Now that we Amis have a nice tax cut, how to reduce spending to cover it?

[MichaeltheGreat]

Originally posted by Kidicious


True, but you have to look at it how it is designed, as social insurance. It's not really an investment. It's insurance. Some people don't recieve benefits.

Since you have no choice but to pay it to one entity at rates it chooses, it's a tax. Insurance is something I can buy on the market at competitive rates and configure to meet my personal needs. Hey! I like that! Let's turn SS from a tax to an insurance policy.

[Kidlicious]

Originally posted by MichaeltheGreat
Being able to "borrow" captive money at below market rates in a disguised tax isn't one of them.

You don't borrow from yourself. You use the money you have, or you get money from somewhere else. I say use the money. To do otherwise would not be rational.

[Kidlicious]

Originally posted by MichaeltheGreat
Since you have no choice but to pay it to one entity at rates it chooses, it's a tax.

Ah, you just like the word premium better than the word tax. They both cost.

Originally posted by MichaeltheGreat
Insurance is something I can buy on the market at competitive rates and configure to meet my personal needs. Hey! I like that! Let's turn SS from a tax to an insurance policy.

The bottom line is that we can choose not to have a social security system. So far we haven't. I think the reason is than we can't do better than the system we have. We pay taxes for it and we get benefits. We can't get more bang for our buck with an alternative system, so we don't.

[MichaeltheGreat]

Originally posted by Kidicious


You don't borrow from yourself. You use the money you have, or you get money from somewhere else. I say use the money. To do otherwise would not be rational.

If you're pretending to be a trust administrator and you transfer "trust" money to your general operations funds you're borrowing from yourself. Unless that "trust" money is someone else's. In that case, the "owners" should have the right not to give it to you, and the right to get it back when they want it.

Funny, SSA tells me I can't do that, so I guess the money isn't mine, it's the government's now.

But you did finally hit on the fun-and-gamesmanship behind the SS scam.

[Kidlicious]

Originally posted by MichaeltheGreat
Funny, SSA tells me I can't do that, so I guess the money isn't mine, it's the government's now.

The thing that your missing is that the govt doesn't own things the way people own things. The govt is an institution which we created to benefit ourselves. Unless there is some king or there's some corruption there is no scam.

[MichaeltheGreat]

Originally posted by Kidicious
Ah, you just like the word premium better than the word tax. They both cost.

One you have a choice over, the other you don't (unless you want to do time in a Federal prison).

The bottom line is that we can choose not to have a social security system.

I'm ready to opt out tomorrow. I'll even sign waivers out the wazoo that I'll never whine to the government for benefits, or inconvenience them by panhandling or standing in soup lines.

I think the reason is than we can't do better than the system we have. We pay taxes for it and we get benefits. We can't get more bang for our buck with an alternative system, so we don't.

We've never tried. I suppose we should reject all innovations, especially when the current system can be objectively proven to be worse than alternatives as simple as market rate treasury securities.

[Kidlicious]

Originally posted by MichaeltheGreat
One you have a choice over, the other you don't (unless you want to do time in a Federal prison).

That's why it's SOCIAL insurance. It only works if everyone pays.

Originally posted by MichaeltheGreat
We've never tried. I suppose we should reject all innovations, especially when the current system can be objectively proven to be worse than alternatives as simple as market rate treasury securities.

From what I've seen alternatives have been tried in other countries, and as anticipated, they were/are more expensive and not as beneficial.

[PLATO]

Originally posted by MichaeltheGreat
Those with less than ten years but more than five paid into the system get a one time tax free (if it goes into a qualifying plan) lump of 100% of what they've paid in, but the employer's matching side stays to partly handle the buyout of the old folks. Those with less than five years into the system, too bad, you wouldn't have seen a dime anyway.

How is this a "tax free" distribution? Haven't I already paid the taxes on it once? Also, what about the time value of my money? Shouldn't I get at least what a T-bill was earning?

PLATO - a little inflation is nice. Right now, it's been so low for so long that people completely discount the notion of it in spending decisions.

