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SOCIAL SECURITY: We have hard choices ahead

Letter by Lawrence H. Smith, University Place on Dec. 29, 2011 at 9:54 am with 135 Comments »
December 29, 2011 9:59 am

Social Security is not a Ponzi scheme (TNT, 12-19): It is a benefit for the political class.

When Social Security was enacted in 1935, the average life expectancy was around 62. That meant half of the participating workers would never see a dime of their Social Security retirement payments.

Franklin Roosevelt knew this, of course, but setting up such a system didn’t do him any harm because Social Security, like a state lottery, allowed the average guy to fantasize that the program was something of value. That got FDR re-elected three times.

Social Security alone is not a retirement program because it provides very little in what is needed to survive. It is not an investment because its returns are terrible, and there is no ownership stake for the individual. Nobody “owns” any shares of Social Security.

So, what is Social Security? It is a fund that politicians raid to bankroll projects in their home states and districts in order to win re-election. They direct the Treasury to replace the current surplus funds in the Social Security “trust” fund with short-term government bills and notes. When those notes mature, they’re simply replaced with more IOUs.

The problem we’re facing is that life expectancy has increased to the point where our assumptions about the trust fund’s survival are wrong. Social Security is destined to fail in the long term unless we make the hard choices to save it.

The surplus is vanishing, and government will have to redeem those IOUs sooner rather than later.

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Leave a comment Comments → 135
  1. A banker told me long ago – there are two ways to financial security (1) more money and (2)less debt.

    Why can’t social security be retirement if your debt is minimal to none?

    As to funding – quit cutting the taxation off at $106,000.

  2. bigredone says:

    Better yet, tell the politicians HANDS OFF! This is not s slush fund for our elected officials to “borrow” from as they see fit. People are putting trhis money away, and not by choice, so it there when they retire. LEAAVE IT ALONE and it will fix itself.

  3. SandHills says:

    As long as there is ever increasing input ( more and more younger workers) and always a dwindling number of takers (a dying older population) the SS system could conceivably work….

    But add in the fact of an aging baby-boomer generation, who due to increased health and medical care are living longer – with a current economy where so many jobs have flown overseas and a slowing birth rate (except for those who have been living on the dole for generations). Then add that SS has been used as a piggy bank for many other entitlement programs proposed by our elected officials in DC….

    Well, it may not have started out as a ponsie scheme, but it is one now. Anyone who can add 1 + 1 and come up with 2 can see this. I can see where anyone over 65 would be worried that the money may run out before they need a tombstone, but for those under 50 it is a forgone conclusion. As for those between 50 and 65, well you better stay healthy enough to work well into your 70s….. And don’t you know that will now put a crimp on the younger generation wanting your job.

    A very interesting contradiction – do we keep raising the debt limit, or raise payroll deductions, to keep SS solvent?

    Both will be paid for largely by young workers who can’t possibly expect any benefit when they get to the eligibility age.

    Again, this pyramid could still work if there was significant growth in a working population paying into the system – once you subtract the fact that the only growing population in our country is among welfare recipients and illegal aliens, well then again most Americans just listen to political correct rhetoric who are teaching that 1 + 1 adds up to anything but 2.

  4. cclngthr says:

    There are a lot more people drawing from SSA than just older people. People with legit disabilities also receive the benefits.

    Having said that, the taxes and funding are going elsewhere than where it should be going.

  5. Misunderestimated says:

    It is actually quite easy to determine if social security is a ponzi scheme.
    Would it be legal for you or me to set up a similar system ourselves?
    The answer is “no” because they government has determined that such an activity is only a “ponzi scheme.”
    Social Security was doomed from its inception; the actual death date was speeded up during the 1960s when Congress raided the funds and replaced them with worthless IOUs.
    Today we watch our politicians fiddle as the system burns, and we re-elect them.
    Silly us

  6. It’s a shame, and the letter writer is quite right. Several of us at work who’re about the same age, early to mid 50’s, have acknowledged to ourselves that we won’t be seeing any social security, but that’s okay. We’re just in that generation that’s going to have to take one for the team, but that’s a small sacrifice compared to what some generations have endured. Many people I know realize that the USA is fubar, with the entrenched political class and crony national socialism, and it might be nice to just get the civil war over with.

  7. RW… “As to funding – quit cutting the taxation off at $106,000.”

    When you wrote that you knew it was kind of like waving a red flag in the face of a bull didn’t you? I’m surprised someone hasn’t jumped all over that by now, but I agree with you. No limit for SSA taxation. Or at the very least raise the limit to $250,000. Check that. Let’s go with No limit!!!

  8. concernedtacoma7 says:

    Ha, no one bit your tax the rich, redistribution rhetoric. Let’s focus on real solutions, and stop being afraid of the older, entitlement rich voting block. Let’s see a politician with some intestinal fortitude.

  9. “When Social Security was enacted in 1935, the average life expectancy was around 62. That meant half of the participating workers would never see a dime of their Social Security retirement payments.”

    That’s not true!!!! See the social security web site.

    http://www.ssa.gov/history/lifeexpect.html

  10. I should say, not entirely true.

  11. “Congress raided the funds and replaced them with worthless IOUs.”

    If these IOUs are worthless, what does that say about all the other IOUs the government issues?

  12. Fibonacci says:

    concernedtacoma7
    I have to pay social security tax on ALL of the money I earn. Why should the rich have to pay on only PART of theirs? This is not “raising taxes oon the rich” it is only fair. 100% social security tax on EVERYONE, not just those earning up to a certain point.

  13. aislander says:

    SandHills writes: “But add in the fact of an aging baby-boomer generation, who due to increased health and medical care are living longer…”

    Don’t worry: Obamacare will eliminate the “living longer” part…

  14. Fibonacci, regarding LibertyBell, WOW!!!! I think maybe I will just stay away from that thread for a while.

    BTW, I’m with you on the rich paying their fair share on all their income, like the rest of us have to. Take off the artificial top-end limit. It’s only fair.

  15. pawl: “That’s not true!!!! See the social security web site.”

    Average American life expectancy, all races, both genders, in 1935, was 61.7 years.

  16. Oh God!!! Somebody is going to bring up the infamous Obamacare Death Panels!!! Where is Sarah Palin? What screen name is she using here?

