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Social Security in violent transition?
Jackie Calmes at the NYT has a good summary regarding the last minute effort to get an extension of the 2% payroll tax reduction for 2012. (There is consideration this morning for a two month extension) There are some subtleties of the debate that are worth noting. Both sides agree that an extension should happen, but within both parties there is surprising opposition. The lovers of Social Security see the handwriting on the wall. They fear that a second year of a payroll tax break may be the last step leading to significant changes in America’s biggest social program.
However, that the payroll reduction hurts SS is a common misperception. That's not correct. Every month, the Treasury transfers cash to SS in order to make up for the shortfall. I follow this stuff; if these transfers had not been made, I (and a bunch of others) would have blown the whistle months ago.
As a result of these transfers, SS ends up unharmed by the tax break. Other taxpayers foot the bill. But since we have a deficit to begin with, this just adds to the countries red ink. Uncle Sam is digging into one pocket and transferring wealth to SS. This is the socialization of Social Security. What does it mean if SS becomes a ward of the state? Charles Blahous, an ex Bush advisor had this to say:
“The payroll-tax cut would take a major step toward transforming Social Security from what it has long been — an earned benefit, funded by separate worker payroll taxes — into an income-tax based system more akin to welfare.”
For years the SS defenders have pointed out that SS is self-funding and does not contribute to the deficit. That was not true in 2011 (to the tune of $115b). The on-budget expense/increase to public debt will be $120b in 2012. That’s real money.
It's an unfortunate fact that the US economy will flounder if workers pay only 2/3rd of the statutory rate in 2012. That’s how fragile the economy is. It’s not likely that things will be much different a year from now. Another “one time only" extension of the FICA tax breaks will be on the table twelve months from today. From the Times:
Robert Reischauer, Ex CBO and SSA.
“Imagine that next December the unemployment rate is 8 percent and a year later it’s 7.4 percent. We’ll still be trying to stimulate employment and terminating the payroll tax holiday will be a big hit on most families, one that will hurt job growth.”
Reischauer is right, we will not revert to the statutory rates, much less the 1% increase that is require to stabilize SSA. I think he's also correct with his projection of a huge fight:
“The nightmare that I have is that when it comes time to raise the tax back up to 6.2 percent, conservatives are going to propose that these two percentage points of payroll tax be devoted to individual accounts. That will precipitate a huge fight and could change Social Security in a fundamental way.”
There is a huge brawl in front of the country on this issue. Folks on both sides are deeply entrenched. The following is an exchange I saw on Angry Bear blog. It's an example of the rhetoric we will get, The fellow who wrote this, Dale Coberly, is a fairly well-know contributor to the SS debate. Dale loves SS and hates anyone who thinks that changes are required. If you have any doubts how visceral a fight we're in for, consider this bit of fluff:
rjsjust a heads up...Bruce Krasting says Social Security 2011 - Another Bad Year...he concludes: The current thinking is that SS is a problem that can be worried about in another ten years or so. That's simply not true.12/08/2011, 13:00:51– Reply
coberly
rjsthere are bigger liars than Krasting writing about SS. I can't keep up with them all, and with Obama killing SS outright with the permanent payroll tax holiday, and the Democrats and Progressives rallying behind him, there is nothing more I can do.
Maybe Krasting will be out of a job soon.
The stalwarts of SS recognize that the program is now vulnerable. They want bad things to happen to those who believe changes are essential. We're going to have a fight. A big one. Think, “Age Warfare”.
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Quoting Krugman at ZH, a brass pair on you dude. The situation you and Dr. K are talking about does exist but only by the usurpation of market forces. Market forces are fine with me, so is intelligent deregulation, what we have above is the obvious greed of the elite and their brainwashed bootliking lackys that want all regulation repealed so they can make money poisoning everything they get close to. Ain't going to happen so the presentation of the arguments in favor of it are total bullshit and a distraction of the real challenges to productive investment.
SWRichmond is right. Your right.
BOTH OF YOU ASSHOLES ARE NAME CALLING! (See what I did there.. har har har)
THATS IT: FIGHT!
