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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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fuck the reset button. how about pulling some TRIGGERS.
Pray tell who would you recommend be shot? The guys that put this SS thing together were dead a generation before I was born. Prez Johnson funded his great socialist experiment by raiding the SS "fund" of its actual money and for Vietnam. I was in grade school. How about we dig up FDR's bones and burn them like they did to Tindale and the religious heretics of old England instead?
I've always thought we should not dig them up (Johnson, Hoover, FDR, ect). Just put a public bathroom over there grave. They can be shat upon forever more.
Politicians know, or will learn if they don't, that they will quickly become extinct if SS checks bounce and the USA defaults. Your proposal to raid SS cannot stand up to the political realities.
On a personal note, Wolf: Fuck you.
Ever notice it's the rich cocksuckers that want to RUN AWAY from their duty to pay in?,or the punks that think it's a WELFARE payout.
Tell it to the 200K+, stolen from me over the last 30yrs.
I be wanting some fuckers blood.You steal a $100.00 from me a knifepoint I will shoot you dead,you steal 200"+k, and your reallly fucked.I be gettin up it your bidness real quick.
Thanks for your frank personal note.
I do want to point out that my "proposal" was utter sarcasm. I paid into SS all my life, and I'm furious that they're trying to raid it. I think we're on the same wave length.
Watch these:
http://reason.com/blog/2008/10/24/saving-social-security-episode
then read these:
http://reason.com/blog/2009/10/15/social-security-chief-says-ins
http://reason.com/archives/2005/05/02/social-securitys-progressive-p
You are the first blogger at ZH to take this side of the issue. I'm not sarcasm impaired. I'd recommend your using the /sarc tag.
I withdraw the personal note. Thanks for your support.
You got ripped off. I'm not sure why Boomers can't figure this out. Their soultion is too often to have their children also ripped off. You got suckered, deal with it. The quicker SS is ended, the better. The money can then go into real savings.
There was no ambiguity that the payroll tax cut was intended to underfund and sabotage social security. The world is being run by douche bags... I'm just hoping some of these douche bags come to me for help so I can show them equal care. Fuckers.
"There was no ambiguity that the payroll tax cut was intended to underfund and sabotage social security."
They chose the payroll tax, because even those that pay no income tax still get a tax brake. If you make less than 20K per year, there is no income tax, but there is a payroll tax. SS has been in the red since 2008 when SS outlays exceeded SS (Payroll tax) revenue. Medicare has been the red for about a decade. The Difference comes from the general fund (income taxes and QE funding).
SS is a true ponzi scheme in that money from new investors is paid to the old investors, Since 1964-65 (Johnson Adminstration - Guns and Butter) the SS surplus was handed over to the general fund. Initially this was to pay for Johnsons "Great Society" program and the Vietnam War. Since Johnson, no president or congress as bothered even to reverse this.
I love this one AGuy. Little mind or little thought.
You said, "SS has been in the red since 2008 when SS outlays exceeded SS (Payroll tax) revenue."
I say, So, who was president for the eight years before 2008. Who gave tax cuts to the wealthy, (who are called job creators by the pathetic).
Who went to a endless war for 6 years without paying for it. How many times does one need to hear the facts to understand the truth.
Those job creators did not create jobs with their tax cuts. They lost 6 million jobs. That's alot of tax revenue lost from people who acutally work and pay taxes.
Unlike the transfer of wealth that happened under the bailouts.
What makes you think that my post had any politcal ideology? I was just stating the reason why they cut the payroll tax over other tax cuts. I said nothing about Dems versus GOP. or if you perfer Elephants versus Mules. You forgot to add the Bush Prescription Drug Program.
I will add that the ME wars is about securing the ME oil fields in order to ensure Ameriicans can keep on driving SUV, or even Priuses, and the Airlines stay open for business. No Oil means the Road warrior goes mainstream USA.
If you mean tax BREAK? Maybe you should read what a poniz scheme is about? Social security is holding U.S. bonds in the trust fund, they are a special Non-marketable bond. There is a surplus in the trust fund of 2.6 TRILLION dollars! That is not a ponzi scheme! There would have been a surplus without the O'Bummer payroll tax cut! Now if you are saying you are going to steal my trust fund, I have a big problem with you and your kind! We old people will come for you, you can bank on it!
I've got some very special IOUs !
They tell me that I can spend them when I get old.
They are kept in a secret place.
They are so important that they were replaced with some other IOUs.
IOUs are the best !
Landrew,
Put up or shut up.
Show me the money or go away.
You are an idiot.
The R Bonds have no value on any market. They can only be used to redeem at Treasury for SS checks to be cut. Nothing. Else. The money there was spent.
In order for Treasury to honor these bogus IOU's to itself, it needs the cash. In order to get the cash it will need to ISSUE NEW DEBT in the form of US Bonds.
This will cause the annual deficit, and cumulative debt, to rise ever faster.
So, in essence you're relying on an insolvent US Govt. to keep it's promise to pay for yer retirement (whatever that is!) with green pieces of paper -- good luck wid dat!
LOLOLOLOL. Landrew is a moron. Either trolling or has yet to accept that they money is toast. It was toast a long time ago.
Yeah, a big ripe basket of 2.6T guarded by policians. That is the funniest thing I have heard yet.
Not to mention, Landew seems to not grasp the concept that perpetual growth is required in order for the fund to keep up with inflation that is require for the economy to function. Uh, the last I looked, that is the basic design of a ponzi scheme... each layer larger than the last. Yeah... it is going to end well. Ha ha ha ha.
Couple of years ago they showed the facility in West Virginia [thanks to KKK Kleagle Robert Byrd] full of four drawer file cabinets, they are stuff to the brim with IOUs from HUD, Dep of Energy, Dep of Educ, etc. How do you collect on IOUs from other government agencies?
