Social Security Surplus

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I have heard Thom say again and again that Social Security has a MASSIVE surplus. Just a couple of days ago, it was mentioned on the news that the Social Security Trustees have stated that Social Security will be INSOLVENT by 2033. Thom often states on his radio show that the Social Security Trust Fund has a MASSIVE surplus to the tune of trillions of dollars. I would like for Thom to justify his statements and please point myself and his listeners to the Government website or Government account or Social Security Trust Fund website(s) which shows the MASSIVE surplus in the Social Security Trust Fund. Every time I state something on this website, respondents want proof or government websites to back up my statements. I'm asking Thom to back up his numerous statements that Social Security has a MASSIVE surplus. It only seems fair that if I must back up my statements Thom should be held to the same standard for statements he makes on his show. I look forward to Thom's response on this issue and the specific government website(s) to back up his statements.

robert351
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Feb. 18, 2012 9:39 pm

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According to the trustees report released today, the 2012 Social Security surplus is projected at $57.3 billion in 2012. Social Security will continue to run a surplus through the end of the decade. As a result, the trust fund will grow from $2.74 trillion in 2012 to a peak of $3.06 trillion in 2020 (Table VI.F8 on p. 206).

Social Security is now running a “cash-flow deficit,” which means it is running a deficit if you exclude the $110.4 billion Social Security is earning in interest on trust fund assets (Table VI.F8 on p. 206). Social Security will begin running a deficit as it is commonly understood in 2021, when it begins drawing down the trust fund to help pay for the Baby Boomer retirement. This is perfectly natural: the trust fund was never supposed to grow indefinitely, but was meant to provide a cushion to help pay for the retirement of the large Baby Boom generation. That said, the Great Recession and weak recovery pushed up the date that Social Security will first begin to tap the trust fund to help pay for benefits.

http://www.epi.org/blog/2012-social-security-trustees-report-nutshell/

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Bush_Wacker
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Jun. 25, 2011 6:53 am

Wow! How did you find that information? Are you some sort of magician or something?

chilidog
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Jul. 31, 2007 3:01 pm

The problem though is that the SS trust fund is composed of Tbills. The 3 Trillion trust fund is offset by the 3 Trillion dollar debt on the other side of the ledger.

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WorkerBee
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Apr. 28, 2012 11:22 am
Quote robert351:

I have heard Thom say again and again that Social Security has a MASSIVE surplus. Just a couple of days ago, it was mentioned on the news that the Social Security Trustees have stated that Social Security will be INSOLVENT by 2033.

What part of being solvent today and being insolvent 20-some years in the future is so in need of a retraction from Thom? SSI has made good on all of it's obligations since it's inception almost 80 years ago and will continue to do so for at least 20-some years before it's "insolvency" which will require reduced benefits, increased eligibility age or (God forbid) increases in the cap that does not tax anything over $108,000 of income. Simple solution: increase the cap and solvency is restored.

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Laborisgood
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Jul. 31, 2007 3:01 pm

No, I say let's go the republican way. Let's dissolve the SS and let old wore out people stay in the work force until they die on the assembly line . . . oh wait, we don't have assembly lines anymore. Ok until they die at the entrance of Wal Mart as greeters. The fact that so many old people will still be working so young people will have less open jobs to choose from is lost in the republican equation. Their system screws the old and young alike. We must save SS money for the oil resource wars as half of every dollar goes to the military. Let's keep the oil depletion allowance subsidies for the oil companies even though they borrow our military and are making the most money of any corporation in history, oh, about $40 billion in profits per year. Let's also keep the subsidies for the big agra monoculture producers that forgoe organic methods in favor of high oil use, herbacides and fertilizers while destroying the fertility of the soil. Great idea. Let's stick with massive economies of scale and consolidations of corporations from media, oil, chemicals, etc so that we don't have the ineffeciencies of real competition. Another great idea.

Hey you old farts, so what if you've paid into SS all your life. There are no free rides in America. Get your ass to work!