  17. pawl, apparently some folks have trouble with the concept that the words “around 62″ would be inclusive of 61.7, which is around 62, especially if you a round it up!

  18. aislander says:

    I would have no objection to removing the ceiling on the payroll tax IF the benefit amount went up as well. If it doesn’t, well then we have to admit that social security isn’t just a Ponzi scheme or a slush fund for congressional hacks, but income redistribution–charity, for want of a better word. A pension plan? What a joke…

  19. lanq, I don’t get the joke. You and pawl have an issue believing that “around 62″ is inclusive of 61.7. Big news for you. You and pawl are wrong! Around 62 does include 61.7, because 61.7 is around 62. Basic math my friend. Basic math!

  20. crusader says:

    Hard choices indeed. However they require leadership to make them. Our elected leaders instead agreed to increasing the national debt to yet a higher recored in absentia this week.

    WIthout eliminating these career politicians (including the POTUS who has never had a private sector job) we are doomed to become Greece.

  21. concernedtacoma7 says:

    Fib- it is a new tax because the conversation is about raising their taxes and not their benefits. So more money from the rich ‘re-distributed’.

    Read through te rhetoric. If you asked the rich to pay more, but state in law they would get the same amount they put in at the same crappy interest rate, I’d be all for it.

    What the national conversation is have them pay on all income, but only collect the bennies on the first $106k.

  22. Pacman33 says:

    “So, what is Social Security?”

    It’s an intergenerational income redistribution system that has been built upon a stack of lies and contradictions of basic actuarial math.

    Workers and their employers contribute to a trust fund …….. ?
    There we go, I had to wipe off some Progressive Pixie-dust. Workers and their employers have funds swindled by a confiscatory tax that is involuntary and Constitutionally questionable. The appropriated, employer-matched income is then redistributed away to others on a vague promise to pay it back later.

    What remains is an IOU and a note to raid our grandchild’s future to pay off the debt for our retirement. In addition, the IOU is less than the total confiscated from our income. Depositing the same amount in a savings account would have equaled a greater total and allowed us to retire on our terms, not some date dictated by politicians. Regrettably, we have no property right to the ‘benefits’ derived from our ‘contributions’. Politicians can raise the eligibility age and/or decrease benefit amounts whenever they want, even deny benefits all together.

    Savings Account = More $ + More Freedom – Dependence on Government

  23. Misunderestimated says:

    Yes, our social security funds which had been held in “trust” until the 1960s were replaced with worthless IOUs.
    I like the idea of removing the cap on social security taxes.
    Anyone arguing my claim of worthless IOUs just needs to explain how these will ever be made good.
    This nation just added another $ Trillion to its debt.
    This nation has over $100 Trillion in unfunded obligations.
    This nation could take every single dime from every rich person in the country and it would hardly make a dent in this looming disaster.
    These IOUs are worthless; once the interest payments on our massive debt surpasses 25% of the budget, Congress will no longer have any choices on what/where to “cut future spending increases.”
    Enjoy the ride; we will be teaching Greece how it can really be done…

  24. concernedtacoma7 says:
  25. Franklin Roosevelt knew this, of course, but setting up such a system didn’t do him any harm because Social Security, like a state lottery, allowed the average guy to fantasize that the program was something of value. That got FDR re-elected three times.

    Nice rhetorical trick there…..turning FDR’s policy into a slick trick by an elitist to win votes from the common folk by fooling them into thinking that they could “win” on long odds.

    Social Security isn’t like the state lottery. It isn’t gambling. If you pay in, you get paid out.

    The middle class was made possible, in a large part, by Social Security.

    Raiding Social Security funds in order to (partially) pay for other things isn’t a problem with Social Security – it is a problem with Congress and how it overspends.

    Social Security can easily be made more solvent for longer by increasing the maximum income that is subjected to the tax.

  26. Understanding how life tables work illustrates two important points about life expectancy as an indicator. Firstly, the life table models a synthetic population, not a real one. Life expectancy is therefore only a guide to the health of a population at a specific point in time – it is not a prediction about how long people alive today will actually live. Secondly, changes in mortality at younger ages will have a larger impact on life expectancy than changes at older ages. This is because the total number of years the population lives (person years) is used in the life table. For example, infants surviving into adulthood and living long lives will add a considerable number of person years to the population when compared to the elderly living only a few years extra.

    http://www.aihw.gov.au/how-is-life-expectancy-calculated/

    More infants surviving into adulthood lengthens the life expectancy…..but that means more people contributing to Social Security.

    life expectancy at birth in the early decades of the 20th century was low due mainly to high infant mortality, and someone who died as a child would never have worked and paid into Social Security. A more appropriate measure is probably life expectancy after attainment of adulthood.

    http://www.ssa.gov/history/lifeexpect.html

    At that link there is a table that demonstrates that, though the life expectancy has risen nearly 20 years due to better infant survival rates, the life expectancy of those who reach age 65 (from 1940-1990) has gotten 2.6 years longer for men and 4.9 years longer for women.

  27. commoncents says:

    Social Security is not a ponzi scheme. It’s a tax. It’s involuntary. It’s proceeds are used to fund a social insurance program. The tax could be folded into the general income tax and all your moaning and groaning about ponzi scheme would disappear (although many of you would still gripe about welfare etc etc). Heck, I would think the fact that it’s transparancy would be preferable to many of you compared to what we have in most fed (and state) programs.

    As Beerboy showed…we are NOT living substantially longer than we were in the 30’s. We simply have more people living to that average life expectancy age. See – it’s all about AVERAGES…it’s a simple math concept.

    Eventually we will have to raise the cap rate – but doing so without raising the benefits equates to a tax increase. Fair? No. But not substantially different than a raise in the tax rates of FIT on the highest income earners. It is better in some respect because since it specifically benefits the populace somewhat equally as everyone receives social security. That being said – I’d be more inclined to raise the ee rate .25% than raise the cap. Unfortunately – giving the 2% credit that Obama has done has removed this as an option.

    As for investment in T-Bills? What would you rather have done with the money? Stick it in a bank account earning 0% interest? Yikes! Or, better yet…have the government invest in private companies. Good idea! Let’s start with the oil companies. You think the government is socialist now? If the Chinese (and other countries) still see US Bonds as a legitimate investment – and they do – then so should you and I.