I've said since day one the ZH focus on equities is completely mis-placed in this environment. The panic buying of quality debt while the junk gets incinerated is a textbook default play. Quality has never looked better precisely because shit has never looked worse. This speech on Thursday sounds like panic at the state and local level as funding is drying up for "the irresponsible places" and "they need another bailout or else." I think David Tepper is spot on with cash and short term debt instruments: everyone's duration is getting shorter...and shorter...and shorter. Once the blow-ups in the sovereigns occur "it's all about the military."
http://www.youtube.com/watch?feature=player_detailpage&v=9f7LwuVF8Oo
If Bernie Madoff belongs in the slammer for his ponzi, so does every politican who supports the Social Security ponzi.
alphabrew,
No supporting it is not the issue, jail for all the SOB's that have raided it for Pork Barrel projects in their states deserve jail, or the states that recieved it, need to repay them.
This is like a Bank heist......................or holding you up, I come to you with a pistol demand money, and you have NO recourse to get it back.
NOW thats a PONZI.
Another fucking MORON! Wow, what part of 2.6 trillion surplus do you morons not understand! Another Cock Brother payroll moron!
Landrew,
If the USG had to abide by GAAP, as opposed to the whacked out accrual system that they use for their financials, we would see that the 2.6 trillion srurplus for what it is - vaporous nonsense. As of FY 2009, if the USG had to play by the rules it enforces, the SS and Medicare deficit was somewhere around 4.3. trillion, almost a - 7 trillon spread from your numbers.
According to John Williams' Shaddow Stats article in 3/2010, the USG is drowning in a Marianias Trench of red ink, and it won't be long untill it succumbs to the kazillions of tons psi of financial pressure. You can read the article for yourself here (apologies to ZH regulars if this is old news, noob here):
http://www.shadowstats.com/article/282-federal-2009-gaap-accounting
Accounting 101 should indicate just how cooked the USG books are. I think you should reconsider those numbers amigo.
Why is it you lefty afflicted trools (trolling tool) always have so much Koch in you mouth?
I'm a moron? How about you factor the future obligations of Social Security in. Where's your suprlus now, bitch?
Surplus of what!? Worthless dollars? Nope, even worse, a promise to pay back worthless dollars. Is that the surplus of which you write?
No, but the politcians who raid it and do not make the elitist, (anybody with more than 10 million in assets), pay more taxes do belong in Jail.
As a matter of fact. Tax payers, who paid for Lloyd Blankfeins 100 million dollar bonus, need to see him in Jail with Hank Greenberg from AIG.
Remember, this all happened under Bush & Co.
Hank Paulson and Neel Kashkari engineered the bailout for Wall Street. They too belong in Jail. They all Lied.
No wonder Hank Paulson was puking when he commited his sins against most Americans right in front of Congress.
I bet, Hank was really thinking Jail. You forget, Most companies do not have 401K plans or retirement plans.
Social Security is needed for those who do not make the millions in their life that all Wallstreet thieves do.
And the truth be told, Social Security does not pay inflation adjustments. But somehow, CEO's get that in their contracts.
Yes, their is corruption in America. The problem is, most of it is in Corporations who lobby for tax cuts through tax law.
Which eliminates them from most of the taxes everyday Americans pay. Warren Buffet's secretary pays a higher rate than Buffet.
Buffet said it is wrong. He is right.
Time for you to mature and get off the two party kick. Congress was controlled by the so-called other side during this "Bush & Co" thing you talk about.
It's one party, current figurehead Obama, last figurehead, Bush.
Your buddies had complete control for two years, all branches.
Why do we have more wars, more ponzi, more theft?
Because it is the same party, the Statist Party, working for the banksters.
Until you and other wake up to that, it is impossible to get better.
When you get elected, you gain immunity for crimes against the American people. Its a little know fact that the President is referred to as "Criminal in Chief", not "Commander in Chief" Get with the program!
They have lost my consent to be governed.
There is no longer any rule of law. There are no ethics. There is no desire to do what is fair or just.
I comply only because the criminal thugs have guns.
I will throw a wrench into the system any way I can so long as it is "legal".
oooops, too late
Dude what r u smoking, THERE is no TRUST FUND it's just a name w/ IOU's.
< 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.">
I will agree that alllowing ANY deductions from the 6.2% is doing NOTHING for the GDP,nor the FUND.'If anything the taxes should be raised 2-3%."
It's only too late if most of the republic allows it to be so. As a Fox contributor said one day.
If we abolish Social Security think of how long we could remain in the Middle East.
This is what Bush & Co. had in sight all along. Let's think this out.
Give tax breaks to the rich, (who some call job creators), go to war for 6 or more years. Bankrupt everything.
Result: We lost 6 million jobs, crashed the stock market and the savings of everybody who needed it.
Some call this part stealing from the poor to give it to the rich. The money went somewhere.
I call it the greatest transfer of wealth by the powers to be. The ones who run Wall Street.
And now those powers to be say if you tax us it is a transfer of wealth. What a fucking joke. And the sheeple somehow buy it.
Can you say Fox and CNBC Stupid Morons. Joe Kernen said on air to Carl, "Bailing out the Banks is all good". What a Shit.
Even if they keep the imaginary trust fund floating long enough for me to get benifits...those checks will never equal the value of dollars put in. Not even if I were to live to 110! Inflation has made this ponzi even worse.
You all can mark me down for not caring any more. Let me know when the smoke clears.
Hey Rocky! Watch me pull a rabbit outta ma hat! See ... Nothin' up ma sleeve ...
http://www.youtube.com/watch?v=kRW7pITY5Cg
Close, but no cigar. That's the squirrel.