GOP Godless Orwellian Pricks

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Choco
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Jul. 31, 2007 3:01 pm

Straw man arguments aside, the demographics are what they are and we will be down to a ratio of 2.1 workers supporting each retiree. Is raising the retirement age to 68 or so really that terrible?

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WorkerBee
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Quote WorkerBee:

Straw man arguments aside, the demographics are what they are and we will be down to a ratio of 2.1 workers supporting each retiree. Is raising the retirement age to 68 or so really that terrible?

Yes.

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spicoli
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Quote WorkerBee:

Straw man arguments aside, the demographics are what they are and we will be down to a ratio of 2.1 workers supporting each retiree. Is raising the retirement age to 68 or so really that terrible?

Why 68? Why not recover some money from the bloated military budget so people can retire and still have some life left. Why not recover some more money from the subsidies to super wealthy corporations I mentioned above? The longer people hold onto their jobs the less jobs are available for the younger people entering the work force.

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Choco
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Jul. 31, 2007 3:01 pm

What really stinks is that a lot of people are in my boat. If all the money I put into Social Security (and my employer matched) were put into an account and I earned interest just at the T Bill rate, I would have an account worth somewhere between 1.5 and 2 milion dollars at age 63. I will not get anything close to that out of it.

This is why Social Security is a Ponzi scheme, the only thing that will keep it a float is reducing my benefits even more. This is what happens when the goverment gets its hands into something they know little or nothing about, setting up a reasonable pension plan.

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mauiman58
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Jan. 6, 2012 5:45 pm

If we imagine a world without inflation and you start working at 18, by 63 you will have worked 45 years, saving 12.4% of your earnings every year, thereby accumulating 558% of your average annual wage (45 * 12.4).

So you will have had to average $269,000 annual wage to accumulate $1.5 million. Which isn't possible under today's laws that cap FICA taxes at $100k.

chilidog
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Jul. 31, 2007 3:01 pm

Speaking of paying out to the boomers, has anyone considered the fact that the median age of boomers now is about 64? In twenty years, the median age for boomers will be 84. If the life expectancy is approximately 80, what's the crisis again? Also, even after 20 years, social security will be able to pay about 80% of its obligation. Given that there will be a decrease in the ss eligible population at about the time the "crisis" is supposed to hit, it seems there really isn't a crisis.

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scriber1
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five-social-security-non-myths

Turning the current expenditures of 5% of gdp, to a little over 6% of gdp removes any shortfall. To put it in current terms, removing the bush taxcuts on singles earning 250000, and married filing jointly 450000 eliminates any shortfall for at least 75 years.

The return on the trust fund could be higher than t-bills, if a percentage was invested in international equities. The kind that had always followed Sarbannes/Oxley, Glass Steagal, Mark to Market, you know countries that don't make fraud part of their by-laws.[Norway does this, they also won't buy equities of companies found violating human rights laws...They dumped their walmart holdings for that reason]

btw means testing is a complicated undertaking and is unneccesary. Recipients could file the equivalent of a W-4 that withholds the percentage of their retiree payout within the guidelines set in agreed upon charts. April 15, if you under withheld, you owe, over witheld you get a refund. 95% of the people would owe no tax on their retirement payout.

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douglaslee
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Jul. 31, 2007 3:01 pm

There's a bigger problem here that back in 2000 we KNEW that the on-budget side of the ledger had to be in surplus and debt paid down so we would be in decent shape to start paying back those SS IOUs around 2020 instead of borrowing from SS.

Bush ran on paying down debt in 2000 then did everything he could to sabotage debt paydown... and even create more debt.

Now, 12 years later we don't even talk about how fiscal irresponsibility is affecting SS. In fact Obama is putting the SS fund more at risk with a payroll tax cut. Yes, that money must be paid back but you can be sure the GOP isn't going to make that easy. The GOP needs to have SS in trouble in order to push for privatization. That's their MO... break a program they never liked, then pretend they must be trusted to fix it.

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Pierpont
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Feb. 29, 2012 1:19 pm
Quote scriber1:In twenty years, the median age for boomers will be 84.