  28. commoncents says:

    By the way…we did have a “lock box” on Social Security in 1999 and 2000 (Who was President then?). All excess funds being brought into Social Security were specifically used to pay down on the National Debt. Unfortunately, Congress wanted to spend that money more than they wanted to use it to pay down debt. Not Social Security’s fault but instead blame the bill payers.

    Balance the budget and then continue that ‘Lock Box’ idea and our debt begins to drop AND the T-Bills that are currently owned by SS become more likely to be able to be redeemed. Of course that goes along with all the other reduce spending ideas being floated.

  29. Here’s a rhetorical question for those defending social security in its present form. You make a certain amount of money, and with a certain percentage of that income, you MUST do one of three things:

    1) Put it in a safe deposit box where it can’t be touched until you retire

    2) invest in a retirement fund that can’t be distributed until you retire

    3) give it to the federal government as a social security kick in, and depend on them for distribution upon retirement.

    Nuff said.

  30. commoncents says:

    Why must it be only one of your 3 choices? How about choice #4 which is 4) Give it to the government to prevent old folks from having to sell apples on the street corner in order to survive while you invest another portion of your income so that when it comes to your own personal retirement you am not depending on that distribution but instead it is a welcome addition to your retirement.

    Seems like that’s the socially responsible thing to do. After all – you can’t make YOUR own income without the help of the rest of society. Your life is not in a vacuum.

  31. Spiderweb says:

    It’s the myth of the “self made man” commmoncents…no such thing ever existed…

  32. You’ve made my point for me. Social security needs fixing. We all know that. Liberals and progs don’t offer any solutions. Some conservatives have, but they’re then demonized as wanting to push old people off of cliffs. Liberals use social security as a campaign tool, but if it isn’t fixed, it’s going to fail. There’s no arguing that point.

  33. commoncents says:

    Of course it needs fixing. It needed fixing in the 60’s, 70’s, and 80’s too. Here’s a big hint though…Reagan’s bandaid was accomplished only because it was truly bipartisan. Anytime you start using the words “liberal, progressive, or conservative” then you’ve allowed politics into the equation and you are truly not interested in “fixing” anything. Not fair to point a finger at anyone and say they are using it as a campaign tool when you have just done the same.

    BTW you are aware that in certain circles it is thought that if you simply increase productivity significantly without a corresponding increase in benefits (or significantly delayed increase) then you will be able to get over the baby boom bubble. Remember, it is a bubble. As they start dying off then we will be closer to equilibrium in regards to contributors and receivers.

  34. commoncents says:

    Spider – yes it is…although there are many who believe otherwise. Prime example can be seen in the NFL. There are those who feel that they have earned every penny of their salary and they shouldn’t have to contribute to a pension fund or to the old-age pension/medical fund to support those who came before them. They refuse to acknowledge that without their predecessors they wouldn’t have been able to earn those huge salaries. They don’t OWE the old players anything but it’s the socially responsible thing to do…and there is a difference between owing and feeling a moral obligation.

  35. spider: “It’s the myth of the “self made man” commmoncents…no such thing ever existed…”

    That’s the big difference between how we think. You seem to be comfy with the notion of your life being controlled by others. Personally, I believe that people should acquire stuff by virtue of what they have to offer, not by virtue of being able to breathe.

  36. No kidding lanq.

  37. Spiderweb says:

    “and there is a difference between owing and feeling a moral obligation.”

    Yes, I don’t even feel it is an obligation, it is merely recognizing the truth of our existence. I wouldn’t be what I am without what others have given/helped me with, I want to return that as best I can…because, without others, my life is meaningless and empty….

    lanq – you are correct, we don’t think alike. I know for a fact that the only real value in life comes through relationships with others…

    If I had the biggest house, the best material goods money can buy, but nobody to share it with, those “things”, to me, would be worthless…

    Not sure what that “controlled by others” bit is about…but it’s actually rather amusing because it’s so far from the truth….

  38. Pacman33 says:

    “It’s the myth of the “self made man” commmoncents…no such thing ever existed…”

    If that isn’t an absolutely riveting statement. Never before have I witnessed a fictional utterance so engrossed with animosity, derangement and bitterness as this gem.

    I must question it’s sincerity. It is likely an provocative ploy in an attempt of spurring a reaction. Nobody is that irrational.

  39. Pacman33 says:

    The Social Security program is a scam that reduces our liberty. It reduces the quality of life we can and should be able to afford in retirement. It allows the political class to control the end of our lives despite our constitutional rights. It perpetuates the myth of the necessity of a all powerful, nanny state instead of the freedom to take care of ourselves and our families. Decades of deception has embedded the foolish notion in our minds; That elected officials, consisting of sleazebag lawyers, academic introverts and corrupt community activists, are more responsible and qualified than ourselves to deal with our finances.

  40. commoncents says:

    lanq – re: your breathing remark….all good and well but we are talking about social security which pays out mostly only to those who have paid into the system. Never was and never will be a welfare system. So not sure how your comment is germane to the topic.

  41. pacman: “That elected officials, consisting of sleazebag lawyers, academic introverts and corrupt community activists, are more responsible and qualified than ourselves to deal with our finances.”

    This is what I don’t get. So many people rail about the 1%, but not only are the political class part of the 1%, they are the almost always the rotten 1% of the 1%. Politicians become so because they like control and money, don’t doubt it. I would _much_ rather have a private corporation manage my retirement fund than the government. The employees of the evil corporation, their jobs depend on customers being happy with the performance of the fund. In government, the fund is simply used as a money laundering scheme to further enrich contributors.

  42. common, between self-made men and the NFL, not sure how being scolded for wandering off topic is anything but the height of hypocrisy.

  43. Fibonacci says:

    Pacman33
    “Social Security is a scam that reduces our liberty”—that might be news to those unfortunates that have to survive on it.

  44. Liberals and progs don’t offer any solutions.

    That is a lie. You just don’t like the solutions that have been offered – in spite of the reality that they would work.

  45. took14theteam says:

    Social Security is a pension program not Welfare.

    Thank you for that moniker impostor.

    I think RW said somewhere that if you had no debt, you could live on SS. If you own your house outright, which you never will because you still owe the government property taxes, you will be spending a good portion of you SS “pension” on property taxes. Then you might want to eat, and stay warm, and perhaps go somewhere to purchase food to eat. Don’t think SS will cover you alone.

