8
   

Social Security?

 
 
Robert Gentel
 
  2  
Reply Wed 17 Sep, 2008 04:05 pm
@Cycloptichorn,
Cycloptichorn wrote:
What do you mean? Are you implying that my position is not a serious one?


No, I'm implying that it's so ignorant that I am surprised that people have the patience to take it seriously.

Social security is fundamentally flawed and is a much bigger ticking time bomb than the economic downturn you are trying to use to discredit the privatization proposals. The problem is not 30 or 50 years away, the problem starts around 2017 when payments would exceed revenue.

The problems with social security are no "sham" and without significant reform it would cause much greater problems than the economic downturn you are using as an argument against privatization (as if the government is doing any better with our money right now).

But like I said, I lack the patience to deal with this kind of ignorance combined with this kind of demagoguery and just want to point out that it's not "guts" that are needed to confront this kind of nonsense, it's time and patience.
Cycloptichorn
 
  2  
Reply Wed 17 Sep, 2008 04:18 pm
@Robert Gentel,
Robert Gentel wrote:

Cycloptichorn wrote:
What do you mean? Are you implying that my position is not a serious one?


No, I'm implying that it's so ignorant that I am surprised that people have the patience to take it seriously.

Social security is fundamentally flawed and is a much bigger ticking time bomb than the economic downturn you are trying to use to discredit the privatization proposals. The problem is not 30 or 50 years away, the problem starts around 2017 when payments would exceed revenue.

The problems with social security are no "sham" and without significant reform it would cause much greater problems than the economic downturn you are using as an argument against privatization (as if the government is doing any better with our money right now).

But like I said, I lack the patience to deal with this kind of ignorance combined with this kind of demagoguery and just want to point out that it's not "guts" that are needed to confront this kind of nonsense, it's time and patience.


You are incorrect on this issue, sir. Most economists agree that SS will be perfectly fine FAR beyond 2017; 2041 is the date commonly associated with the inability for the program to meet it's financial obligations. I would ask you to provide links to back up your position; will you do so?

If not, I'm afraid I cannot continue the conversation with you, for you are simply incorrect. I'm afraid you have bought into the Republican party line, and probably should do some more research on the issue.

I would note that those who fear SS not being able to fully pay it's bills seem to have little to no problem with our government's regular practice of not paying 20% or more of our bills every year at this point. This is a far larger problem then a projected deficit in Social Security.

Cycloptichorn
Cycloptichorn
 
  2  
Reply Wed 17 Sep, 2008 04:26 pm
@Cycloptichorn,
I have figured out your error in thinking.

Currently, SS runs a huge surplus. A big one. 2017 or 2018 is the year when the surplus is expected to go away, and at that point SS truly will be giving out a little more money then they are bringing in, and that will increase, until in 2040-something they will be far behind. So why isn't it a problem now?

The SS fund owns a shitload of government bonds. These bonds have been used in exchange for jacking 100 billion or so from the SS funds every single year, in order to make our deficits look lower then they truly are. Both parties are guilty of this, it's not a partisan thing. When SS starts to run out of money, they will start calling in the bonds. Now, to Conservatives, this is the equivalent of taking money from the General Fund and a 'disaster.' It is nothing of the sort. It is calling in the loans that the people of America made to the Federal government under the pretense that they would be paid back in due time. There's nothing at all wrong with expecting the gov't to pay those loans back.

It's erroneous to say that in 2017 we will somehow have an SS problem; we will not. What will happen is that the true depth of our deficits will be revealed, as there simply will not be any more money to steal from the program, and the bills will come due.

I'm afraid I must contend that your lack of understanding of this issue, and your error in the dates involved, betrays ignorance - but not mine.

Cycloptichorn
Robert Gentel
 
  3  
Reply Wed 17 Sep, 2008 04:42 pm
@Cycloptichorn,
Cycloptichorn wrote:
You are incorrect on this issue, sir. Most economists agree that SS will be perfectly fine FAR beyond 2017; 2041 is the date commonly associated with the inability for the program to meet it's financial obligations. I would ask you to provide links to back up your position; will you do so?