I will >> greed,fraud,cronyism,Judeo-Gucci Christians,Dick Cheney,water boarding,WMD's,off balance sheet thievery,DoD,indefinite detention,HFT algo's,false flags,7 trillion dollars, Pontiac aztec's
All under the current Bill of Rights and very well regulated. It's not the regs that matter it's the corporately captured govt that won't enforce them which is the problem, more regs only kills trees that's it. There's always a small print proviso get out of jail clause somewhere for the corprocrats to use and if not they just get congress to snap one off in your face.......indefinitely
The system of regulation in America has degenerated to one to protect the power elites from competition with the non-elites. The elites get it all. This includes social security savings. Part D Medicare should be a wake up call, but no one seems to understand how this is a giant embezzlement of the trust fund.
The elites act as if they no longer need a healthy working class, or at least one as large as it was. JPM and their ilk somehow believe that all that capital is theirs and they were the ones that worked for it. I say "bullshit".
Bully for you SWR. Truer words have never been written on ZH.
+1 to the tenth.
Isn't +1 to the tenth still just +1?
-1 to the 11th for your math so early in the morning.
1 again....
No, -1.
+1000
Well said, SWR. Concisely and precisely right. This will be one of the very few times I bookmark a ZH comment.
Yeah, I love it when he talks like that. But seriously, is SS turning into just another way to polarize Americans? We've already got black vs white, male vs female, rich vs poor, native-born vs immigrant, coastal American vs flyover American, red vs blue, Dem vs Repub, etc, etc. Do we really need old vs. young, too?
Social Security has never been anything but a welfare program for old women, at the expense of young men. That, and a vote buying machine for CONgress.
old wmen made those young men
there are no jobs for old women, Mr. kaiserhoff ! no one wants to hire any woman over the age of 60, let alone 70 or 75 ! those "old women" are the women who raised you, probably stayed home & laundered your clothes for school & made sure you had breakfast in your stomach so you'd do well in school.
p.s. if anyone does know of a really good job with wages that are enough to purchase food & gasoline let me know, i'm looking for one of those jobs.
What about raising children, staying home, laundering clothes for school, and making breakfast? Aren't those jobs?
Thanks to constant indoctrination by Madison Ave. et al, this is no longer believed to be worthwhile in society. I suggest this attitude has much to do with the disintegration of western civilization as we once knew it (for those old enough to know the difference).
The parents have always taken care of the young, even though the young aren't providing income then to the family. When the young get older, they have historically been the ones that took care of their parents that are no longer able to compete in the labor marketplace. Some societies just do this as a natural family obligation. American and much of the so-called first world countries has instead done this necessary task on a societal level. It's a choice that we've made. Live with it.
There are no jobs left for young men either. I seem to have struck a nerve.
I was merely pointing out two things that should be obvious.
1 Social Security was always a ponzi, nothing more or less.
2 Women live, on average, about eight years longer than men, and typically collect pensions based on their husband's incomes.
Men pay about 85% of the social security taxes. Guess who cashes the checks.
And women cook the food, raise the kids, clean the house, and have to fuck their husbands.
Maybe the problem is that we subsidize old women so we get more of them and for longer periods of time?
Let us not forget that it transfers earned money from minorities that tend to die young to that part of the population that tends to live longer. I have often wished that we had a personal retirement account that would combine pensions, IRA contributions, SS, etc. and allow for individual ownership. That would, if nothing else, allow workers who are more demographically likely to die young to actually have something to leave as an estate. But we live in an age where the government acts as if it owns us and our assets, so I see little hope for a plan such as mine.
I have often wished that the dollars I MIGHT collect in 20 odd years might be worth more than the paper they're printed on. If 'legal tender' dollars were not losing value as fast as they do, the gov't would have far fewer reasons to be intruding in the retirement business.
>>>I have often wished that we had a personal retirement account that would combine pensions, IRA contributions, SS, etc. and allow for individual ownership.<<<
So the FIRE sector could get bigger and more bloated and...predatory?
Children of minority workers or any worker who dies young recieve survivors SS benefits.
http://www.ssa.gov/survivorplan/onyourown4.htm
..."But we live in an age where the government acts as if it owns us and our assets......
