Global Economy Bursting?

[Couch Potato]

No, Social Security is not the magnitude of the problem. It can be fixed, really easy.

Yes, I suppose you're right. If we just cancel medicare, social security problems will go away due to natural attrition.

 

[Randolph Kinney]

Yes, I suppose you're right. If we just cancel medicare, social security problems will go away due to natural attrition.

The problem is PAYGO - pay as you go federal programs. The programs are not balanced or matched for projected payouts versus incoming revenue.

Social Security retirement benefits are based upon 40 quarters of Social Security taxes paid into the system and the maximum benefit is capped no matter how much was paid into the system. The benefits are indexed to less than the CPI so it never catches up to inflation. See the link: http://www.ssa.gov/oact/cola/Benefits.html

Medicare is not capped for benefits. Medical inflation has been out of control and therefore benefits are out of control. It is why there is trillions of dollars mismatch of revenue coming in versus payouts.

Fixing Social Security under PAYGO is simple - push out the eligibility by one year.

 

[Couch Potato]

The problem is PAYGO - pay as you go federal programs. The programs are not balanced or matched for projected payouts versus incoming revenue.

Social Security retirement benefits are based upon 40 quarters of Social Security taxes paid into the system and the maximum benefit is capped no matter how much was paid into the system. The benefits are indexed to less than the CPI so it never catches up to inflation. See the link: http://www.ssa.gov/oact/cola/Benefits.html

Medicare is not capped for benefits. Medical inflation has been out of control and therefore benefits are out of control. It is why there is trillions of dollars mismatch of revenue coming in versus payouts.

Fixing Social Security under PAYGO is simple - push out the eligibility by one year.

What system are you talking about? It is not like money is collect to be invested so that funds are available to pay benefits. Social security taxes are just like any other tax and go into the same pool of money as every other tax collected. Benefits are indexed to the CPI so that congress never has to vote on increasing or decreasing benefits. They simply manipulate the CPI calculation to do that job. The CPI is only marginally related to the inflation rate at this point.

Social security payments will go from 4% of GDP to 6% of GDP over the next 10 to 15 years. Moving the start date for benefits merely shifts when it reaches 6% by a a year assuming the unlikely senario where the delay in benefits is applied to those already in their mid-fifties.

 

[Randolph Kinney]

What system are you talking about? It is not like money is collect to be invested so that funds are available to pay benefits. Social security taxes are just like any other tax and go into the same pool of money as every other tax collected. Benefits are indexed to the CPI so that congress never has to vote on increasing or decreasing benefits. They simply manipulate the CPI calculation to do that job. The CPI is only marginally related to the inflation rate at this point.

Social security payments will go from 4% of GDP to 6% of GDP over the next 10 to 15 years. Moving the start date for benefits merely shifts when it reaches 6% by a a year assuming the unlikely senario where the delay in benefits is applied to those already in their mid-fifties.

The Social Security payments are not 100% indexed to the CPI.

Yes, all taxes are spent, those in excess are given IOUs. China and the Social Security system own U.S. Treasury debt.

Pushing early retirement from 62 to 63 and each point up one year for full benefits will make a huge difference.

Or just uncap the earned income level and require the Social Security tax to be paid on total earned income just like Medicare.

According to Social Security:

In the 2011 Annual Report to Congress, the Trustees announced:

http://www.ssa.gov/pressoffice/pr/trustee11-pr.htm

• The projected point at which the combined Trust Funds will be exhausted comes in 2036 -- one year sooner than projected last year. At that time, there will be sufficient non-interest income coming in to pay about 77 percent of scheduled benefits.
• The point at which non-interest income fell below program costs was 2010. Program costs are projected to exceed non-interest income throughout the remainder of the 75-year period.
• The projected actuarial deficit over the 75-year long-range period is 2.22 percent of taxable payroll -- 0.30 percentage point larger than in last year’s report.
• Over the 75-year period, the Trust Funds would require additional revenue equivalent to $6.5 trillion in present value dollars to pay all scheduled benefits.

 

[Couch Potato]

The early retirement age makes no difference at all except for the timing of paying the money. The whole process of early retirement is based on having the same total payout as would be given if retirement is done at the full retirement age, just spread out over a few more years.

Moving the full retirement age from 67 to 68 would indeed cut benefits by a year and save money, but not nearly enough. It is not like we just need to get past a babyboom peak.

Spending for Social Security as a Percentage of Gross Domestic Product

Also, moving the retirement age only affects retiring workers, which is the largest group of Social Security recipients but less than two-thirds of the group.

The only solution to Social Security is economic growth.

 

[Randolph Kinney]

The proposed 2012 budget from the White House shows spending of $3.7 Trillion, of which Social Security is the largest item at $767 Billion, followed by Defense at $738 Billion, Medicare at $492 Billion and Medicaid at $269 Billion.