  46. No it is not! It is a pension program!

    If the 1% would just pay their fair share, everyone would be able to MAKE $50 an hour!!!

    I am so tired of the 1% NOT doing what they are supposed to do! All they want is what is right for them. We all know that the 99% do not want what is right for them!!!!!

  47. muckiibr says:

    No it is not! It is a pension program!

    If the 1% would just pay their fair share, everyone would be able to MAKE $50 an hour!!!

    I am so tired of the 1% NOT doing what they are supposed to do! All they want is what is right for them. We all know that the 99% do not want what is right for them!!!!! We sacrifice for the 1%!!

  48. muckiibr says:

    Double standard much?

  49. muckiibr says:

    The humu­humu­nuku­nuku­āpuaʻa (pronounced [ˈhumuˈhumuˈnukuˈnukuˈwaːpuˈwɐʔə]) do go swimming by.

    Good times.

  50. muckiibr says:

    Nothing like favoritism …

  51. Absolutely correct, ami, anyone who thinks that they can spend their retirement years anywhere but under a bridge with what social security pays out is smoking weed.

  52. Pacman33 says:

    The fact that everyone pays into the system gives the false impression we have been funding our benefits. When Social Security was being designed, the idea of being “on the dole” was a moral no-no. Language used in promoting Social Security, stressed alternative words to avoid promoting a welfare scheme.

    President Roosevelt promoted the idea as “insurance.” Roosevelt himself stated in a speech on November 14, 1934 that the program should encourage employment based on sound insurance principles and avoid the commingling of insurance and relief elements. Despite such statements, President Roosevelt understood that Social Security, etc. would be a transfer of wealth:

    “I want to save our system, the capitalistic system; to save it is to give some heed to world thought of today. I want to equalize the distribution of wealth.” ~ FDR

    The designers of Social Security went to great pains to separate the tax and benefit provisions for fear that the courts would rule against wealth redistribution. As late as May 1935, the Supreme Court had ruled the Railroad Retirement Act unconstitutional because “it violated the due process clause by taking the property of one and giving it to another.”

    To the designers’ surprise, the court ruled in May 1937 (Steward Machine Co. v. Davis) that Congress had such power under Article III, Section 8 to “provide for the common welfare.”

    Evidently, due process can be violated if the court feels like it.

  53. “Absolutely correct, ami, anyone who thinks that they can spend their retirement years anywhere but under a bridge with what social security pays out is smoking weed.”

    I wouldn’t know about smoking weed, lanq. I’ll leave that up to you.

    I do know math and according to the Social Security Administration, all I need to do is keep my household expenses under $3,300 a month and we’ll live just find. That doesn’t include pension/retirement money.

    People that say stupid things to get attention (inclusive of the “welfare” comment) will always end up embarrassed when math is applied.

    Oh and for the other ignorant post – my property taxes are only $2200 for the coming year (less than $200/month). I think I can handle that.

    Why don’t you people stick to what you know – like how much oil it takes to cook a french fry. Your stupidity is astounding.

    No wonder you all get your undies in a bunch when I don’t get worried about taxes. You are all renters and don’t have a clue as to real estate taxes in the State of Washington. You have no knowledge on the subject but you know that FOX wants you to believe you pay too much.

  54. Oh and just one more thing to the doom and gloom crowd – the only reason we’ll continue working – in one way or another – is for medical insurance. Once we hit 65 and get Medicare, all bets are off.

    If I didn’t feel like crap because of the flu, I’d be laughing because the same people that say you can’t control your spending and live off social security are the same people that claim that the government can cut a trillion dollars in spending in a year.

    Kinda funny, isn’t it?

  55. “you still owe the government property taxes, you will be spending a good portion of you SS “pension” on property taxes.”

    How can people be so ignorant on the subject and embarrass themselves with comments like this? My property taxes are less than $2400 a year and would decrease with the discount for seniors.

    Open mouth, insert foot.

  56. rw: “.. according to the Social Security Administration, all I need to do is keep my household expenses under $3,300 a month and we’ll live just find.”

    Hahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahaha!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  57. lanq – my truth was too much for you to comprehend?

    I realize you are probably not old enough to know better, but the Social Security Administration sends out a report to you every two years. That report stipulates your earnings if you retire at 62, 66 or 70. I use the “66” calculation.

    When you grow up enough, you’ll get your report.

  58. amiJames says:

    RW98512, I was wrong! You are correct. Social Security is a pension program not Welfare. Like you say, lanq needs to grow up, or should stop smoking weed under his bridge.

  59. rw: “When you grow up enough, you’ll get your report.”

    Sorry. I was just too messed-up smoking my weed under my rental bridge. I will try to grow up.

  60. rw: First I need to pull my foot out of my mouth.

  61. SCORPION says:

    RW – a government entity takes your money, and then decides the benefit outlay at a time they also determine. They also decide what the maximum amount you can earn in your older years and they determine whether to alter your payment.

    Your property tax reduction as a senior citizen is also beholden to a government entity. They can decide to rescind that reduction… oh, when revenues are tight for example.

    “…. we’ll live just fine.” – didn’t you work all your life to live the best you can and not on the crumbs a government provides to you?

  62. Wow. Someone went through the bother of registering a look-alike name for the sole purpose of displaying their immaturity.

    rw, to achieve a $3300 monthly retirement benefit from social security puts you squarely in the 1%, meaning your standard of living will need to drop significantly when you receive your 39k per year from big brother. That’s assuming you have no other retirement plan, which is what the original comment was based on, remember.

  63. Moot.

    Social Security, for many Americans (if not most), is ONE source or retirement income in addition to the 401(k) that they have been contributing to.

    For those who are relying solely upon SS checks – they will not have monthly expenses any where near $3,300.

  64. Wow. Someone went through the bother of registering a look-alike name for the sole purpose of displaying their immaturity

    Which makes 3 in the last 2 days. It’s a free for all since the moderator is turning a blind eye.

    amijim, amiJames, and now lanp

  65. That’s the 3rd look-a-like lanq… and since the moderator refuses to do anything about it we’ll have to assume they approve.

