I haven't verified this, but quite interesting if true: "The Greenspan Commission supposedly fixed Social Security’s finances for 75 years, that is, until 2060. Why, then, do most projections show the trust fund running out well before then? Not because life expectancy is rising — that was already built into the projections. No, the big reason is rising inequality, which has led to a growing share of income coming above the payroll tax cap, so that SS revenue lags behind overall compensation. And yet the conventional wisdom is that we should respond to a financing issue caused by rising inequality by slashing benefits, further increasing inequality."
Policy Implications of Capital-Biased Technology: Opening Remarks krugman.blogs.nytimes.com
Social insurance, still affordable, and more necessary than ever.
B.C.: I've said for years we need to remove the payroll cap.
Me: It's broke now. The trust fund is empty.
B.C.: That's because Bush and Cheney stole it to pay for 2 illegal wars that we still aren't done with. I truly believe the government owes and should pay that money back! And no, it's not all that broke, either.
Me: Since the 70's? That's when congress started emptying it.
Me: You are right about government owing it. The government has been issuing the trust fund non-negotiable bonds (debt instruments) and spending the cash in the general fund. the trust fund is full of IOUs that have to be paid back.
B.C.: One way would be to cut the "entitlement benefits" to corporate farming and big oil, and use that money to repay SS.
B.C.: Remember the Presidential Race between Gore and Bush in 99-00? The big issue was keys to the "vault", which in actuality was a locking file cabinet. It was far from broke then, and frankly, I don't believe it's all that broke now. And remember, the Government was balanced in the black after Clinton's tenure!
B.C.: Remember the Presidential Race between Gore and Bush in 99-00? The big issue was keys to the "vault", which in actuality was a locking file cabinet. It was far from broke then, and frankly, I don't believe it's all that broke now. And remember, the Government was balanced in the black after Clinton's tenure!
Me: Gore wanted it in a lock-box. It wasn't in one then, and hasn't been for decades. The Clinton budget was not balanced. The national debt increased every year: http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo4.htm
M.W.: The cap applies to both payments and benefit calculations. If you remove the payroll cap on taxes, you either have to remove the payout cap (which means it won't make you any extra money) or else admit that Social Security isn't really an investment scheme at all.
B.C.: Also, Obamacare SAVED 700bn in SS by cutting the fat and going after fraud.
B.C.: SS isn't an investment at all. It was never intended to be. If you work from 16 - 65+ one is likely to pay more in than received.
B.C.: It may not have been balanced, but Clinton left the country in far better shape after 8 years than Bush did.
Me: The government takes the money from the trust fund and issues non-negotiable bonds. Bonds are "debt instruments." There is no money in the trust fund, only bonds which have to be paid back.
B.C.: I look at SS as an insurance policy, which it truly is. We are required to purchase auto insurance. And if we never ever have an accident or claim, we will never recoup that money.
B.C.: aren't those bonds interest bearing?
Me: SS is not insurance. It is a tax with a promised future benefit. Fleming vs. Nestor decided that there is no right to SS benefits. Current retirees are funded by current workers. it's a redistribution program.
B.C.: It's far closer to insurance than a ponzi scheme.
Me: Those bonds can only be purchased by the SS trust fund. No other entity can buy them. They are not marketable. The interest paid is from the general fund (funded by debt), and as soon as it is received by the trust fund, the money is taken out and more bonds are purchased. It's an accounting gimmick
B.C.: And because I paid the taxes i.e. premiums, it means that I do have a right to collect SS at retirement of either 62 or 65. Unfortunately/fortunately I am disabled, it has been proven in court, and I am on SSDI, Social Security Disability Insurance.
B.C.: Also, Obamacare SAVED 700bn in SS by cutting the fat and going after fraud.
B.C.: SS isn't an investment at all. It was never intended to be. If you work from 16 - 65+ one is likely to pay more in than received.
B.C.: It may not have been balanced, but Clinton left the country in far better shape after 8 years than Bush did.
Me: The government takes the money from the trust fund and issues non-negotiable bonds. Bonds are "debt instruments." There is no money in the trust fund, only bonds which have to be paid back.
