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US Gov: The best that money can buy.
01:04 AM on 12/10/2010
"Despite what many politicians and pundits would have you believe, Social Security isn't in crisis. "

Baloney. It isn't in a crises on an accounting standpoint, but the situation was, Bill Clinton left office with surpluses through 2040, and unfortunately, G.W. Bush came in and enacted tax cuts that required that the Social Security trust fund be raided.

Now, it would seem that Social Security would be in crisis, since Obama wants to extend the Bush tax cuts, which would necessarily require that the Social Security trust fund not be repaid for financing the tax cuts for the rich. That would effectively change past FICA tax into a flat income tax.
Restore civility, flag ad hominem.
05:35 AM on 12/10/2010
The math of Clinton's surpluses:
07:07 AM on 12/10/2010
fanned and faved. I knew that Clinton was lying but could not put my finger on why. Now I know why. Thanks
05:52 AM on 12/10/2010
Cannot understand your logic or conclusions and if you state what you believe to be facts, then you should try and make your case. You have not done that. You say Social Security(SS) is in crisis. How so? By being raided? Then we have been in crisis since SS began because the government has used the EXCESS funds every year of its existence. 2010 is the first year that SS would have a shortfall i.e.
less money taken in than went out(expenses and payments to recipients) The Bush tax cuts has nothing to do with SS and revenues went up after they were enacted and if you do not believe me you can verify for yourself at historical data.
Even if it were true for your point about tax cuts for the rich, why would the trust fund not be repaid?
SS buys special treasury notes with its EXCESS funds backed by the full faith of the US government
(some have said even on this site that it is not any good)
and the FICA being a flat tax because the funds would not be repaid????
My understanding of a flat tax is that everyone is taxed at the same rate. All wage earners are taxed
the same up to a point(SS is capped and goes up every year), but there is other income that is taxed
as well.
So it appears to me that you are just venting
Two 'alves of coconut!
01:00 AM on 12/10/2010
I say balance the federal budget, and start issuing annual/quarterly reports to the taxpaying public. We're expected to pay taxes, ok-fine, so how about a 'shareholders report' every quarter, so we know that people aren't doing some kind of sly, sneaky, back-door stuff and sticking everyone else with the tab, as has happened in years past? Even if it means taking money away from Social Security, which might, or might not have anything left in it, depending on who you ask, 'get er done' and make transparency and fiscal responsibility the new national standard. Throw a couple sacred cows in the freezer against a future rainy day, and do what's needed to secure our national financial future. Too many programs=too many promises to too many people. If it makes rich people mad, do it. if it makes poor people mad, do it anyway. But where we're headed NOW is to the point of owing a trillion dollars in interest on an annual basis on the national debt, and that's a trillion that could be spent much differently or not at all.
12:46 AM on 12/10/2010
Trust Fund??? . . LOL!!! . . a new show on the Comedy Channel? . . what a box holding IOU's .
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09:28 AM on 12/10/2010
All it needs is a "Lock Box". I miss Algore.
Every act is an act of self-definition.
10:54 PM on 12/09/2010
They say Social Security is in crisis because it is underfunded. Then they institute a 2% Social Security tax holiday so that it becomes more underfunded. Then they use the fact that it is more underfunded to justify reducing benefits and increasing the retirement age. It is a shell game and we are being conned.
11:05 PM on 12/09/2010
12:48 AM on 12/10/2010
if someone farts on top of Mt Everest . . can you smell it in West Hollywood? . .
. . the equilavent of the 2% temporary deduction . .
09:42 PM on 12/09/2010
Interesting, that there isn't a word on the fact that SS trust fund money has all been physically spent by the Federal Government on various causes du jour and it's actually full of IOYs. Heard it on NPR.
So the trust fund is just as solvent as the Federal Government, which is not too much.
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10:15 PM on 12/09/2010
IOY's or not.

If Bank Of America, Citicorp or Goldman Sachs said it's just a bunch of IOU's, would that be acceptable as well ?