  66. bb, you’re redefining the parameters to suit. This came from a comment that asserts that people cannot retire comfortably on social security alone. I stand by that comment.

  67. I’ll have to agree with lanq on this one.

  68. As much as it pains me to say so, lanq is right beerBoy.

  69. lanq – “retire comfortably” is a very broad statement that is open to many interpretations. I venture to say that what is “comfortable” for me requires considerably less creature comforts than many others.

    Regardless….we agree. Social Security should not be considered the only source of a wise retirement strategy.

    However that isn’t an argument against the importance of continuing Social Security.

  70. Social Security is the difference between having something and having nothing for many older and disabled Americans. Fewer and fewer employers offer retirement programs. Social Security is all that is available.
    There is alot of bickering going on having nothing to do with the topic.

  71. lanq – my wife and I make average livings.

    Keep trying

  72. I meant to say “wife”.

  73. rw, so my “partner” and me.

    So there!

  74. Yes lanp, I should have said “partner”, it’s just that He wants me to call him “wife”. So quit correcting me and mind your own business.

  75. nwcolorist says:

    Some good comments here. But a few misconceptions.

    Social Security is not welfare. Welfare is receiving money you haven’t earned. SS payments are determined by how much you have paid into the fund. It’s your own money being returned to you in the form of an annuity.

    Social Security was never conceived for living the ‘good life’. It was created to insure having a roof over your head and putting food on the table.

    If SS were run as it was supposed to, it wouldn’t be a Ponzi scheme

    Yes, SS is inefficient, a forced savings program, and has other weaknesses,, but it has proven to be a success in achieving its goal of helping people in their retirement years.

  76. beerBoy says:

    “We can never insure one-hundred percent of the population against one-hundred percent of the hazards and vicissitudes of life. But we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age. This law, too, represents a cornerstone in a structure which is being built, but is by no means complete…. It is…a law that will take care of human needs and at the same time provide for the United States an economic structure of vastly greater soundness.”
    — Franklin D. Roosevelt, August 14, 1935

  77. Why don’t those of you who think SS is a “ponzi scheme” put your money where your mouths are and refuse to file for SS benefits when you become eligible?

  78. jmpurser says:

    It’s fun when Superman visits opposite world like the author is doing. However I wouldn’t use those episodes to try to run anything on THIS side of the reality coin.

    SS is fully funded for nearly two decades. Can you name another federal program that can say that? The Trust fund is doing it’s job perfectly as designed which means it’s SUPPOSED to “go broke” after it eases the strain on the system created by the demographic of the baby boom. SS is a MASSIVE success and will continue to be unless we allow this current batch of politicians to sabotage it and BOTH parties seem to be determined to do exactly that. Odd for a “benefit for the political class” don’t you think?

    SS has two structural weaknesses right now: The wealthy have largely protected themselves from having to pay their share in and the program itself is so efficient it generates no (short term) profits for Wall Street and therefore no bribes for either political party.

    Aside from this it is vulnerable to long term economic downturns which should not be a problem but given the current political climate it looks like that’s exactly what we’re in for. One double win tactic we might take is remove the cap on SS wages and with the additional income REDUCE the retirement age, thereby reducing unemployment, stimulating the economy, and allowing seniors who now need to work in pain for years to have some years of peace. Strangely neither of the parties of our “political class” have brought this up as a possibility.

  79. nwcolorist says:

    jmpurser, maybe I missed something, but your comment has me scratching my head.

    “…the program itself is so efficient it generates no (short term) profits…”

    It’s like saying my 1978 Datsun is efficient because it gets me to work and back without breaking down. A rather shortsighted viewpoint.

    I do agree that raising the income limit to $250,000 for SS paycheck deductions is a good idea.

  80. Pacmsn33 says:

    SS should be like unemployment. Everyone should pay into hoping they never have to draw out of it. That leaves enough for those who sadly would need to.

    SS should be like auto insurance. Everyone should be required to pay into it so that we’re all covered in case a accident happens and we need help. But don’t get anything if we don’t need the help.

    SS should be like health insurance. We all pay into it but hope we never need it.

    SS is not welfare, and should not be retirement, it should be anti-poverty insurance. Those who don’t need it at the end of their careers should not want it or get it.

  81. I was glad that social security wasn’t privatized in September 2008

  82. aislander says:

    jmpurser writes: “SS is fully funded for nearly two decades.”

    So…is taking in less than it pays out THIS YEAR the same as being fully funded?

    By THAT definition, I guess the whole Federal government is “fully funded.”

    What deficits and debt?

  83. aislander says:

    To the degree that Social Security IS funded, it is funded with IOUs from a Federal government that is deep in a financial hole…

  84. Pacman33 says:

    The lefty with no life and too much free time said –
    “SS should be like auto insurance”

    Yes, you are correct, it should be. Auto insurance isn’t required and is quite voluntary. This is so because of other options the public has “choice” to pick from. In this state I can “choose” to utilize Public Transportation, walk, bicycle, scooter, motorcycle, etc.

    There is no such choice in SS. Despite lazy cop-out responses from educators(bB) and others known for their lavish pensions who blurt:
    “Social Security should not be considered the only source of a wise retirement strategy.”
    This dismisses a large faction of us who work our tails off to avoid the oppression and shame of the ‘welfare dole’. Responsible, hardworking folks who don’t earn enough to have sufficient funds left over to dedicate to another retirement plan after the substantial amount of their earnings is involuntarily and intrusively STOLEN by the Govt.

    These individuals have had their choice to a comfortable retirement, free from the dependence on Govt, wrongfully taken from them. Their hard earned wages are pilfered to reward sloth and those that have contributed next to nothing. The irony of the situation is deplorable.
    It almost legitimizes giving up and claiming the victim role. Why work your tail off, exerting the effort to stay off the dole when, in the end it doesn’t count for squat? After working your whole career to separate yourself from bums and self-proclaimed victims, SS steals the money that could have funded a legit retirement, just to knock you down and bring them up to an engineered “equality”.

    The Progressive drools as freedom, liberty and integrity withers and in it’s place grow a herd of slaves to the state. Slaves who are forced to live their ‘Golden Years’ under the thumb and vulnerable to the whim of the political elite.

    The vagrant grins at the new herd members circumstances. Never experiencing the independence of those who supplemented the vagrant’s free ride with integrity, effort and ambition, he giggles at what he perceives as the new guy’s ignorance. The ignorance of rewarding his sloth and getting nothing in return.