So you're counting on there being NO medical progress in the next 20 years to extend longevity? And on that flawed assumption you're claiming there won't be any problems?

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Pierpont
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Feb. 29, 2012 1:19 pm

Pierpont: Actually, you're kind of ignoring my point. But, the same technology that allows for an increase in longetivy or life span, will also allow for an increase in productivity and wealth generation.

My point was that social security is not in a crisis and that the screaming is premature, rightwing fear mongering. If you want to make sure that social security is solvent, then remove the cap and make millionaires pay. Even if it is on their first 5 million.

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scriber1
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Quote scriber1:But, the same technology that allows for an increase in longetivy or life span, will also allow for an increase in productivity and wealth generation.
Maybe, maybe not. I'm not convinced that the Right's war on SS by sabotaging debt paydown isn't working... and the longer Dems put off confronting that only makes the problem worst. Then there's the Right's war on workers and their determination to drive down wages means there will be less to tax. But, we agree that the current cap is absurd. It needs to be adjusted upward... It's easy to suggest but the stars aren't lining up well for an easy fix. The Right is dead set against any tax increases... and the Dems aren't making a case for revenues. And again, I believe Obama's payroll tax cut is falling into the Right's trap. In the real world, I don't see any simple answers.

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Pierpont
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Feb. 29, 2012 1:19 pm

Right now, only 82 % of earned income is subject to FICA, Reagan and Tip O'Neil adjusted the earnings susceptable to FICA to 90%. The same goal could be done in a graduated way with the incremental adjustments laid out over a decade. Unearned income should be included in the mix, too.

While we're at it, the carried interest spectacle should have a tax levied. Currently hedge fund managers pay no tax, not even capital gains, because they borrow their salary from their fund's holdings, at 1% or 1.5%. All of it should be open for taxes, or maybe a new category 'irs shipping and handling'

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douglaslee
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Regurgitating whatever he hears on Rush

Quote mauiman58:This is why Social Security is a Ponzi scheme, the only thing that will keep it a float is reducing my benefits even more. This is what happens when the goverment gets its hands into something they know little or nothing about, setting up a reasonable pension plan.

It's clear you don't know what a Ponzi Scheme even is. SS is self funding... and yes, that formula may have to be adjusted at times as it was in '83 when Reagan signed a big SS tax increase. Those IOUs are backed by the full faith and credit of the US.

What's more akin to a Ponzi Scheme is the stock market where people put in real money for pieces of paper they HOPE will be worth more in 20-40 years. At that point their money is gone.

But prices only increase if there's slightly more money chasing those stocks than sellers and arguably that's what happened when IRAs were created because before that stock values were flat for nearly 25 years between 1958 and 1984 http://stockcharts.com/freecharts/historical/djia1900.html. In those cases when prices go up, everyone looks at their portfolios and thinks they're rich. But it's as phony a concept as market capitalization. All it takes is for 1-2% of those owners start cashing in than demanding those stocks, and the value of those stocks goes down. And that's what can easily happen when too many Boomers start cashing in their stocks the next 10-20 years or so... and there's not enough new demand to prop up prices. The more who cash in lowers stock values and that discourages new buyers who are afraid of a downward spiral... thus creating that downward spiral. What we really need to fear is any stagnation or crash in the market will make millions of seniors instantly poor... because unlike SS, the stock market comes with no guarantees. What is likely to happen then is the government would step in to bail out these suckers... I mean investors.

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Pierpont
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Feb. 29, 2012 1:19 pm

Sorry Chilidog, you forgot about the effect of earnings. The average T bill Rate for the last 40 years or so is around 7% last I looked. If you take somewhere between $8-9,000 a year, get 7% earnings every year, and do that for 40-45 years, you will have in the neighborhood of 1.5 million dollars. Try those calculations for yourself.

Sorry your answer shows you have no idea the power of compound returns over 40-45 years.

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mauiman58
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Quote mauiman58:This is what happens when the goverment gets its hands into something they know little or nothing about, setting up a reasonable pension plan.

