like paying benefits wothout a trust fund - with general revenues, or debt, in essence, new money.
This is because the bonds in the trust fund were issued as collateral for the surplus FICA taxes and interest, which were lent to the Treasury and paid for current expenses.
How can those dollars be in the Treasury (and spent) and in the trust fund, at the same time?
From a paper entitled "Analytical Perspectives, Budget of the U.S. Government, Fiscal Year 2009:"
Page 195 "At the time Social Security or Medicare redeems the debt instruments in the trust funds to pay benefits not covered by income, the Treasury will have to turn to the public capital markets to raise the funds to finance the benefits, JUST AS IF THE TRUST FUNDS HAD NEVER EXISTED."
http://www.,gpoaccess.gov/USbudget/fy09/pdf/spec.pdf.
Don Levit
My view is that if you are under 60 you should develop a financial plan that counts social security as a big fat goose egg... If you have any assets at all the gov't is not going to help you and you are left to fend for yourself, act accordingly.
http://www.networthprotect.com
I think we should Un-Unify the Federal Budget and sever the Social Security Trust Fund from it.
President Johnson combined the SS trust fund with the general fund, now it's time to un-unify it.
That way, the SS issue is always off the table.
How do you like them apples?
Social Security was first "raided" by LBJ. His was the first adminstration that lumped social security money in with general funds.
There are some major contractual issues involved with Social Security Insurance. Simply said, there are contractual obligations for the insurer to pay the insured. The consequences of not honoring these obligations could be rather severe both domestically and internationally.
Case in point - I worked in Saudi Arabia for 2 years in the 70's and the Saudis withheld a retirement/social security tax from each paycheck. For whatever reason the Saudi Government (Monarchy) decided to dissolve the trust fund without compensation to the payees. A few years later, the World Court ruled against the Saudis and they were required to reimburse payments to all who filed claims. I eventually received full repayment of funds withheld. The only catch was the claim process was costly and quite complicated and I doubt if many of the 3rd world contributors to the fund ever recieved compensation.
Failure to make payouts to US citizens and Foreigners who have contributed to the Social Security Fund would be a really major breach of contract. It would open the door to question all contract law and perhaps usher in some form of Mad Max World. Without some adherence to law, we are all screwed.
As much as the US government disgusts me, I do not find anarchy that appealing. Of course there are other methods of defrauding Social Security contributors through inflation, reduced COLA's etc.
You are ignoring that the Supremes ruled years ago social security contributions are a tax and not an insurance or defined benefit retirement plan. Period. They handled that years ago. What the fuck SA has to do with it, I have no idea. But I do know about SS. Look it up.
Sir, you have a good point, but "contract law" in the United States has already been thrown out, unless of course you are an elite Kleptocrat.
Basically, contract law in America at this state works but only for the elite. If the elite have a claim (or even if they just say they have a claim), they win. If the rest of the population has a claim, too bad. Basically, contract law in America works under the kleptocracy of "he who controls the government controls the law". The banks own America, so they make the rules and politics is just a side show.
The difference between the USSA and Saudi Arabia was that the Saudi's did not have a brainwashed military and brainwashed population to defend their looting like the USSA does. Since the USSA is a police state and the police are all brainwashed as "enforcers" for the corrupt kleptocrats, essentially, the comparison is null and void. In the end, the banks get they want, plain and simple, so little annoyances like "contract law" are just there to make the sheeple believe the playing field is fair---IT IS NOT.
http://www.youtube.com/watch?v=hYIC0eZYEtI&feature=related
The USSA has corrupt courts and judges are pretty much all bought and paid for just as academia. Academia tows the kleptocratic line and brainwashes all who want to enter the corrupt kingdom. Those who oppose are quickly dealt with by the corrupt "justice system" that is controlled by the kleptocracy.
There is a raid going on. But it is not at Social Security. Yes payroll taxes have been reduced by 2%. But every penny of that loss is being paid to SS from Treasury. So SS is no poorer as a result of the tax holiday.
The $110b is showing up as a current expense on the budget. It is also showing up in an increase in debt held by the public. But no change at SS.
bk
Fiscal sleight-of-hand. An IOU is the ultimate negative returning asset.