  85. beerBoy says:

    Pacman33 – my “lavish pension” is me paying into a Roth IRA the maximum allowed, which is a pretty neat trick of frugal budgeting considering how little I get paid as a 1-credit-below-half-time-so-the-University-doesn’t-have-to-pay-benefits-faculty-member.

    The same was true when I was a 1-hr-below-half-time-so-the-County-doesn’t-have-to-pay-benefits-employee while I was working about 120 hour a week running my own business.

    And – my wife, as a full time faculty member gets a whopping 3% of her salary paid into her 401(k).

    We have assets because we don’t spend money on cell phones, new computers, new cars, etc. and SAVE even when the money is tight.

  86. concernedtacoma7 says:

    Bb- so you expected benefits even when you admittedly worked for yourself?

  87. Self employed pay self employment tax – basically the same as Social Security

  88. beerBoy says:

    ct7 – No.

    The reason why I took the part-time job with the County while I was running my own business is that they did pay partially into medical insurance – my salary covered the rest – essentially I was working 19 hours a week to pay for medical insurance.

    Much of my early adult life I was an independent contractor. My income as an artist was very low and I subsisted at below poverty levels – so low that I did not pay any self employment tax – as a result my accrued Social Security benefits are low as they are based upon the total I have paid into the system.

    Again – I knew that I would not have much in terms of Social Security (I have paid in through other jobs at other times) and that I would not receive any retirement from any source so I have saved for my retirement. I write this, not as a back-slapping, self-congratulatory measure but to counter Pacman’s suggestion that I expect a lavish retirement from the State.

    Oh….and to counter your other caricatures of “libs” – I have never collected unemployment nor welfare. I have worked hard all my life and never expected, nor got, a handout from anyone.

  89. Bandito says:

    Raising or eliminating the wage limit would solve the problem. That’s the way to go.

  90. concernedtacoma7 says:

    Why do the left keep saying ‘you get what you pay in’ ref SS, yet want the rich to pay more and receive no additional bennies? Where is the individual responsibility?

    The argument made against it (SS) being a ponzi scheme is that it an individual payer/receive system. Now they ask for yet another tax on the wealthy.

    Bb- thanks for the response. You made lifestyle choices (artist) and excepted the results of te choice. Admirable.

  91. Why do conservatives constantly bash SS, and yet take the money when they become eligible?

  92. How does anyone know if Moore doesn’t pay additional taxes voluntarily?

  93. what if someone played with the internet and everything they thought they learned was wrong?

  94. SilliCavilli says:

    aislander says: Jan. 1, 2012 at 2:00 pm   To the degree that Social Security IS funded, it is funded with IOUs from a Federal government that is deep in a financial hole…

    Tell us exactly how much of the SS is funded by IOUs a.i.slander.

    Show us proof of the IOUs.

    If the SS has no real money, then

    Show me the IOU! Show me the IOU!

    or is that just a cavil?

  95. ehill: “Why don’t those of you who think SS is a “ponzi scheme” put your money where your mouths are and refuse to file for SS benefits when you become eligible?”

    For the same reason that you wouldn’t refuse to go down to the tow yard and pick up your recovered stolen car. Even though the steering columns effed up, and the radio’s missing, and it’s not worth what it was when it was stolen from you, you’ll go ahead and take it back anyway, won’t you?

  96. amJames,

    “Why do progressives bash capitalism, and still capitalize on it? Michael Moore is a perfect example.”

    Perhaps you can show a few quotes from Moore that “bash capitalism” in general. Because if you can’t, then the only reason for this statement is that you’re a liar. Are you a liar?

    “(that’s such an idiotic, strawman statement, Jr., that it didn’t really merit a response. So I apologize in advance.)”

    This comment from someone who complained about personal attacks in another thread? Pardon me, but your hypocrisy is showing.

  97. “it’s not worth what it was when it was”

    So you won’t be filing for benefits when you’re eligible, will you? Is that a promise?

  98. I think the comments have gotten away from the author’s original intent which was simply, the social security system is broken and needs addressing. He’s right. I don’t believe for a second I’ll see any social security even though I will have paid into it for a majority if not all of my working life. The term borrowing from social security implies the government will pay it back. They won’t. At this point its theft plain and simple. That said I live comfortably knowing even though I will not see that money, it provides for my brother who is developmentally disabled and my grandmother who is 85. The only thing I’d like to see is an admission from the government saying ‘Yeah, we took it for stupid wars and tax breaks and a drug program, and we’re not going to be able to pay it back.’ It won’t happen. The easiest way to cover up a theft is to erase it.

  99. ehil: “So you won’t be filing for benefits when you’re eligible, will you? Is that a promise?”

    Not even a very good try, ehill, you’re going to have to go back and re-read your own rules, and try to live up to them. Very immature, indeed.

  100. aislander says:

    The Social Security “trust fund” now holds $2.6 trillion in non-transferable Treasury bonds–AKA IOUs…

  101. “Not even a very good try, ehill, you’re going to have to go back and re-read your own rules, and try to live up to them.” == I’m not the one who said SS wasn’t worth it. That was you, remember?

    “Very immature, indeed.” == LOL – that’s pretty funny coming from you.

  102. beerBoy says:

    as of As of October 2011:
    Holder $US billion
    1. China 1134.1
    2. Japan 979.0
    3. United Kingdom 408.4
    4. Oil Exporters 226.2
    5. Brazil 209.1
    6. Caribbean Banking Centers 175.2
    7. Taiwan 150.1
    8. Switzerland 131.7
    9. Hong Kong 110.7
    10. Russia 92.1
    11. Canada 81.8
    12. Luxembourg 72.3
    13. Singapore 63.7
    14. Germany 60.9
    15. Thailand 55.9
    16. France 48.0
    17. Turkey 39.7
    18. Ireland 37.9
    19. South Korea 37.8
    20. Belgium 36.1

    What do you know aislander that these investors in Treasury securities don’t?

  103. ehil: ““Very immature, indeed.” == LOL – that’s pretty funny coming from you.”