You're positing a false dichotomy... government vs non-government. What's more important is who is in control of that government. I'm sure you'll deny it but it's the far Right that is trying to sabotage these programs by burdening the government with debt which they'll then use for an excuse to undermine or dismantle programs like SS. Compared to the far Right that today has taken over the GOP, Reagan was a moderate who realized something had to be done about SS and acted. Today's GOP secretly cheers bad news about the SS Trust Fund because they want to dismantle all the progress made over the past century. People like Norquist even admit as much.

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Pierpont
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Feb. 29, 2012 1:19 pm

But Maui, if you assume buying tbills, and then ignore that you are also demanding a balanced budget, what tbills are you buying?

See if the idea is we can't afford ss, and need to balance the budget now where are going to find these safe tbills?

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Phaedrus76
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Redemption of trust fund assets from the General Fund of the Treasury will provide the resources needed to offset the annual cash-flow deficits. Since these redemptions will be less than interest earnings through 2020, nominal trust fund balances will continue to grow. The trust fund ratio, which indicates the number of years of program cost that could be financed solely with current trust fund reserves, peaked in 2008, declined through 2011, and is expected to decline further in future years. After 2020, Treasury will redeem trust fund assets in amounts that exceed interest earnings until exhaustion of trust fund reserves in 2033, three years earlier than projected last year. Thereafter, tax income would be sufficient to pay only about three-quarters of scheduled benefits through 2086.

Costs display a slightly different pattern when expressed as a share of GDP. Program costs equaled 4.2 percent of GDP in 2007, and the Trustees project these costs will increase gradually to 6.4 percent of GDP in 2035 before declining to about 6.1 percent of GDP by 2050 and then remaining at about that level. http://www.ssa.gov/oact/TRSUM/index.html

So by 2033 the trust fund will be exhausted and revenues will still pay 75% even if nothing at all is done. And by 2035 the cost to Americans for supporting our parents and grandparents in their retirement is only 6.4% of GDP. Seems like a bargain to me.

As Thom has explained ad nauseam the only reason that the Social Security trust fund exists anyway is so that it can pay for the "baby-boom" generation. Before the increase in payroll taxes during the Reagan administration the program paid out benefits only from revenues but because the govt. foresaw the explosion of claims coming up it created a trust fund just for that purpose. The trust fund is now paying down as it was intended to do all along. Period.

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mdhess
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Apr. 9, 2010 10:43 pm

Even after the budget gets balanced, there is still the matter of the 16 trillion dolar debt. The government will still have to continue to issue bonds to cover that.

Besides I was just trying to set a reasonable risk free return on money. Even with a balanced budget and no federal debt, you could still buy a slew of AAA rated corporate bonds. It has been a long time since even one of those bonds has gone belly up, and if you bought bonds in at least 100 such companies you risk would be close to zero.

Phaedrus76, your splitting hairs with me, there is always a risk free return on your money. Besides, do you really think the federal budget will get balanced anytime soon? I would love to see it, but I probably have a better chance of winning 100 million dollars in the lottery that seeing a balanced federal budget anytime soon.

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mauiman58
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You are correct, I do not agree with you statements here. SS was supposed to stand on its own. On its own it is nothing short of the largest Ponzi scheme in history. The only way to save it is to raise contributions and/or reduce benefits. That will make an already terrible deal for all of us between 50-60 even worse. Where is the 1.5 million that I should have? I should be able to draw about $75,000 a year and I won't get anything close to that. And I have a lot of company.

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mauiman58
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Quote mauiman58:

Even after the budget gets balanced, there is still the matter of the 16 trillion dolar debt. The government will still have to continue to issue bonds to cover that.

Besides I was just trying to set a reasonable risk free return on money. Even with a balanced budget and no federal debt, you could still buy a slew of AAA rated corporate bonds. It has been a long time since even one of those bonds has gone belly up, and if you bought bonds in at least 100 such companies you risk would be close to zero.

Phaedrus76, your splitting hairs with me, there is always a risk free return on your money. Besides, do you really think the federal budget will get balanced anytime soon? I would love to see it, but I probably have a better chance of winning 100 million dollars in the lottery that seeing a balanced federal budget anytime soon.