A 2% reduction in the federal tax rate would benefit all, not just payroll wage earners and would not create an IOU that requires the expense and opaqueness of double accounting & multiple books in a subordinate relationship fraught with little reason for accuracy or investigation. The ultimate goal, privatization, is hastened & achieved when the IOU reaches a total where continued separation of funds/taxes/accounting is no longer necessary.
In fact, one wonders why the existing marginal tax rates are not broken down into sub components where the base of 10% funds a pool for discretionary spending (A) up to the top bracket of 35% which funds defense (D) so that the accountants that track the funding of D can borrow from the accountants that disperse funds to A to the extent that accounting becomes a growth industry in an endless, mindless, bureaucracy.
This way, a 1% tax increase can be passed to fund deficit spending in a specific tax bracket that both targets and benefits that specific income level, making it impossible to refuse, while at the same time funding a bracket with more political influence.
Perry sticks by ‘Ponzi scheme’ label for Social Security
http://blogs.marketwatch.com/election/2011/09/07/perry-sticks-by-‘ponzi-scheme’-label-for-social-security/
We need to default the trust fund... the money does not exist, repete the money does not exist. Then adjust the age requirements, payout, and collections (extending the range), means testing to make sure its a long term program. Then by law after adjustments are made any surplus need to be refunded to tax payer, not used for more slush fund spending.
You've got to wonder why they keep up the charade of a Social Security fund as something separate from the rest of the government's general fund anyway. All contributions to SS go directly to the general fund and are spent along with everything else the politicians can beg, borrow, or steal (or in this case, print). There is no fund, it's just another tax. No need to worry about restructuring SS - the whole damn thing needs to be restructured. Hihway trust fund, ariport trust fund, blah, blah blah - it's all gone, and there is no trust. How much longer will they keep it up? Answer, as long as they can.
They can keep it up as long as they want. Think about it? People in the USSA are the most dumbed down population in the history of mankind.
DON'T EVER GET DELUDED INTO THINKING THAT ANYTHING WILL CHANGE.
It is very easy when you frequent sites like ZH to believe that most people "get it". Sir, people that understand the content (and I mean truly understand the content) on sites like ZH are like .000000000000001% of the population. The other 98.999999999999% are retarded brainwashed sheeple. What happened to the other 1%? Those are the corrupt kleptocrats that laugh all the way to the bank every day.
NOTHING WILL CHANGE except the value of your assets and your freedoms. It has been designed that way and the kleptocrats are executing their strategy brilliantly. Oh sure, there will be the occasional "black swan"---nothing but an annoyance to the kleptocracy and anyone that believes otherwise is delusional and guilty of the same "hope" that the sheeple are that watch CNBC. In essence, we have "sheeple" on both sides. The majority who are ignorant, and the minorty who while somewhat educated, believe some "black swan" is going to fix everything. IT WON'T.
We'll never get our social security so why should you?
The ponzi should stop now.
I look after my own retirement plans. If you want to retire and thought the government would look after you then you are the fool. I sure as hell don't want to carry you since I know the ponzi will be up long before I benefit.
All you sponges can get stuffed...
Anyone retiring on SS is asking to live on the poverty line. A sensible person is also making other plans. Let's see:
- Paid off my house, but now its worth half of what it was
- Contributed the maximum to my 401K, but I've earned nothing on it the last 10 years.
- I'm continuing to work, but I'll get laid off before my planned retirement age.
So, you see, it's not that simple.
I knew I should have used a rubber...ungrateful cunt! We gave you a GREAT life...and now you want to throw us into the streets? The money was spent on all your "pussy projects"...you know, welfare, food stamps, section 8, all the shit for women and minorities. Isn't "civil rights" great? Hope you're enjoying them!
I think the author is being sarcastic. I would argue the article is absurd were it not for the fact that most of what it describes has indeed already happened.
Ronald Reagan raised taxes to build up a surplus so that we would have enough to pay Social Security benefits for baby boomers.
Of course, this money has already been stolen to help fund Commodus W. Bush's massive new spending and tax cuts... it is a done deal.
Turnabout is fair play, so for the next 30 years we should just eliminate all payroll taxes and pay for entitlements with higher income taxes. If people who don't exceed the payroll tax ceiling had any political power, this might actually happen.