    Translation: lanq pegged ehill bad, who subconsciously falls back on rule # 5, ridicule. While anymore # 5 is completely ineffective, it’s even more so when you have nothing but incoherent blathering. Why don’t you just say that your dad can beat up my dad, or something like that? :)

  104. concernedtacoma7 says:

    Bb- aside from pointing out major holders of public debt, what was your point? Trying to show where are interest payments go?

    A better guess is that you are trying to show our debt is no big deal, China buys it? Yeah, and I read Krugman’s terrible partisan letter yesterday also.

    The strength of our dollar is in jeopardy, which may not equate to people not buying our debt, but will mean they will demand a higher interest on it.

  105. “Translation: lanq pegged ehill bad, who subconsciously falls back on rule # 5, ridicule. While anymore # 5 is completely ineffective, it’s even more so when you have nothing but incoherent blathering. Why don’t you just say that your dad can beat up my dad, or something like that?”

    Translation: you have nothing to offer but insults. Which is a public admission that you know you’ve lost the argument. Thanks for the admission.

  106. beerBoy says:

    ct7 – my point is that aislander’s claim “Treasury bonds–AKA IOUs” is absurdist demagoguery.

    No IOU pays interest and, based on my list of holders of US Treasury securities – it is seen as a good investment by many.

  107. beerBoy says:

    And….I read Krugman rarely and haven’t for at least a month.

  108. ehil: “you have nothing to offer but insults. Which is a public admission that you know you’ve lost the argument”

    Please explain the argument you think I’ve lost.

    You can’t, of course, but this is the way it has to be, by your own rules. Shame that progs have to make things up to defend what they’d impose, while I only have to tell the truth, and not have to remember everything I say. Remember what your mom told you? If you tell the truth, you don’t have to remember what you say. Yer a funny dude..

  109. aislander says:

    So…if you give an IOU to a loan shark, beerBoy, there’s no interest? Kooky! (to quote the philosopher formerly known as LarryFine).

    I DO know that the holders of US debt (AKA T-bills) are getting nervous about our ability to repay. When they express that nervousness in a reluctance to buy MORE T-bills, hell will indeed break loose…

    On a completely unrelated topic: did you know that the Federal Reserve has been the biggest buyer of T-bills at recent auctions?

    In any case, the only entity (besides the Fed) that seems not to evince skepticism at the continued value of those notes IS…the Social Security Administration….

  110. Yawn. More insults. Another admission of defeat.

  111. ehil: “Yawn. More insults. Another admission of defeat”

    Yawn, I’m still waiting for something more than your diversion. Must be a bit ch to acknowledge that you have nothing for me, but diversion. :)

  112. you have to love those who congratulate themselves on a victory on a comment column in a website.

  113. More insults. Another admission of loss.

  114. ehil, do you even remember what the discussion was about? Or do you just fall back on # 8, now that you know that # 5 is ridiculous? Go ahead, tell me what we were discussing.

    Obviously, you’ll have to go look, because your a prog, and can’t remember what you’ve lied about, but go ahead, anyway.

  115. JoeMcCarthy says:

    My fellow Americans!

    My good friend A.I. Slander has stated that:

    “The Social Security “trust fund” now holds $2.6 trillion in non-transferable Treasury bonds–AKA IOUs…” (aislander wrote that on: Jan. 2, 2012 at 12:44 pm)

    And even though he, A.I. Slander, has provided NO PROOF, NO LINK, NO FOUNDATION for his comments whatsoever, I say to you – you can believe him. You must believe him.

    Just as you can believe me when I have said, “I have in my hands a list of five hundred card-carrying-Communists employed by the United States State Department.”

    Because A.I. Slander and I, me, Tail-Gunner Joe, are cut from the same conservative Republican white supremacist cloth, the same cloth that Pat Nixon’s coat was made out of.

    Harrumph!!!

  116. amJames says:

    Somebody has a crush on you aislander.

  117. commoncents says:

    Aislander – your link is an advertisement…however, you’re right. Social Security trust funds are basically IOU’s. But then again, so is every other bond or security. They are all IOU’s…either IOU a dividend, interest payment, or current market value upon redemption. Only difference is that SS has IOU’s that are based upon the full faith and credit of the USA. And yes, we have been redeeming those IOU’s over the last year or so on a monthly basis…but then again we were receiving the IOU’s on a monthly basis when the economy was better and receipts were higher than payments. As for the question the author posed…what would happen if the trust fund disappeared? Well then the US Govt would not have to pay the SS benefits (the obligation to pay disappears) unless said payments become welfare payments. But, you can’t simply wipe the books of an asset and not impact the liabilities or even expect the liabilities to remain.

    Bottom line, it’s still a revenue problem. We either have to increase revenue or decrease expenses. The latter is untenable. So, what do we do? Well, for one we get people back to work. Unfortunately that’s not necessarily up to the feds. Another thing we can do is increase the EE piece; either through increasing the cap or the rate. Since Pres. Obama has decreased the rate – raising it would be seen as a tax hike (poor move on his part). So, that leaves raising the cap. I hate that as the benefit payment is tied to the tax rate and the cap. raising the rate without the benefit is inherently unfair. Unfortunately that’s the only way to go at the moment. And, I for one want to see the EE piece go back to 6.2%.

  118. I’d be embarrassed to have posted that link. The blush is warranted

    “Somebody has a crush on you aislander.”

    It will be a full blown love affair when you think everyone is someone else or keep a data base of their alleged quotes.

  119. “Obviously, you’ll have to go look, because your a prog, and can’t remember what you’ve lied about, but go ahead, anyway.”

    Is that really the best you can do?

  120. aislander says:

    So…the non-marketable securities number is wrong? I wasn’t searching further for something I knew to be true.

    And, no one has ANY problem with the post I was responding to? Unbelievable…

    Stalker good; ad bad…

  121. aislander says:

    commoncents writes: “But then again, so is every other bond or security…”

    Except, the Social Security fund is supposed to have money in it, not bonds or securities. But you’re right in the sense that our money itself is little more than that…

  122. aislander says:

    commoncents writes: “We either have to increase revenue or decrease expenses. The latter is untenable. So, what do we do? Well, for one we get people back to work.”

