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

[MichaeltheGreat]

Originally posted by Kidicious


You don't like the corporate subsidies and MtG doesn't like SS, but the people elect the politicians who make these spending plans.

Not me, I left the country.

[Kidlicious]

Originally posted by MichaeltheGreat
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?

No, I don't want to follow their poor example, especially when the system we have is working and not going to blow up in our faces. And you don't get to vote on it since you aren't a citizen.

[MichaeltheGreat]

I'm a citizen, I just left.

And our system is going to cause the biggest financial meltdown in history unless it's fixed or scrapped.

[Kidlicious]

Originally posted by MichaeltheGreat
I'm a citizen, I just left.

You still get to vote then don't you.

Originally posted by MichaeltheGreat
And our system is going to cause the biggest financial meltdown in history unless it's fixed or scrapped.

Nah, if we have to we will just raise taxes or cut benefits.

[MichaeltheGreat]

Originally posted by Kidicious

You still get to vote then don't you.

Only for President, and my vote gets lumped in (with all the other non-resident expats and territorial scum) with the whopping three electoral votes of the non-sovereign territory of Puerto Rico.

Nah, if we have to we will just raise taxes or cut benefits.

Hey, sounds like a perfectly functioning system to me.

[Kidlicious]

Originally posted by MichaeltheGreat
Hey, sounds like a perfectly functioning system to me.

Well, we can either take care of our elderly or not. If we want to take care of them it's going to cost us. There's no getting around it.

[Kidlicious]

Originally posted by MichaeltheGreat
The "trust administrator" (SSA) loans your money to an affiliated entity (the Treasury) in a non-arms length transactions, at a below market interest rate (less than the rates paid for that week's issue of 30 year T-bonds, less than the 13 week T-bill rate, and every one in between) and does so while the trust is technically insolvent ("as the $1.4 trillion is a small percent of benefit obligations.")

MtG,

We weren't looking at the correct rate of return here. To figure out the rate of return first we have to know what the investment is. The investment is not the taxes collected on SS. The investment is the amount of taxes collected minus the amount paid out in benefits. That is, when SS trust fund is running a surplus, as it is now, the surplus is invested. When the SS fund will run a deficit there will be no investment at all. There will only be transfer payments from payees to beneficiaries.

So the true rate of return on the money which is now invested in the SS trust fund is comparable to whatever the government would have to pay to borrow the same amount of money, not the amount that is transfered between funds as interest. If the govt were to leave the funds in the SS trust fund there would be no return on investment at all.

Looking at it this way the rate of return isn't so low.

If we privatize the system we will still have to make the transfer payments to the beneficiaries of the old system while the beneficiaries of the new system would have to pay into a system for themselves. What's the difference in doing this and just raising taxes? Now what I want to know is where all this funding is going to come from if not from higher taxes. Or are you going to have the youngest generations pay into the old system and the new system at the same time?

[HershOstropoler]

Originally posted by MichaeltheGreat
Do you really want to use France as a model for US policy, or vice versa?

Now that would be good for some fun.

Btw, how are SS pensions calculated?
I think the contributions are capped at a 70k$ tax base... what is the maximum pension, and what is required to achieve it?

Btw2, for millionaires... quite meaningless due to inflation. Roughly: 400 $ a month saved and invested at 7 % return leave you with a million $ after 40 years.

[JohnT]

"Let's say it's my "perception" that the risk the US government will legislatively dance around what would otherwise be a default on SS obligations."

There are no obligations for the government to pay any SS funds according to Nestor vs. Fleming and another (earlier) USSC decision that I can't remember right now.

[JohnT]

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.

No, it is not. In a USSC decision (possibly the aforementioned Nestor case) the Supreme Court decidedly ruled against the idea of SS as "insurance" because:

1. There is no guarantee that the individual will get any money back.
2. There are no ownership rights to ones' SS funds
3. The benefits cannot be passed down through the generations.
4. The Social Security "contribution" is a tax, with no choice among the citizenry but to pay it. Insurance coverage tends to be, you know, voluntary.

and a few other "minor" details.

[Arrian]

And our system is going to cause the biggest financial meltdown in history unless it's fixed or scrapped

I agree. I'm no expert, but I'd give it 50-100 years before the whole house of cards comes tumbling down.

-Arrian

[Kidlicious]

Originally posted by JohnT
"Let's say it's my "perception" that the risk the US government will legislatively dance around what would otherwise be a default on SS obligations."

There are no obligations for the government to pay any SS funds according to Nestor vs. Fleming and another (earlier) USSC decision that I can't remember right now.

True, the govt has no obligation to pay you your SS. Your contributions go to pay current retirees, and yes it's a tax, not a personal investment or personal insurance. Future generations could decide that when you retire you shouldn't get benefits even though you paid for others to recieve benefits.

[Kidlicious]

Originally posted by Arrian
I agree. I'm no expert, but I'd give it 50-100 years before the whole house of cards comes tumbling down.

-Arrian

By that time it will be running a surplus again. We just have to get through the next 20 years or so.

[Japher]

The government should allow ppl to "opt out" of SS for some other kind of break, i.e. wave capital gains on a specific portion of a traditional IRA, reduction in tax braket if they continue to work, or a reduction in tax on estate planning vehicles... I know that there are a lot of people out there who don't "need" SS, but only take it because they have been paying into their whole lives, and now they are being offered it.

My mom, for one, asked me if she should take the SS, she doesn't need it. I told her that she should, because I am still paying it, and I will never see a penny of it again. Without a kickback SS will always be a big mess. Thanks for the tax deferred invest vehicles, but that didn't really help my parents, or any of the baby boomers...

Deficit spending suks because of this whole mess.

[Kidlicious]

Originally posted by Japher
The government should allow ppl to "opt out" of SS for some other kind of break, i.e. wave capital gains on a specific portion of a traditional IRA, reduction in tax braket if they continue to work, or a reduction in tax on estate planning vehicles... I know that there are a lot of people out there who don't "need" SS, but only take it because they have been paying into their whole lives, and now they are being offered it.

My mom, for one, asked me if she should take the SS, she doesn't need it. I told her that she should, because I am still paying it, and I will never see a penny of it again. Without a kickback SS will always be a big mess. Thanks for the tax deferred invest vehicles, but that didn't really help my parents, or any of the baby boomers...

Deficit spending suks because of this whole mess.

Japher,

Let's say that all the 20 somethings opted out. That would create a shortfall in payments. Where would the money come from to pay the current retirees?