B.C.: I look at SS as an insurance policy, which it truly is. We are required to purchase auto insurance. And if we never ever have an accident or claim, we will never recoup that money.
B.C.: aren't those bonds interest bearing?
Me: SS is not insurance. It is a tax with a promised future benefit. Fleming vs. Nestor decided that there is no right to SS benefits. Current retirees are funded by current workers. it's a redistribution program.
B.C.: It's far closer to insurance than a ponzi scheme.
Me: Those bonds can only be purchased by the SS trust fund. No other entity can buy them. They are not marketable. The interest paid is from the general fund (funded by debt), and as soon as it is received by the trust fund, the money is taken out and more bonds are purchased. It's an accounting gimmick
B.C.: And because I paid the taxes i.e. premiums, it means that I do have a right to collect SS at retirement of either 62 or 65. Unfortunately/fortunately I am disabled, it has been proven in court, and I am on SSDI, Social Security Disability Insurance.
Me: It's not insurance at all. Insurance is based on actuarial assumptions, mortality and morbidity tables, and reserve and surplus calculations.
B.C.: Hell our entire monetary financial system is only an accounting gimmick!
Me: Bingo!!! Big banksters milk the system, the Fed invents money, and congress has 50 ways to make it seem like your tax dollar is helping someone when in actual fact it only helps them get reelected to spend even more money that doesn't exist.
B.C.: I'm not in total disagreement with you Rich in the difference between SS and insurance and how it's calculated. I worked in the industry, both health and personal lines for a number of years. However, the effect of SS is the same.
Me: You do not have a right to collect benefits. Please read about fleming vs nestor: http://en.wikipedia.org/wiki/Flemming_v._Nestor and http://www.ssa.gov/history/nestor.html
B.C.: I'll read it, thank you.
Me: D.G., sorry to hijack your post...
B.C.: I worked for a Farmers agent managing his personal lines for 5 years. I worked for 4 in health claims and auto claims. My uncle was a Farmers actuary and we had some good conversations about it.
M.W.: D.G., this claim seems dubious mathematically. If Krugman were right about the Greenspan Commission having accounted correctly for everything except the fraction of income which exceeds the Social Security Wage Base, then yes, Greenspan would have overestimated Social Security income--but he would also have overestimated Social Security expenditures. The only way to make Krugman's claim work would be (approximately) if Greenspan were right on expenditures and wrong on income, i.e. young workers are disproportionately likely to hit the wage cap, compared to retirees, thus failing to fund "their" share of retirees. This seems unlikely. Let's see if Krugman can back up his numbers...
Me: He might have to give his Nobel back...
Me: Bingo!!! Big banksters milk the system, the Fed invents money, and congress has 50 ways to make it seem like your tax dollar is helping someone when in actual fact it only helps them get reelected to spend even more money that doesn't exist.
B.C.: I'm not in total disagreement with you Rich in the difference between SS and insurance and how it's calculated. I worked in the industry, both health and personal lines for a number of years. However, the effect of SS is the same.
Me: You do not have a right to collect benefits. Please read about fleming vs nestor: http://en.wikipedia.org/wiki/Flemming_v._Nestor and http://www.ssa.gov/history/nestor.html
B.C.: I'll read it, thank you.
Me: D.G., sorry to hijack your post...
B.C.: I worked for a Farmers agent managing his personal lines for 5 years. I worked for 4 in health claims and auto claims. My uncle was a Farmers actuary and we had some good conversations about it.
M.W.: D.G., this claim seems dubious mathematically. If Krugman were right about the Greenspan Commission having accounted correctly for everything except the fraction of income which exceeds the Social Security Wage Base, then yes, Greenspan would have overestimated Social Security income--but he would also have overestimated Social Security expenditures. The only way to make Krugman's claim work would be (approximately) if Greenspan were right on expenditures and wrong on income, i.e. young workers are disproportionately likely to hit the wage cap, compared to retirees, thus failing to fund "their" share of retirees. This seems unlikely. Let's see if Krugman can back up his numbers...
Me: He might have to give his Nobel back...
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