You didn't even understand what I said. I say payment would exceed revenue in 2017 and at that point it is cash flow negative. You are citing the date at which the fund is predicted to be completely depleted when trying to refute the date at which I claim they will start being depleted.

You portray this as a distant problem whose urgency is a "sham" and ignore that people are paying into it now knowing that if nothing changes they'll have nothing to show for it when they are eligible. This is not a problem for future generations it's a problem for the youth of today who are paying into a failing system.

Quote:
If not, I'm afraid I cannot continue the conversation with you, for you are simply incorrect. I'm afraid you have bought into the Republican party line, and probably should do some more research on the issue.


The 2040 estimates refer to the complete exhaustion of the fund, but it's cash flow negative much earlier. Here is a link that describes the reports that generate both the 2040 and the 2017 dates, if you read it carefully you'll understand the difference between the problems that start when it goes into the red and the problems that start when the fund is completely exhausted.

http://money.cnn.com/2006/05/01/retirement/SStrustees_2006report/index.htm?cnn=yes

Quote:
The report also estimates, as it did last year, that come 2017 Social Security will no longer be taking in enough payroll tax to pay all promised benefits and will need to tap the special-issue bonds that make up its trust fund. In order to make good on repaying those bonds, the federal government will have to borrow more money, raise taxes, cut spending elsewhere or reduce benefits.


In any case, I'm fine with the whole not discussing it thing. I really don't have the patience to elucidate every basic concept of the problem for you if you aren't willing to spend the couple of seconds it would have taken you to acquaint yourself with the facts I was telling you about (a simple "2017 social security" query on a search engine would have saved me the time for example).
Cycloptichorn
 
  1  
Reply Wed 17 Sep, 2008 04:46 pm
@Robert Gentel,
You will note in the post directly above your last one, that I anticipated your answer, and pre-responded to it.

Quote:
In order to make good on repaying those bonds, the federal government will have to borrow more money, raise taxes, cut spending elsewhere or reduce benefits.


I will point out once again: this is not a problem with Social Security in the slightest. SS is perfectly fine. There is no reason that the program should not fully expect to receive the money from these bonds. This is a problem with our government and the shitty accounting practices that both parties have used. To blame SS for this is folly.

The program doesn't need fixing; the practice of falsely reporting debt, and issuing bonds we have no intention of repaying, needs fixing. Two completely separate issues.

Cycloptichorn
0 Replies
 
Robert Gentel
 
  2  
Reply Wed 17 Sep, 2008 04:48 pm
@Cycloptichorn,
Cycloptichorn wrote:
I have figured out your error in thinking.


No, you found out the error in yours and are trying to portray it as an error in mine. My statement is straightforward and not erroneous. We have a cash flow problem starting in 2017.

Quote:
It's erroneous to say that in 2017 we will somehow have an SS problem; we will not. What will happen is that the true depth of our deficits will be revealed, as there simply will not be any more money to steal from the program, and the bills will come due.


Now you are just spinning it. I see what you describe as a problem, if you want to put it in a rosy color that's your prerogative but my claim remains factual: the program goes cash flow negative around 2017. You can try to spin that as a positive thing if you want.

Quote:
I'm afraid I must contend that your lack of understanding of this issue, and your error in the dates involved, betrays ignorance - but not mine.


I made no such error in the dates involved Cyclo and you know that. You are merely portraying the events as less problematic while acknowledging exactly what I said: that the cash flow is expected to be negative by 2017. You simply decided to call that a positive thing and pretend you were right all along.

And that kind of dumb game to be right is what I have no patience for, so now I'm out of here for real.

Robert: "There is a problem in 2017"
Cyclo: "You have the date wrong, that happens in 2041"
Robert: "We go cash flow negative in 2017 and completely bankrupt in 2040"
Cyclo: "Oh that, that's not a problem."

Call it what you want if it means that much to be right to you.
parados
 
  1  
Reply Wed 17 Sep, 2008 04:57 pm
@Robert Gentel,
2017 is the year in which the government needs to start to move the publicly held debt to privately held debt. SS presently holds treasuries. They can sell treasuries to the public to pay off the SS held ones.

