Social Security yet again!

[Ogie Oglethorpe]

Originally posted by PLATO


Wouldn't current contributions be subject to the same math?

Yes thats rather the point. DanS's point was that 3.7 trillion now dollars means significantly higher than 50 billion per anum increases to fund the expected 5.2 trillion now dollar expenditures less the 1.5 trillion now dollars in the fund. I can't be arsed to come up with the real number but it is significantly higher than 50 bil additional GePap claimed to fund the existing ponzi scheme.

Edit - clarification the $50 bil is a correct figure if inflation adjusted during the course of the 75 years or more correctly what DanS says below.

[DanS]

So does the price of gum., you point??

This is different. The increase in the price of gum will match inflation. The increase in the unfunded portion of Social Security is at a much higher "discount rate" -- about 4-6% higher per annum, rather than the 2% higher per annum of the pack of gum.

Wouldn't current contributions be subject to the same math?

Yes. And let's consider the math you did. Right now, the increase needed for long-term solvency would be about $50 billion per annum. But consider that at least roughly half of the income you quoted is not subject to payroll taxes at all, since payroll taxes top out at $90,000 in income. $50 billion on $2.5 trillion is in the 2% range, not the 1% range that you quoted. Since social security payroll taxes are 12.4% of the first $90,000 in income, a 2 percentage point increase represents a 15% increase in the payroll taxes.

Then consider that this assumes that we fix the problem right now and start pre-paying 2 percentage points additional in payroll taxes in order to just stay above water (i.e., nobody's going to be getting any additional benefit). If we put off fixing social security, and end up with the same system that we have now, we will have to pay very roughly 4 percentage points in additional taxes starting in 35 years -- a 30% increase in the payroll taxes. (Even if you pre-payed the 2 percentage point increase, in 70 years people still would be paying 4 percentage points extra).

Then let's discuss the extra $1.5 trillion that is shown as "funded." Let's face it, this money has been spent by the congress (or more accurately, it already offsets money that has been spent by the congress). It's not coming back. So in addition to the 4 percentage point increase, you have a 1.5 percentage point increase to make this program sustainable.

Adding it all up, we're talking about a 45% increase in payroll taxes, to a total of 18%.

Increasing payroll taxes is a bad idea. It's a regressive tax. Progressives should be apalled at the prospect of an increase in this tax. Further, research shows that a smaller portion of our population will choose to work as taxes increase. This will just exaccerbate the problem of fewer people supporting more retirees.

[Ogie Oglethorpe]

Originally posted by GePap

We don't give people a "choice" of fire departments, or police departments, or militaries. You authoritarian scum

Gee wow, there is a matter of geogrphy that makes sure we have police where you want them and fire departments where you want them.

Pension seems a bit independent of geography and hence shouldn't be held to the smae closed minded kind of thinking. Open your mind to the possibilities its a new century.

[JohnT]

but her conclusions match those expressed more discreetly in a recent report by Britain's Pensions Commission, which warns that at least 75 percent of those with private investment accounts will not have enough savings to provide "adequate pensions."

Of course, 100% of those Americans who rely on SS alone do not have an adequate "pension". Point?

[DanS]

Of course, 100% of those Americans who rely on SS alone do not have an adequate "pension".

Unfortunately, this is very true. They aren't eating cat food, but they're just a step above.

[Sava]

Originally posted by DanS


Unfortunately, this is very true. They aren't eating cat food, but they're just a step above.

and the privatization camp wants to cut their benefits (as the Bush plan calls for)

SS isn't in any danger. But the Bush plan will put it in danger.

[Ming]

Originally posted by GePap
I don;t give a **** about having "control", the question is having enough to live on when old.

If you are planning to actually try to live on what the current system is planning on paying you when you retire... you're in serious trouble

[Sava]

Originally posted by Ming


If you are planning to actually try to live on what the current system is planning on paying you when you retire... you're in serious trouble

and the privatization plans I've seen would mean even less than the current system...

[DanS]

Overall, with the partial privatization, you would be getting more money, even though you would be paid less by the Social Security portion.

[Sava]

Originally posted by DanS
Overall, with the partial privatization, you would be getting more money, even though you would be paid less by the Social Security portion.

that is only for people who have paid into these private accounts... what about the seniors on SS right now? They get their benefits cut.

Private accounts sound nice to someone like me, who is young and can pay into said accounts. But for people at or near retirement, those accounts don't do anything for them.

[GePap]

Originally posted by Ogie Oglethorpe


Yes thats rather the point. DanS's point was that 3.7 trillion now dollars means significantly higher than 50 billion per anum increases to fund the expected 5.2 trillion now dollar expenditures less the 1.5 trillion now dollars in the fund. I can't be arsed to come up with the real number but it is significantly higher than 50 bil additional GePap claimed to fund the existing ponzi scheme.

Edit - clarification the $50 bil is a correct figure if inflation adjusted during the course of the 75 years or more correctly what DanS says below.

Beyond you lame use of a discredited and invalid comparison (Thought I guess you have lied to yourself so much you actually believe it), who ever said funds to keep social security going as it is would have to come out of a payroll increase? We can just as well take them out of the general fund.

If the "actual number" is 50 billion is irrelevant- the question is what percentage of the federal bills it will eat up in the future. In the end, Social Security is no budget buster.

Medicare, sure, that will be a massive budget nightmare in just ten years, not social security.

[DanS]

that is only for people who have paid into these private accounts... what about the seniors on SS right now? They get their benefits cut.

The proposal going around would still give current and soon-to-be retirees their full amount, but would cut the benefits for those for whom choosing private accounts makes sense. I think it's fair for those having the choice to go into private accounts to pay some of the gain back.

[GePap]

Originally posted by DanS
Overall, with the partial privatization, you would be getting more money, even though you would be paid less by the Social Security portion.

You will get more money assuming the market does OK. If the market is in decline for a significant portion of the time your money is there, you will get less money than someone before or after living throught better market years.

[DanS]

You will get more money assuming the market does OK. If the market is in decline for a significant portion of the time your money is there, you will get less money than someone before or after living throught better market years.

In the past, the stock market has indeed gone sideways for substantial periods of time. But never for a 45 or 50-year stretch. And that doesn't even account for the fact that a substantial portion of the money would be in government bonds, not the stock market.

[Sava]

Originally posted by DanS


The proposal going around would still give current and soon-to-be retirees their full amount, but would cut the benefits for those for whom choosing private accounts makes sense. I think it's fair for those having the choice to go into private accounts to pay some of the gain back.

that's contrary to the plans I've seen... but if what you say is true, that does sound better. However, I'm still skeptical.

Like I said... the people who want this so bad are those who stand to gain substantially from it. (Wall Street) That causes me to be suspicious.