I should hope not.
10:59 PM on 12/09/2010
Why would any of these authors say a word about the truth. The article says the citizens of the US ought to be educated about SS and every single article in HP gives misinformation about the SS Trust Fund and makes these poor economic illiterates believe that there is a corpus in the SS Trust Fund and it is money just sitting there to be used when the Trust Fund Bonds are redeemed. In fact, the General Fund will be used to offset the shortfall when SS is short of cash. If anyone doubts this then they should go to the CBO website and see how SS really works and how it will depend on the General Fund paying back the SS revenues that have been spent on other things over the last 25 years
09:17 PM on 12/09/2010
Truth is, SS does give us modest return. Turn it over to Wall Street. The return will get modester.
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09:04 PM on 12/09/2010
This is an excellent article.

It should be pinned and/or categorized on HP. It would be great if it could be updated as time and events warrant.

Thank you, Gara LaMarche.
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I search for the America I believed in as a boy.
09:03 PM on 12/09/2010
This is the second attempt by Obama and friends to attack Social Security. The first was when he picked Alan Simpson to chair a deficit commission, which allowed him to put forth on a stage why Social Security needed cut. Actions speak louder than words, and Obama is against Social Security.
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09:38 PM on 12/09/2010
You watch, Obama--a democrat for dog's sake--will be the first president to cut SS!
11:06 PM on 12/09/2010
No COLA for the last 2 years...on his watch.
03:21 AM on 12/10/2010
Agree--seems silly to say that when it is so obvious Obama is clearly on the attack against SS.
Dump Obama 2012.
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I search for the America I believed in as a boy.
08:10 AM on 12/10/2010
I really don't understand why he won't stand up for Social Security, unless he is in agreement with the Republican's and is as stated against it. I can't come up with an alternative answer for this decision. You are right he is a one term President, and for this action alone needs voted out.
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08:52 PM on 12/09/2010
the GOP is shameless (so are a bunch of Dems) that is why they want to do such a shameful thing. And their mindset is eternal, here's some examples from bygone days:
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08:39 PM on 12/09/2010
Success or failure? Depend's on how you look at it.
A wise man learns from the mistakes of others.
08:30 PM on 12/09/2010
Republicans should lead by example and give up their government retirement and health care. Let them pay their own way.
Larry Kurnarsky
08:28 PM on 12/09/2010
The most important thing to know about Social Security is that the private sector wants the money and said private sector is used to getting what it wants.This is not about the solvency of Social Security because, as everyone with the data knows, and as the private sector certainly knows, the Social Security fund will be solvent, if administered exactly as it is now, for about fifteen more years. In other words, this is not a problem staring us presently in the face like, say, unemployment.

But the folks who did such a good job with your mortgage want to get their greedy paws on your retirement. They want to take your future like they took so many of our homes. They lie, cheat, and besmirch their critics with impunity because, simply put, ours is now a country governed by and for them. The Social Security fund is the largest single sum of public money in the USA and it is sealed off from the bankers and Wall Street by statute. That's what's about to change, regardless of solvency, if the Democrats do what they seem about to do. That is, cave in to the oligarchs again.

So, can we start calling a spade a spade and call this exactly what it is? Theft. Can we call the politicians who support this theft aiders and abetters of a huge crime? Can we call the Democrats who "compromise" on this betrayers? Can we start debating something real, please?
Every act is an act of self-definition.
10:56 PM on 12/09/2010
And all that so they can increase the wealth of people who already have more money than they could possibly spend. What kind of a country have we become?
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07:32 PM on 12/09/2010
The BEST way to improve the retirement status of every American is to terminate all the pensions and federal savings plans that members of Congress give to themselves in order to protect themselves (while taxpayers cover the cost). If members of Congress were required to rely on the exact same IRAs, 401K, Social Security and personal savings like the rest of us, you can bet they would improve and maintain all of these programs for themselves, and the rest of us would benefit in kind.