What really happens is the government can't borrow from SS at that time so the books won't balance like they are doing now with their accounting tricks.

It won't be a sudden crisis in 2017 because it will be diminishing returns on SS borrowing leading up to 2017. The deficit will have ballooned before 2017 because the accounting will mean they can borrow less and less from SS each year until 2017.

The same thing will happen in 2040 when the trust fund runs out. If the government is really paying all its bills in 2041 the cost to pay the unfunded SS won't add much to the federal expense. The only difference will be they won't be paying back the trust fund but will just be supplying extra money.
0 Replies
 
Cycloptichorn
 
  2  
Reply Wed 17 Sep, 2008 04:57 pm
@Robert Gentel,
You still don't get it. It's not a problem with SS, which is how you and others here have presented it. I understand your arguments and have understood the whole time where you are coming from; but it's not accurately targeting the real problem. It's a problem with the Federal government having bills coming due. SS doesn't need to be reformed to solve this problem; the federal budgetary process does.

That's why the whole 'privatization' thing was a sham. It won't fix the problem. It will in fact remove MORE funds from the system, exacerbating the budget problems. It was nothing more then an attempt to kill social security and get rid of the safety net we've enjoyed for years.

Cycloptichorn
Cycloptichorn
 
  1  
Reply Wed 17 Sep, 2008 05:34 pm
@Cycloptichorn,
Finally!



Finally Finally Finally! I've been waiting for Obama to run this ad for months. He is going to hang McCain's SS votes around his neck and choke him to death with them.

FINALLY

Cycloptichorn
0 Replies
 
OCCOM BILL
 
  3  
Reply Wed 17 Sep, 2008 07:18 pm
@Robert Gentel,
Robert Gentel wrote:

Cycloptichorn wrote:
SS is hardly the biggest of our worries at this time, and it was never anything but a sham issue.


I'm amazed that anyone's trying to discuss this seriously with you. They don't need "guts", just a lot of patience (more than I possess at least).
Word.

Cyclo; research what people are saying to you. SS is run like a Ponzi Scheme which is illegal in all 50 States because it's a ******* Scam. Since the money taken from people goes to pay others rather than being invested in any traditional sense; R.O.I. only takes place by increased investment on the front end... which is why withholding has and will continue to need to be increased to cover the back end.

Boomers, through no fault of their own, present an enormous draw on the rest of the population. The proportionately larger percentage of the population Boomers make up would be largely immaterial with any traditional form of investment... but is torturous on the Ponzi Scheme we use today. The system is solvent only in that Americans can still be taxed sufficiently to pay the bill. Ever-increasing withholding percentages required to remain solvent is hardly the hallmark of a good investment, Cyclo.

The Market on the other hand; has indeed outperformed virtually every form of investment. One day's losses, or even a year... or decade for that matter (though there's never been a losing decade yet) isn't terribly important in a retirement plan designed to be maintained for 40+ years. Examine any 40 years of the Market and you will see astounding ROI. I'd wager there's been not one Index Fund that didn't outperform SS over such a period... not one. Not ever.

You can make a reasonable, valid argument that SS in its current setup is a necessary evil for the safety net it provides. You cannot consider it a good investment without looking like a fool. Your case is beyond absurd and is showcasing your ignorance of the subject more than anything else.



Cycloptichorn
 
  2  
Reply Wed 17 Sep, 2008 07:27 pm
@OCCOM BILL,
I'm sorry Bill, but you surely realize that the 'ponzi scheme' comparison is an opinion of yours, not a fact. It is not a ponzi scheme. I submit that you do not understand how a ponzi scheme works, if you make that comparison.

Reposted from earlier in the thread.

Quote:
Some free-market economists, such as Thomas Sowell, and the Cato Institute[30] have argued that national social security systems, such as the Social Security system in the United States and the National Insurance system in the United Kingdom, are actually large-scale Ponzi schemes. In economic terms, these pension systems are often referred to as "pay-as-you-go" or unfunded national pension plans.

