patrick.net

SFace says

I actually love the idea of a private account, a 401K type government account that has direct relationship with what you put in.

401(k)Social Security (sorry, typo fix) has a direct relationship to what you put in. If you don't think so, then you haven't read the formula and are misinformed.

Agree with you that removing the cap on SS taxable income is probably the wrong way to go -- that changes it from insurance to an entitlement.

corntrollio says

Agree with you that removing the cap on SS taxable income is probably the wrong way to go -- that changes it from insurance to an entitlement.

Me too, though if rich people are living longer than wage slaves, raising the cap without raising monthly benefits accounts for this.

It's getting harder for the average tech worker bee to stay above the cap, LOL.

When I joined the dotcom economy in 2000 the cap was $76,200, for 2012 it's $110,100.

4% pa cap inflation, ouch. Gotta run to stand still.

One thing the pro private account people forget is that when you divert money away from the Social Security trust fund and instead into private accounts, the system collapses. There is no money being brought in to fund current retireees or those who are soon going to retire. As a result, the checks have to stop going out and Social Security is immediately bankrupt. And yes, it would be immediate. Not twenty years from now. Not ten years. But immediate.

Your post presumes we want to phase it out.

It is an insurance plan, and all insurance plans have a balance that make them workable. Remove the cap and take more from higher earners. Limit the COLA increase to tighten up payouts over time.

All you have to do is a little bit here and there to make it through the Boomer Bulge and then it will be fine again.

Didn't Ron Paul propose this same idea?

HousingWatcher says

One thing the pro private account people forget is that when you divert money away from the Social Security trust fund and instead into private accounts, the system collapses. There is no money being brought in to fund current retireees or those who are soon going to retire. As a result, the checks have to stop going out and Social Security is immediately bankrupt. And yes, it would be immediate. Not twenty years from now. Not ten years. But immediate.

Fist off, I think their proposal is usually more that people under a certain age don't won't receive SS or as much, and they pay in to a
private account. (but it would destroy SS a ways out anyway).

Secondly, I don't think those behind the idea are forgetting anything (if you know what I mean).

I would do it differently. Every year raise the age by 6 months until the minimum age to get anything is 72 and for full benefits 75. None of this grandfathering in stuff and taking forever to get the age increase implemented.

Bellingham Bill says

SS is just income redirection from workers to retirees.

It's welfare for old people.

Question:

How come nobody applies the SS/MC payroll taxes to the savings rate?

Isn't having 6%+ of your income (the employee side at least) deducted from your paycheck each period, that you will supposedly get back, savings?

I laugh every time someone mentions the Social Security Surplus. There is no surplus. The government used all of the surplus to spend on there over extended budget in previous years and gave Social Security Government Bonds. When income from Social Security doesn't cover expenditures, your going to see how worthless those government bonds really are. They can't even balance the budget today, despite 100's of billions of dollars in cuts (usually over a 10 year period) how exactly are they going to come up with hundreds of billions of dollars of additional dollars, when Social Security needs to cash in those Government Bonds?

I predict either a default or hyperinflation. They may stave off default for a few years, but in the end, it's pretty much a guaranteed outcome. Sooner or later people will realize the government will never be able to pay back it's government bonds and it's a default or a mad printing press to cover the bills.

APOCALYPSEFUCK is Tony Manero says

Just give a tax break to neocon psychopaths who stuff Sears overunders into their parents' mouths and pull the trigger. That will fix SS. How long before this appears as a GOP plank?

+1

TechGromit says

in cuts (usually over a 10 year period) how exactly are they going to come up with hundreds of billions of dollars of additional dollars, when Social Security needs to cash in those Government Bonds?

Indeed, changing the indexing of benefits to inflation is a subtle way to renege on the Greenspan Commission deal from the 1980s.

If the SSTF isn't at its statutory minumum by the time I start collecting I'm going to be PLENTY pissed.

But not 1 person in 50 can follow the pea with this.

The right wants to not pay back the $2.6T they owe the SSTF, the center understands how difficult it's going to be to raise taxes to do so, and the left is too clueless to understand what's going down, and too powerless to stop it anyway.

zzyzzx says

It's welfare for old people.

What a vile lie.

Bellingham Bill says

As long as the working wage base is large enough to cover retirees collecting their pensions, there is no "ponzi" aspect.

What a vile lie.

zzyzzx says

Bellingham Bill says

As long as the working wage base is large enough to cover retirees collecting their pensions, there is no "ponzi" aspect.

What a vile lie.

If the homeowner isn't insulted by your offer...you didn't bid low enough!!!

Do you understand what a Ponzi scheme is? For Social Security to qualify as a Ponzi scheme it would have to guarantee contributors a complete payout of their principle plus interest. That is not the way SS is setup. Do you understand how SS actually works? Or are you just telling a vile lie?

That is like calling your car insurance a Ponzi scheme. Now, what kind of idiot would think SS is a Ponzi scheme?

Hmmm... Oh, yeah this kind:

Coincidentally, this is also the same kind of idiot that thinks an optional 20% tax rate that still gets deductions and exemptions is a "flat tax" and also a good idea.

leoj707 says

For Social Security to qualify as a Ponzi scheme it would have to guarantee contributors a complete payout of their principle plus interest.

No, if the economy is growing interest can be paid too.

Part of the problem is the non-FICA-paying part of the economy has captured an increasing amount of the productivity gains since 1980.

There are ways SS can become a ponzi, since like Krugman said back in the 1990s it has a ponzi aspect -- payers become payees after some number of years.

But that alone doesn't make it a ponzi. Should total wages collapse later this decade, or people start collecting benefits for decades longer than they used to, then the system will collapse.

We are far from that and I'm really tired of arguing with liars like zzyzzx about it.

Bellingham Bill says

We are far from that and I'm really tired of arguing with liars like zzyzzx about it.

Agree -- there are many people who don't understand a whit about how Social Security actually works and have no interest in learning. Unfortunately, most of these people are the ones who spew nonsense about it.

Nice venn diagram HousingWatcher, it is a little hard to read though.

nice

The whole point of the liars is to just throw bullshit out so we talk about bullshit instead of what the actual problems are.

This is because their team is the one creating these problems, and they don't want them fixed.