What? There is always a risk free return on money? Really?

Ok, so the idea behind we needing to end SS is we cannot afford it, and we need to balance the budget. If you are arguing that you are going to end SS and still run deficits what the hell is the point?

If we elect Rmoney, then no, it'll take 40 years on the Ryan Budget plan. If we can get the Peoples' Budget passed, we'll be back in the black in 8 years. On the Ryan Budget, we'll end Medicare, and torpedo Medicaid, and basically end the hospice care system in America. On the Peoples' Budget we just end the foreign wars of occupation.

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Phaedrus76
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Phaedrus76, if you had taken just one college level economics class you would understand that there is always a risk free rate of return. You obviously have never done that or you never would have asked that question.

Sorry again I say that Social Security is yet another beautiful example of the government getting involved in something that it should never have ventured into, retirement accounts. That is the point. This is why everyone on my side of the aisle is constantly trying to keep the government out of things they do not do well, and do not need to be into. So yes our health care system needs some fixing, but the government power grab of one seventh of the US economy by the current administartion (remember this plan did not pass congress) is nothing short of a disaster in the making. If you don't agree with me, look at the disaster Social Security is (and Medicare and Medicaid are even worse). Fortunately for all of us, it looks like the US Supream court will overturn that one. Stay tuned.

So again I ask on Social Security, where is the $75,000 a year that I should get starting when I'm 65? I'll be lucky to get half that much. And I am not alone, I have LOTS of company.

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mauiman58
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Quote mauiman58:Where is the 1.5 million that I should have? I should be able to draw about $75,000 a year and I won't get anything close to that. And I have a lot of company.

Just because you used some outrageous assumptions to get to your 1.5 million doesn't mean it's true. But feel free to wish upon a star.

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Pierpont
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Feb. 29, 2012 1:19 pm

Please inform me what outrageous assumption I am making. The average T bill rate for the last 40 years or so is around 7%. If a person put $8,000 a year into an account and got 7% return every year, they would have 1.7 million dollars after 40 years. You can run that calculation as well as I can. WIth the employer match, I'll bet I have averaged putting $8,000 a year into Social Security. Me and a lot of other people.

So what am I missing here? I know you think anyone who has ever voted for a Republican is a total idiot, but posts like the one you just made just make me more sure that a whole bunch of "Progressives" have to conveniently ignore the facts when they continue to put a vote a bunch of bleeding heart liberals into elected office. And you are blatently ignoring the facts here, I have never seen a better example of that in my life.

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mauiman58
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Wow, you were making $100,000 a year in 1972? That's quite a haul in 1970 dollars. Gas was 27.9 a gallon. The health insurance companies were non-profit, and doctors made house calls. Minimum wage I think was $1.10 sliders were .10 cents. Most of the people making 6 figures had defined benefit pension plans, the average multiplier of defined benefit plans was around 1.75% . Every dollar earned 1 and 3/4 cents went to a pension fund. Up the ladder were stock options, able to be priced post dated at lower price for purchase to assure a profit when executed.

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douglaslee
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Wow, you were making $100,000 a year in 1972? That's quite a haul in 1970 dollars. Gas was 27.9 a gallon. The health insurance companies were non-profit, and doctors made house calls. Minimum wage I think was $1.10 sliders were .10 cents. Most of the people making 6 figures had defined benefit pension plans, the average multiplier of defined benefit plans was around 1.75% . Every dollar earned 1 and 3/4 cents went to a pension fund. Up the ladder were stock options, able to be priced post dated at lower price for purchase to assure a profit when executed.

The median income of one man working year round was 10,000. So 40 years ago you were making 10 times the average soul, and you're bitching like you've been had. Pathetic

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douglaslee
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Jul. 31, 2007 3:01 pm

He doesn't understand the difference betweeen nominal and inflation-adjusted real rates of return. He thinks someone's going to pay him 7% interest when inflation is zero.

chilidog
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Jul. 31, 2007 3:01 pm

The original lie in this is that we're accepting the assumptions the SSAdmin uses to say that the sky is falling.