Sowell and others point out that, under these national systems, incoming payments, made up of taxes and/or other kinds of non-voluntary "contributions," are neither saved nor invested. Instead, current contributions (from one set of individuals, due benefits at a later time) are used to pay for current benefits (to another set of individuals). The critics of Social Security say that as North American demographics trend toward more pensioners and fewer workers this "pay-as-you-go" system has begun to show its inherent flaws. Therein lies the basis for the Ponzi scheme metaphor: that the system relies on a steady flow of new contributors, just as a Ponzi scheme relies on a steady flow of new "investors."

Nevertheless, retirement programs run by national governments are significantly different from a typical Ponzi scheme in a number of ways:

* Retirement systems, like Social Security, are not blatantly fraudulent. In a genuine Ponzi scheme, the perpetrators falsely claim that there is some business that generates the promised revenues. In Social Security, people know where the money comes from, and actuaries supply written predictions of future cash in-flows and out-flows.
* Retirement systems promise a stipend to the country's retired persons, not the quick and exorbitant profits to current investors that Ponzi schemes invariably offer.
* Retirement systems rely on the taxing power of the state to ensure continuous funding, as opposed to voluntary investor contributions.
* Retirement systems are in many ways insurance rather than investment systems. A person who dies before retirement gets no money back (regardless of what he/she paid in). Someone who lives to a very old age continues to get payments regardless of the amount of money he/she has paid in.


The US government has been taking the surplus from SS for a long time and replacing it with IOUs. Now the IOUs are coming due, and the government is going to have to pay them. I have no clue how you can call this a failure of the program. This was inevitable, and it isn't Social Security which will have to change, it is our budgeting procedures. You aren't blaming the right thing for the financial crisis which is upcoming.

Quote:

You can make a reasonable, valid argument that SS in its current setup is a necessary evil for the safety net it provides. You cannot consider it a good investment without looking like a fool. Your case is beyond absurd and is showcasing your ignorance of the subject more than anything else.


It wouldn't be a signature 'Bill attack post!' without the arrogant bullshit at the end. Love it. Always enjoy it when you point it at others, and I enjoy when you aim it my way too. Smile

Cycloptichorn
Cycloptichorn
 
  3  
Reply Wed 17 Sep, 2008 07:42 pm
@Cycloptichorn,
At any rate,

No matter what your personal opinion of Social Security is, the truth is that it is currently working. It will continue to work perfectly well, even under the most pessimistic judgments, for another decade. It will run at a pretty good but not great efficiency for two decades after that, then it's going to break down. We can tweak the program; I've mentioned in this thread raising the retirement age - which I think we can all agree will be inevitable - and we may have to raise caps or monies as well.

But the program isn't fraudulent; on the contrary, it's been keeping people like my Grandparents alive my entire life. They were poor country folks who did their best and saved money, only to lose it all in the market later on in life. If they hadn't had Social Security, there's no way they would have lived into their 90's like they have. Program worked well for them. We will have to make some changes in SS - and some much larger changes in our spending habits - but I would like my grandkids to have the opportunity to live the kind of life that my grandparents did, all for a modest part of their hard work. I feel deeply and fundamentally different about this program then you do. Please do not accuse me of ignorance and lecture me on 'ponzi schemes.'

Cycloptichorn
OCCOM BILL
 
  2  
Reply Wed 17 Sep, 2008 08:15 pm
@Cycloptichorn,
Laughing

Quote:
* Retirement systems, like Social Security, are not blatantly fraudulent. In a genuine Ponzi scheme, the perpetrators falsely claim that there is some business that generates the promised revenues. In Social Security, people know where the money comes from, and actuaries supply written predictions of future cash in-flows and out-flows.
Laughing So despite it functioning in essentially the same flawed way, the disclosure makes it better.
Quote:
* Retirement systems promise a stipend to the country's retired persons, not the quick and exorbitant profits to current investors that Ponzi schemes invariably offer.
Laughing Ah yes... it's longer term! (Though still fundamentally flawed for exactly the same reasons.)
Quote:
* Retirement systems rely on the taxing power of the state to ensure continuous funding, as opposed to voluntary investor contributions.
Laughing This is rich... The State's ability to legally compel people into the third rate investment scheme makes it better? That’s really funny.
Quote:
* Retirement systems are in many ways insurance rather than investment systems. A person who dies before retirement gets no money back (regardless of what he/she paid in). Someone who lives to a very old age continues to get payments regardless of the amount of money he/she has paid in.
This is certainly true, but does nothing to prove the system itself is any less flawed.