Actuarially reduce benefits for retirement at ages 62, 65, 67.5 and move “full benefits” up to age 70. Then also index “full” retirement age to “life expectancy” (78), keep it 10% below that age.

Raise the income on which FICA payments are made—commensurate with the increased retirement age and index it to COLA also.

Modify the Social Security tax cap. Workers today pay into the Social Security system on earnings up to $106,800. About 83% of worker earnings were subject to Social Security payroll taxes in 2008. If all earned income above $106,800 were subject to Social Security contributions but did not count toward benefits, Social Security's projected deficit would be completely eliminated, good for 75 years.

In addition, the problem lies with fewer workers supporting increasing numbers of retirees. One could alter the immigration policy to open up and increase young people (age 21 to 30) coming into the country to rebalance the ratio of workers to retirees.

Social Security, when established, the life expectancy was 60 but full benefits were 65. The increasing longevity killed Social Security along with the shrinking worker population relative to retirees.

This is a transfer payment program; Social Security taxes received are transferred to retirees. If a surplus tax revenue is generated, that surplus buys U.S. Treasury paper. What else can they do with it?

 

[Couch Potato]

Keep in mind life expectancy at birth and life expectancy at age 70 are different numbers. The difference was even greater back when Social Security was established. It is not so much that we all live longer, but that fewer people are likely to die younger. Currently, life expectancy of a person age 70 is close to 84 for males and 86 for females.

Talk of "changing the retirement age" is all bogus. What they are actually doing is simply reducing the benefits while leaving the retirement age at 62. The "full benefit" age is the age at which one must retire in order to get the full benefit if you live a "typical" lifespan. If you live less than the typical lifespan, you can pull more in benefits by retiring at 62, but if you live more than the typical lifespan, you pull more in benefits by retiring at the full benefit age. If you live the typical lifespan, the benefits are identical whether you retire at 62 or the full retirement age.

Modifying the tax policy, increasing the size of the workforce, and growing the GDP all help with Social Security because they help revenue of all types. The only change specific to Social Security is a cut in benefits. While moving the full benefit age is the most politically palatable way to cut Social Security benefits, it is not the most effective way and requires deeper cuts on future benefit recipients than would directly reducing benefits.

It should also be noted the retirement age increases being discussed would not have any effect until after the chart below hits its peak. Also, this chart showing Social Security as a percentage of GDP was produced by the Congressional Budget Office at a time when economic growth projections were higher than they are now. Reality is worse than the chart shows. :new_all_coholic:

The only real cure for Social Security is a reduction in benefits not just for future recipients, but current recipients.

 

[Randolph Kinney]

I disagree.

Also note that economic growth is not controllable.

 

[prasercat]

If I may interject:

If your household was in a bad economic situation, it would certainly be right to reconsider paying for insurances, health insurance, putting money into social security, etc., however, that is not the answer. It is a necessary continuing exercise to increase the efficiency and solvency of those protective safety nets which all of us will use at one time or another at some point in our life; however, it is only a part of a solution.

If I had to give up a safety net, then one of the first things I'd be looking at is how to increase my income (change jobs or careers, work more hours, get a second job, etc.)

This fanatical focus on dismanteling our safety net is pushed by those that want to use that money for their own purposes and it is promoted through a propaganda media machine.

We need to break through the brainwashing and start looking at who is behind the curtain and exploiting us and taking everything from us. They won't stop untiil we have don't even have a pot to pee in.

From the Wall Street Journal:

http://market-ticker.org/akcs-www?post=186444

Why the fanatical focus on dismanteling Fannie & Freddie? How about restructuring them, improving them and removing their defects!

It appears to me to be the simple minded pursuit of DEREGULATION, so the big banks and Wall Street can do anything they want without any oversight or impacts to their greed - This marks the end of the appraisal profession! Why don't you now vote for the end of your profession!

By the way, did you know that a significant factor in rising healthcare costs and the burdens put on our safety nets from this is due to Wall Street now owning much of the hospitals now out there which will dictate your care. How about charging $500 for a one pill that you can buy at WallMart for $4. When you walk into a private hospital now, Wall Street street gangsters will fleece you and even abuse you physically. Believe me, I heard such stories from patient's own experiences. I will only go to a University Hospital for care - I learned my lession! "Private enterprise" means something different now, it means monopolistic control by the Wall Street Financial Cartel, it means unlimited greed and power without any legal liability or patient recourse, thanks to the deregulation of our anti-trust laws and the their massive power over our legal institutions and government.

 

[Randolph Kinney]

Something for everyone to look at and think about.

No one has to do anything, it will be automatically done for you.

http://www.usdebtclock.org/#