In their report the worst case scenario they use assumes 1) the economy goes into a recession around 2010, and economic growth remains at 1% GDP annually for 4 decades. Which to put that in perspective, things still haven't gotten as bad as their scenario. The Doomsday scenario they accept is worse than Great Depression, for 40 years.

2) Because the economy does so poorly, immigration dries up, and we get no new workers entering the country.

3) And because things are so bad, wages fall from their present level.

4) And the other major assumption is that baby boomers are going to live much longer lives, because as we all know, they dodged the worst excesses of the drug culture, sexual revolution and the obesity epidemic that America has been swamped by. And that last sentence is sarcasm.

And even with these assumptions, at the worst point without changes the system is able to pay out 75% benefits through the baby boomers, and return to 100% around 2055.

Most of the conservative "fixes" involve much steeper cuts to the program in the near term, or raising the retirement age significantly, ie making old age worse for most Americans.

The best way to fix SSI is to get the economy growing, give amnesty to the illegals here, support programs and systems that raise wages (tariffs, unions, and minimum wage laws) and improve our education system.

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Phaedrus76
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Quote chilidog:

He doesn't understand the difference betweeen nominal and inflation-adjusted real rates of return. He thinks someone's going to pay him 7% interest when inflation is zero.

His biggest error is his $8000 a year fairytale.

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Pierpont
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Feb. 29, 2012 1:19 pm
Quote mauiman58:

Phaedrus76, if you had taken just one college level economics class you would understand that there is always a risk free rate of return. You obviously have never done that or you never would have asked that question.

Sorry again I say that Social Security is yet another beautiful example of the government getting involved in something that it should never have ventured into, retirement accounts. That is the point. This is why everyone on my side of the aisle is constantly trying to keep the government out of things they do not do well, and do not need to be into. So yes our health care system needs some fixing, but the government power grab of one seventh of the US economy by the current administartion (remember this plan did not pass congress) is nothing short of a disaster in the making. If you don't agree with me, look at the disaster Social Security is (and Medicare and Medicaid are even worse). Fortunately for all of us, it looks like the US Supream court will overturn that one. Stay tuned.

So again I ask on Social Security, where is the $75,000 a year that I should get starting when I'm 65? I'll be lucky to get half that much. And I am not alone, I have LOTS of company.

Yeah, I have worked in banks for 20 years, every ad we put out has a disclaimer that all investments carry risk. The closest thing to a risk free investment are short term govt bonds. Which, if you're idea is to balance the budget, where are going to find these bonds? If you are going to dismantle the social safety net, AND end the support for widows and orphans (30% of SSI goes to widows and orphans of working age families), and still not balance the budget, then how do you improve our national general welfare, or ensure domestic tranquility with your program?

And as others point out, it is unlikely that you were earning $100,000/ yr, 40 years ago. If you were, then you ought to have been saving more. It is more likely you were making a middle class income, and had no chance to save $8000 / yr on a 8000 -12000 income.

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Phaedrus76
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Sep. 14, 2010 7:21 pm

Quote mauiman58:Please inform me what outrageous assumption I am making. The average T bill rate for the last 40 years or so is around 7%. If a person put $8,000 a year into an account and got 7% return every year, they would have 1.7 million dollars after 40 years. You can run that calculation as well as I can.
Sure I can probably run calculations based on bad assumptions and get the same bad answer. The question is why are you bothering to peddle such nonsense?

First the 10-year Treasury yield has only been above 7% for about ONE year in the past 20. That's already half your 40 year time frame. http://research.stlouisfed.org/fred2/data/GS10.txt

Then there's payments into SS are for two funds... Old Age & Survivors as well as Disability Insurance. SS is a social INSURANCE plan, not a retirement account. It pays for more than just one's retirement. Last amusing assumption is that that someone would sock away $8000 a year. Sure, that sounds reasonable now for people who are not struggling. But you're making the logical error that what's "reasonable" now can be applied to the past. So if the combined employee/employer withholding rate was about 8% http://www.ssa.gov/OACT/ProgData/oasdiRates.html back in 1971 they'd then have to be making about $100,000 a year to pay that amount… and I believe the cutoff then was probably about $40k. I think back in 1971 I was making about $10k which then was pretty good money equivalent to about $55k today. That put me close to the upper limit of the 3ed quintile http://www.census.gov/hhes/www/income/data/historical/household/2010/H01AR_2010.xls. So the total SS contribution from myself and my employer then would be about $800… a mere 10% of your fanciful $8000 a year.