Quote:
It wouldn't be a signature 'Bill attack post!' without the arrogant bullshit at the end. Love it. Always enjoy it when you point it at others, and I enjoy when you aim it my way too. Smile

Cycloptichorn
Happy to accommodate you. Razz Seriously though, Cyclo... a bad day, year, decade at the market does nothing to make your case. Nothing. Download yourself some market research software and compare any SS withholding pattern to any index fund in any 40 years of market-history and see what kind of annuity payments such an investment strategy would yield you compared to SS. You have this one wrong… Very wrong.
0 Replies
 
OCCOM BILL
 
  3  
Reply Wed 17 Sep, 2008 08:31 pm
@Cycloptichorn,
Cycloptichorn wrote:
I've mentioned in this thread raising the retirement age - which I think we can all agree will be inevitable - and we may have to raise caps or monies as well.
No. We don't all agree. This is only true under the current system. I fully believe that the system could be operated at current or even lower funding levels, provide just as much benefit if not more, without increasing the age of retirement.
okie
 
  2  
Reply Wed 17 Sep, 2008 08:37 pm
@Cycloptichorn,
Well, if a private company did what the government is doing, would it be financially sound, cyclops? No is my answer, nothing even close. It is fraud, plain and simple, perpetrated onto the American people.
Cycloptichorn
 
  2  
Reply Wed 17 Sep, 2008 08:44 pm
@okie,
okie wrote:

Well, if a private company did what the government is doing, would it be financially sound, cyclops? No is my answer, nothing even close. It is fraud, plain and simple, perpetrated onto the American people.


It's not fraud; no part of it is secret or mis-representative. You just disagree with the program.

Cycloptichorn
Cycloptichorn
 
  2  
Reply Wed 17 Sep, 2008 08:46 pm
@OCCOM BILL,
OCCOM BILL wrote:

Cycloptichorn wrote:
I've mentioned in this thread raising the retirement age - which I think we can all agree will be inevitable - and we may have to raise caps or monies as well.
No. We don't all agree. This is only true under the current system. I fully believe that the system could be operated at current or even lower funding levels, provide just as much benefit if not more, without increasing the age of retirement.


Through what, the magic of 'privatization?' I just don't buy that. The stock market is not a magic engine for making money.

Cycloptichorn
okie
 
  2  
Reply Wed 17 Sep, 2008 08:48 pm
@Cycloptichorn,
Its not very honest when most of the people think their money is invested into their fund, to be drawn out later, or at least that is what I think most people think, or what most people think it has been represented to be. The money isn't there, its been spent already, not on anything of value, the money is gone. And could a private pension do that without it being fraudulant? I don't think so, cyclops?
okie
 
  2  
Reply Wed 17 Sep, 2008 08:52 pm
@Cycloptichorn,
The stock market at least has some value, some collateral, some assets, something the ious in the trust fund do not have. They are worthless pieces of paper, with no money to back them, only a promise based on what somebody else will pay into the fund in the future, right?
Cycloptichorn
 
  3  
Reply Wed 17 Sep, 2008 08:55 pm
@okie,
okie wrote:

Its not very honest when most of the people think their money is invested into their fund, to be drawn out later, or at least that is what I think most people think, or what most people think it has been represented to be. The money isn't there, its been spent already, not on anything of value, the money is gone. And could a private pension do that without it being fraudulant? I don't think so, cyclops?


Okie, if you misuse a tool, is it the tool's fault? The government replaced the money, the SS fund, with IOU's over the years, and you blame social security for this?

I want you to explain how it is the fault of the program, that the decision was made to spend the excess money on the general budget instead of saving it in the fund. And how much would that money have gained in interest, even at the super-low rates SS is known for, instead of being replaced by IOUs which are weaker in value then when they are issued?

The government has engaged in scandulous and fraudulent behavior - both parties - and yet, you blame the program for this. I'd like to hear you expand on this.

Cycloptichorn
 

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