I totally agree. It is good for inflation to be high after a surge of borrowing. The devaluation of the debt over time makes the burden on the future taxpayer much less. The problem is that the government figured this out in the early 1980's and I am afraid that they will count on it and will therefore increase deficet spending. This along with the politically unsolvable SS mess will lead to large burdens for future generations that can only be marginalized by near hyper inflation.

[Odin]

Originally posted by Kidicious
The thing that your missing is that the govt doesn't own things the way people own things. The govt is an institution which we created to benefit ourselves. Unless there is some king or there's some corruption there is no scam.

Did you really say that. Democracies are just as corrupt as a monarchy, it is just more hidden, as in Bush's connections with Big Oil, or Congess's pork-barreling.

[MichaeltheGreat]

Originally posted by PLATO1003
How is this a "tax free" distribution? Haven't I already paid the taxes on it once? Also, what about the time value of my money? Shouldn't I get at least what a T-bill was earning?

It's a tax free distro in the sense that even though you paid income taxes on the original income (same as you would overcontributing to an IRA or SEP), you won't have the distro treated as taxable income, like you could be if the statute deciced to treat it that way (lots of things are double taxed), and you wouldn't be penalized, like you would under early withdrawal rules for SEPs, IRAs, etc.

You could also be compensated for time value of money, or any other value, if you wanted, but that would be a phantom benefit, because the old folks already in the system would have to be paid out. Not much point (although the government does it all the time) in putting money in your pocket, to take more out later. I figure just getting a lump of money out would be the simplest way, because this isn't an ongoing process, but a one-time exit from an insolvent system.

I totally agree. It is good for inflation to be high after a surge of borrowing. The devaluation of the debt over time makes the burden on the future taxpayer much less. The problem is that the government figured this out in the early 1980's and I am afraid that they will count on it and will therefore increase deficet spending. This along with the politically unsolvable SS mess will lead to large burdens for future generations that can only be marginalized by near hyper inflation.

That is the problem, so I see the only viable solution as a little pain now, couple with moderate inflation. SS is a winning game for the government now, but the artificially low interest rates "earned" on the SS surplus, coupled with demographic changes, make for hell to pay if the government stays in the game. The longer it stays in, the worse things will get.

[Kidlicious]

Originally posted by Odin


Did you really say that. Democracies are just as corrupt as a monarchy, it is just more hidden, as in Bush's connections with Big Oil, or Congess's pork-barreling.

You don't like the corporate subsidies and MtG doesn't like SS, but the people elect the politicians who make these spending plans. If there is unwanted spending it's the voters' fault.

[PLATO]

a one-time exit from an insolvent system.

Okay, this makes sense. I guess its better than settling for pennies on the dollar.

That is the problem, so I see the only viable solution as a little pain now, couple with moderate inflation. SS is a winning game for the government now, but the artificially low interest rates "earned" on the SS surplus, coupled with demographic changes, make for hell to pay if the government stays in the game. The longer it stays in, the worse things will get.

I agree with this also. The problem I see is that even if we were to get a politician with the guts to try, then political in-fighting and public reaction wouldn't let them be around long enough to barely get started.

Hmm...I wonder. Is it possible to file some type of lawsuit that would let the court take control of the system?

[MichaeltheGreat]

The government would have to waive sovereign immunity (which it wouldn't), the right of taxation would be upheld as a basis for dismissal for failure to state a claim (so the Federal District Court and CCA would dump it), and the Supremes would decline to hear it as a political issue, not a judicial one.

Unfortunately, I don't think it will get changed substantially until it's nearly blown up in everyone's faces.

[MichaeltheGreat]

Originally posted by Kidicious

That's why it's SOCIAL insurance. It only works if everyone pays.

SOCIALism. I'm glad you're seeing the light that it's a scam, though.

From what I've seen alternatives have been tried in other countries, and as anticipated, they were/are more expensive and not as beneficial.

And their markets, fiscal, tax and legal systems, and compliance rates, let alone their tax bases, aren't comparable. Do you really want to use France as a model for US policy, or vice versa?

[PLATO]

Originally posted by MichaeltheGreat
Unfortunately, I don't think it will get changed substantially until it's nearly blown up in everyone's faces.

Agreed