Where the hell have you been? As if? As if? Bwaaahahahaha!!!!!
(-1 ^ (-1/2n)) + n; as n goes to infinity, for you.
Let us not forget that it transfers earned money from minorities that tend to die young to that part of the population that tends to live longer.
Isn't it the case that if a young man dies, minority or not, with 3 or 4 children, the children all get SS until they are 18?
Not only true in death, but also if disabled.
Ah yes --the ubiquitus back problem.
Pretty much everything society has ever achieved was on the backs of young men, and this is the thanks we get
Bottom line folks should not steal, and folks should not make promises they cannot keep.
Translated: "DO NOT WRITE CHECKS YOUR ASS CAN'T COVER"
I am sick unto death of this infighting Bullshit.
Man the fuck up,shut the fuck up, and do your part like WE did, and some still are.
What a wad of pussies.
It IS what it IS........................
The backs of young men you are having speech about are enduring only because they are having many womens who are stronger in ways even having more importants who are doing the hardest of all living to be helping the men who are having strong backs be able to survive. Without having the strengths of womens all mens by themselves would be having no chances to live or wanting to live because wanted to live is needed to be doing the hardships that living is needing.
It takes two.
In the West, men have been turned into mules of the system; paying to not see their children and pay for their ex-wives to pursue serial non-monogamy.
Lets cut to the chase----how much exactly to you "feel" men owe you? I mean in dollars and cents--cause thats what it's all about isn't it.
1 million dollars and quart of man juice is all they want.
"What would men be without women? Scarce, sir, mighty scarce." -- Mark Twain
Get back in the kitchen.
And pretty much every society-destroying war is fought on those same backs. Those backs grow to be the backs of old men, with old wives who become older widows, too, not to mention the mothers of a fresh batch of young men.
So, what's your point?
His point is that he's unable to get his head around the concept that "old" and "young" are not separate races, but points on a continuum.
Said otherwise, he thinks he's always going to be young. Well, "thinks" is not quite the right word. He hasn't thought much about it.
The boomers paid their fair share and then some. If there is a guilty party here it is politicians (republicans) and the laziness of the younger generations in NOT BEING VIGILANT!
http://www.fedsmith.com/article/3112/looting-social-security-pretaxing-baby-boomers.html
All the young people know is they are paying for the retirement of people who had a far higher living standard than they will ever have the chance to achieve and they will not recieve that same retirement for themselves.
boomers think their name relates to the sudden birth rate but will soon learn it refers the the sound of their society coming down.
Malus is right, like everything else, this government theft knows no political boundary.
No, Boomers are getting out far more than the fair value of what they've contributed into the system.
I read this divisive, anti-boomer crap on ZH all the time. Another supporter of the divide-and-conquer crowd?
If you think this is about Republocats or Demotocrons, you are fooled by the smoke and mirrors.
The republicans accepted and supported both SS and Medicare when they were limited to the poor. Brining all of society on board generated unnecessary dependency, now we're all screwed.
http://www.youtube.com/watch?v=_d8C4AIFgUg
Lockbox = Bullshit
Would you settle for being able to opt out while paying a substantially smaller (but non-zero) payroll tax?
Yeah, if they refund me the $275,000 + I've paid into it so far. Otherwise, no, I'll take whatever is left in the near future.
In order to have paid in $275,000 into social security you would have had to pay in the annual maximum for more than 60 years. That means a salary of over the cap for every year of the last 60+ years. If that is the case then I doubt you will get a wicked huge pile of sympathy from anybody but the most greedy malcontents on the planet.
Even now for 2011 the total maximum contribution is $11,107. Someone in poverty at $20,000 gross income will pay in $1,240 this coming year, while a Walton, a Buffet, a Bloomberg, a BushCo will pay at most just a few bucks over $11,000. Yeah that's fucking fair.
Keep it up -all of you on the right- keep it up, because it is your failed philosophy that will result in the justification needed to give us REAL socialism.
Census shows 1 in 2 people are poor or low-income
http://www.businessweek.com/ap/financialnews/D9RL00K00.htm
There is NO way to spin that number, and I absolutely promise you it will change.