"Ronald Reagan raised taxes to build up a surplus so that we would have enough to pay Social Security benefits for baby boomers."
Thats not correct since Reagan did nothing to stop the SS Surplus from funding the Federal General Fund. All of the SS Surplus accrued after the Payroll tax hike was spent the day it desposited.
It was Alan Greenspan (before he became Fed chairman) that proposed to raise the payroll tax, not Reagan. Before the Payroll tax hike the SS surplus had disapeared. The Payroll hike just deferred the crisis until 2008 when the SS surplus once again disappeared.
Indeed, I'm utterly sarcastic. Like everyone else, I paid into SS all my life, and I want it work! That's why I'm furious that they're degrading the system with these payroll-tax cuts. I'm surprised just how many people didn't pick up my sarcasm. My fault. I should have been clearer. SS is such an emotional subject that rational thought is becoming a rarity.
I enjoyed your article. Thanks.
There is no such thing as an "employer contribution." The employee actually pays both through a reduced salary. You are crazy if you believe otherwise.
The problem is public ignorance. 300,000,000 people don't know or want to know about balance sheets, income statements. profit, and other financial legerdemain.
That is their fault, for sure. But the educational institutions exacerbate the problem by curriculum manipulation to KEEP the children in the dark. It doesn't serve the purposes of teachers unions, governments, and politicians to have an informed public. They might just begin to finally understand how their government, their unions, along with their corporations (no shortage of potshots at corporations and businessmen/wimmin, ever) have been forcibly sticking it to them their entire lives.
Up to 650 refugees in the state of Kentucky will lose their $674 base SSI benefit if congress does not act by Sept 30. They are entitled to this money because of age or disability or blindness. In order to keep their benifits, these guys must seek citizenship within 7 years of arrival in the USA. (Cincinnati Enquirer, 8-28-2011, p. b7) Unbelievably, these poor guys have not been able to pass the citizenship exam, and now, we simply MUST help them. Never mind the fact that WHY IN THE HELL ARE WE PAYING THESE NONCONTRIBUTORS ANYTHING from OUR RETIREMENT program? With unemployment as high as it is, why are we letting ANYONE into our country who doesn't desire to assimilate and contribute? This particular edition celebrated a bunch of "Fulani" muslims, who celebrated "the first African cultural day known as Nyaldi Pinal last weekend (ibid). Gee, I wonder if they celebrated July 4th? Again, whether they belong here or not is one thing, but why is money being taken away from my (10 year away) retirement to pay for their welfare???
Most of 'em can't even balance their checkbook. They look online and write down whatever the bank says they have. We can thank the current level of education which has caused the average citizen to be economically illiterate. As a grade-schooler in the 1950s I well recall math problems being a trip to the market to buy things at so much a dozen, buying by the pound/ounce, and figuring in a sales tax. That was math I could use! Do they still do that today? The "new math" was certainly a move that warms the hearts of all statists.
I believe that trillions alluded to is now IOU's since the fund has been raided since '84 when it was put in the Fed budget. The contribution, taxes were raised at that time to fund SS for all time but the surplus was spent from day one of the increase in contributions.
"I believe that trillions alluded to is now IOU's since the fund has been raided since '64 when it was..."
Fixed that for ya!
The author is an idiot and a common one at that.
The SS fund is money paid into by workers and their employers, compounding interest that is being held in "trust" by the government as a central distributor of these funds and as a GUARDIAN of these funds.
The use of these funds and the subsequent trading of promissory notes to be paid out of revenues is THEFT and FRAUD. This is NOT an entitlement program. The further controls and attempts to minimize the payouts is CRIMINAL behavior. This is embezzelment in every definition of the term.
This is no different than when a corporation fails to fund a pension program, stealing the wages of workers, and then dumping the program on a government agency to pay out a percentage figure. This is criminal theft.
The continued attempts to refer to SS as a "gift" of taxpayer largess from the latest generation to the last, is just another way to create generational discontent. It tries to let the government off the hook for its' role in this transfer of wealth.
The Supremes ruled years ago it is a tax, not an insurance policy, and there is no promised retirement plan.