Further, we should index Congressional salaries to national median wages (2X median) and private-sector employment (a year-end bonus if unemployment is below a threshold rate). Then watch our unemployment drop and median wages climb - they would find a way if they had real skin in the game.
07:09 PM on 12/09/2010
Why do you suppose greedy insurance companies and their operatives in the senate along with the Obama administration were against a single payer health care system? They know and the American people know that it would be just as successful a program as social security has been for generations. Let's pass a constitutional amendment guaranteeing food, shelter, clothing, health care and education to all Americans. We will need this amendment to ensure the well being of as many people as possible with the coming climate crisis.
My bio is the only micro thing about me...
08:38 PM on 12/09/2010
That is a fantastic idea. However, the two thirds majority in congress and the three fourths of states to pass is quite a challenge in our country these days. Nobody projects basic human decency in American politics anymore.
01:01 AM on 12/10/2010
That is our challenge. We need to leave a legacy for our children that gives them a chance to survive.
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06:55 PM on 12/09/2010
FIX THE FICA: Remove the Ceiling, Spread the Load, Drop the Rate

FICA tax is excessive at 12.4% because its concentrated on working wages up to $106,800. Wages ABOVE $106,800 and all "unearned income" is exempt. Medicare tax is spread across all wages at 2.9%, but also excludes "unearned income".

FICA ceiling is a "couple penalty". A couple earning $100K each pay TWICE the FICA as a 1-earner household making $200K, even though household income is equal at $200K.

FICA ceiling is a "full employment penalty". Employer pays TWICE the FICA on two $100K employees compared to one $200K employee. This drives higher income concentration among fewer workers, killing jobs, increasing wage gap, and shifting wealth from middle to top.

Make SS a budget-neutral Poverty Insurance program:
- Remove the FICA wage ceiling and spread the load across ALL AGI to drop the % rate and cancel the couple and employment penalties;
- Apply FICA to estates over $10 million to drop the rate;
- Exempt employer matching under $100K;
- Have employer match above $100K with a surcharge over $1000K including ISO, dividends, carried interest, perks;
- Calculate SS eligibility on "lifetime work credit" instead of "income contribution";
- Calculate SS benefits payout based on financial need.

This plan is budget-neutral and maintains long-term SS solvency and serves the original purpose to insure society against economic instability and civic dysfunction in times of great financial stress.
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09:43 PM on 12/09/2010
Onemore--you say:

""- Calculate SS eligibilit­y on "lifetime work credit" instead of "income contributi­on";
- Calculate SS benefits payout based on financial need.""

If you do this it makes it just another type of welfare dependent on continuous monkeying with the system and another layer of bureaucrats to decide who should get how much and when etc.

It was meant to be an insurance program, and so it should remain!
11:15 AM on 12/10/2010
Agree. Means testing is a poison pill that will make the entitlement a welfare program. The public will have no qualms ending a welfare program that's why you occasionally hear this recommendation from conservatives.
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11:55 AM on 12/10/2010
"It was meant to be an insurance program" - Exactly my point.

Problems with "income contribution" model:

- People expect a return on the amount they "paid in", viewing SS as annuity or supplemental retirement plan, but it is not why SS was created. SS exists to insure society against poor people living and dying in streets and fields. Those of us with means do not meet this test (Warren Buffet's $1700 checks?).

- Wages have spread widely over the decades, and the FICA wage ceiling has expanded with it. Those with higher wages qualify for a higher payout than those who earn less. Again, this defeats the purpose of providing poverty insurance. Millions earn well under the cap despite working for decades - they are not slackers, they are the manifestation of wage suppression. SS was intended to insure against poverty, not supplement the retirement of those who make $100+K/year for 40 years.

- If people qualify for SS on work credit independent of "income contribution", they are more motivated to take lower-paying jobs instead of welfare and UI. 12.4% FICA tax is a pretty big bite from a $25K annual income. It's unlikely this income allows for much in retirement savings. Worse, the low "income contribution" leads to lower final benefit for a person who will certainly need SS the most.

SS is already a system with bureaucrats deciding who gets what. We need to reduce the cost and allocate benefits for the original purpose - Poverty Insurance.