    You’re right, commoncents, that we need growth–and lots of it–to emerge from our current difficulties. The problem, as I see it, is that the current administration’s policies are antithetical to growth and, worse, a large faction of his supporters are opposed to it–which may explain the wrong-headed policies…

  123. Growth need not be ignorant of health, safety, and other regulatory issues.

    To hear the present day business “minds”, one would think that you can’t do business without polluting, without having an unsafe workforce or without paying wages that can’t begin to pay the bills for a middle class family in America.

  124. commoncents says:

    Can’t imagine the squawk and squabble that would be heard around here if the SS Trust fund was actually sitting on 2.6 Trillion in cash and not investing it. Though I would imagine it would be at a lower volume than if they actually WERE investing it in the market. Can you imagine the power that the Pres. would have if he could influence a purchase of an entire market segment?

    Aislander – re: current administration. You may very well be right. However, one can also argue that the opposition party has not done a good job in promoting a worth adversary – and they have some in their midst.

    One thing that we can NOT do in an attempt to fix social security is increase the ER segment of the SS puzzle (and yes, I know this happened in Reagan years). This needs to be fixed on the backs of the individuals who benefit. Unfortunately it will not likely end up that way. I see a rate increase on both EE and ER happening before I see a cap increase. And it will especially happen if we delay in some fix now. So, again…an increase in EE and a cap increase needs to occur and shortly. That and a natural (albeit delayed) increase in productivity should get us past the baby boom generation.

  125. IOU – acknowledgment of and promise to pay a debt

    US paper money – promises to pay a fixed amount.

  126. amJames says:

    I think you’re being ignored X6_nos.

  127. aislander says:

    amJames: This particular _nos has it exactly backwards. It is the party of unlimited government and skyrocketing entitlements that is the dog being wagged by its enviro-fascist tail who says that there cannot be growth without all those ill effects…

  128. Pacman33 says:

    bB postulates ~
    “What do you know aislander that these investors in Treasury securities don’t?”

    I know I’m not going to one Red Cent of the accrued interest at the end of the maturity period the other ‘investors’ will receive for the kind gesture of loaning the Federal Government funds. In addition to my interest having been looted, I will be allotted LESS than the value of the original principal of the bond ‘investment’, unless I live to be 90+.

    So how does Uncle Sammy thank me for my interest free loan that leaves me nothing to put toward a pension? What’s his gratitude for the generous advance without the obligation of full restitution despite my drunk uncle’s revenue?

    He waits until my last few years to finally repay the strong-armed ‘contributions’, but in only meager monthly increments. I get the compensation I earned with my own time and effort that could have been invested in a 30 year Treasury Bond …. Oh yeah it was, hope someone appreciates the returns…

    The choice to retire with the level of comfort that my earnings could have afforded, taken from my possession is frustrating. But, to be tied to the apron strings of the Nanny State, reliant on a government check that can be reduced or revoked at anytime is exasperating. Further, it is nauseating to dread the idea of being forced to experience what the authors of our Constitution put so much diligence in abrogating.

    I would gladly accept half of the scraps remaining of my contributions to forgo such serf-like subjection during my ‘Golden Years’. One who receives all from the state, has lost all there is. End this Property-Stealing, Freedom-Oppressing, Wealth-Killing, Unconstitutional Shell-Game.

  129. Aislander, What I see is a pack of radical right winders who are responsible both for the mess we are in and for blocking any meaning actions to put people to work IN THIS COUNTRY.

  130. SCORPION says:

    xring – if you open your left eye you will see a clearer picture of the issues.

  131. commoncents says:

    Pacman – I think that you are overestimating the amount that you have been taxed for SS over the years. Based on maximum contribution amounts it will take you about 8.5 years to recoup the amount that you were taxed. And that is assuming that you were self-employed the whole time and were taxed for both the ER and EE portions. I don’t know about you but I will be collecting far more than I ever paid into the program. Unfortunately it will be on the backs of the blue collar crowd as they typically are the ones who fail to live long after reaching age 65.

    Look, we get it. You don’t like the pension concept. The whole idea of reduced return in exchange for guaranteed benefit is foreign to you. However, it’s a necessary component of the retirement savings for a large group of Americans. In fact for 50% of the people who receive SS…it is their ONLY source of income. While it wasn’t meant to be this way, the reality is that’s the way it’s ended up being. As a result some of the people who should be smart enough to realize that it shouldn’t be their only source of income has to subsidize those who either couldn’t figure that out or couldn’t do anything about it. And don’t tell me that they could have invested that money elsewhere because they have the opportunity to invest now and they don’t.

  132. Bandito says:

    This letter makes the claim that “Social Security is destined to fail in the long term unless we make the hard choices to save it.” “The surplus is vanishing,” In a previous letter by the same author titled “Raise The Age Of Entitlement” the writer suggests that “In order to make the Social Security system viable, it’s time to raise the age level for benefits. Raising the age immediately to 70 is a good starting point for the baby boomers, and we should gradually increase the Social Security retirement age to 80 (or older) for the Generation X and Y folks.” That letter generated twelve responses. All in disagreement.

    Read more here: http://blog.thenewstribune.com/letters/2011/03/17/raise-the-age-of-entitlement/#storylink=cpy

    Raising or eliminating the wage limit is an easier choice that would not create a hardship on our retirement aged citizens. Who wants to work along side of an 80 year old who is 15 years past retirement age?

  133. Bandito says:

    This letter makes the claim that “Social Security is destined to fail in the long term unless we make the hard choices to save it.” “The surplus is vanishing,” In a previous letter by the same author titled “Raise The Age Of Entitlement” the writer suggests that “In order to make the Social Security system viable, it’s time to raise the age level for benefits. Raising the age immediately to 70 is a good starting point for the baby boomers, and we should gradually increase the Social Security retirement age to 80 (or older) for the Generation X and Y folks.

    Raising or eliminating the wage limit is an easier choice that would not create a hardship on our retirement aged citizens. Who wants to work along side of an 80 year old who is 15 years past retirement age?

  134. “In order to make the Social Security system viable, it’s time to raise the age level for benefits. Raising the age immediately to 70 is a good starting point for the baby boomers, and we should gradually increase the Social Security retirement age to 80 (or older) for the Generation X and Y folks.

    Unfortunately, many who propose “solutions” to problems don’t think them all the way through. Part of the logic for Social Security included getting old folks retired so the younger set wouldn’t have to compete for jobs – thus lowering the unemployment in America.

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