Since when did the Supreme Court have anything to do with real law?
Theft and fraud was committed? I like the way you think.
This is what the government is "allowed to do". This is the great weakness of any political system in world history. Government iis based on the idea that some individual or organization is awarded power than no human should possess-- the power to control you, to kill, to declare war, to steal, to lie, to cheat, to defraud, to counterfeit.
All of these powers are considered immoral by man, but perfectly acceptable for government
No matter how much they dress it up in nice words as being good for the people, all political systems makes full use of their authority in order to maintain the status quo and keep the ruling elite in power.
We are all their economic slave with no rights. They need your money now because they don't want to loose their own along with their power.
Its "don't tax me, but tax the man behind the tree". It's always tax the innocent since the beginning of time. Just when will the world wake up to this fact? Never.
Our leaders are con men. The President can sell whatever he is asked to sell as the latest and greatest. The American public will follow it without asking questions to the edge of the cliff, and jump off if that's what it takes to prove they are behind the idea.
oops
Yes. Let's clean it out. And let's do it at the same time Boomers are cashing out their retirement accounts.
And while I am all for it being done openly, there is far more profit in allowing this to remain a conspiracy theory for at least one more Executive term.
This is why God created the ETF. If you are interested in retirement planning, I invite you to discover which will be the underlying assets for the derivative ETFs used in the re-formed Social Security.
To learn these secrets before the cat's out of the bag, check out our FREE guide, After the Pwning: A Nwobody's Way Out. Inside you'll find advice like... Option 2: Become a multi-billionaire US Senator. and Option 4: Be the CEO of a large cap financial institution. On page 3, we detail exactly how much more informed you would be if only you would Become a governor of a central bank. As an added bonus, Page 7 lists several not entirely uncomfortable methods you can choose to use the little wealth you have remaining to bring an end to your miserable existence in the, now fascist, country you once loved dearly, without ever burdening your hopeless children!
Amem. Thanks for the advice.
thank you sir, for making me laugh this dismal morning
I would give up all claims on SS if I could stop paying into the Ponzi. With 30 years into that's no small amount.
Who's with me and wants out!?
6 years from drawing and I want out. Still.
Completely agree. I've said exactly the same thing for years.
In fairness, that's not too hard a give, since I know I am getting nothing from it anyway, but it sounds good.
Kind of like when I gave up brussels sprouts for Lent.
Even if you killed SS, don't kid yourself that you'll keep the FICA payments for yourself.
What i am suggesting is that since it IS my money, supposedly I am paying into an insurance policy, maybe I would be smarter than to trust it some bureaucrat in Washington.
I realize that this is repugnant to you, but really I would rather take care of myself than have some nanny state look after me.
Not with indignant, self-righteous Bicycle Repairmen demanding "fairness" he won't, that's fer sure.
Wake up, will you? If SS gets killed, the system that BK'd you simply rolls on. Let's talk about the root of the problem. The FED.
We've managed to keep the facade going by having the government move money from one pocket to another, from the SS Lock Box to the General Fund, from Direct Buyers to the Fed, and from private businesses into GSEs.
Unfortunately, we'we run out of pockets.
But there's nothing wrong with this economy that a good pair of cargo pants can't fix
The Social Security program in which working people "contribute" and then, upon reaching retirement age, receive "distributions" back is actuarially sound.
The Social Security "welfare" programs are, of course, not actuarially sound.
My friend has a Bachelor's degree...well, it's a Social Services degree, but it's a degree nonetheless. He's absolutely able to work, but because he chooses to live off the $1200 SSI check instead, that's exactly what he does. Yes, he actually does have a brain injury and is somewhat disabled, but he could work if he wanted to.
We know at least two other people who live off SSI. They could at least sweep floors or something for the govt, but they are required to do nothing so that's exactly what they do.
Yeah, and that $1200, like wages in this country, has remained stagnant thanks to a fixed CPI formula used to determine COLA payments.
Is he too disabled to eat or drive a car because if he isn't he's being hit even harder since food and fuel costs are growing steadily.
He's got a brain injury and can't work, so he won't notice eating dog food and walking. Where would he drive to? The Social Security Office? You only go there at the start. No need to return once the tap is turned on.