So when you ask: "Where is the 1.5 million that I should have?" guess what Einstein.... you never had it. It's a product of your fantasy Orwellian Math.

Are there any intelligent right wingers out there?

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Pierpont
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Feb. 29, 2012 1:19 pm
Quote mdhess:As Thom has explained ad nauseam the only reason that the Social Security trust fund exists anyway is so that it can pay for the "baby-boom" generation.

When the T-Bills that make up the fund are cashed in where does that cash come from?

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WorkerBee
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Apr. 28, 2012 11:22 am
Quote WorkerBee:When the T-Bills that make up the fund are cashed in where does that cash come from?

The money needed to repay the SS IOUs will have to come from the on-budget side of the ledger... which is why it was critical to maintain the Clinton Surplus and pay down debt back in 2001. Bush KNEW this... he RAN on paying down debt to protect SS... then he did everything possible to sabotage debt paydown and create massive amounts of new debt. So as the SS surpluses run out, there will be less money loaned to cover on-budget expenses... and if we're still running a deficit, we'll have add to that deficit with SS payback... and the GOP isn't going to make it easy. They'll extract a high price because if they can't kill SS they'll try to kill some other Democratic programs..

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Pierpont
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Feb. 29, 2012 1:19 pm

You guys obviously have your minds made up and will not listen to the other side of the arguement. That's your choice.

You say my $8,000 dollar year average over 40-45 years is unreasonable, I think not. Remember, that includes the employer match, and right now they get me for $12-14,000 a year (including match), and will continue to get that out of me for many more years. My AVERAGE for 40-45 years will probably be higher than $8,000 a year.

However good point about the insurance, so you can figure that an eqivalent insurance policy would cost about $1,000 a year or so. So perhaps my numbers are a little high, but only a little. They were only meant to be ballpark anyway.

And I'll bet the average rate on the 30 year T Bill over the last 30 years is right around 7% (it was double figues for a lot of the 1980's). That's buy and hold until maturity, no risk there if you do not intend to sell them early. Risk free investmant unless President Barak "Downgrade" Obama gets a free hand. I don't see that happening, the House will stay in Republican hands, and they will block most of his tax and spend new programs even if he does get re elected.

So choose to believe what you will, that is your choice. But the fact remains that for anyone under the age of 55, Social Security is a rotten deal, and it is only going to get worse.

And Medicare and Medicaid are even in worse shape. How those programs are going to survive I have no idea. At least Social Security will survive.

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mauiman58
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Jan. 6, 2012 5:45 pm

Quote mauiman58:You guys obviously have your minds made up and will not listen to the other side of the argument. That's your choice.
TRANSLATION: You FAIL to make a convincing case with your Orwellian Math... you now refuse to stand by your own numbers, and it's OUR fault for punching holes in your fairytale? Are there any intelligent right wingers out there? Not in this thread.

You say my $8,000 dollar year average over 40-45 years is unreasonable, I think not. Remember, that includes the employer match, and right now they get me for $12-14,000 a year (including match), and will continue to get that out of me for many more years. My AVERAGE for 40-45 years will probably be higher than $8,000 a year.

No one gives a crap what you contribute now. I told you that was a big error in your thinking and you're so wed to your fantasy you refuse to rethink your fairytale. I went BACK 40 years to show you that your $8000 number was nonsense... because THEN, to contribute a mere 10% of that $8000... including one's employer's contribution, one needed to be at the top of the 3ed quintile for household incomes. With the cap at about $40k, NO ONE was contributing $8000 a year into SS.

However good point about the insurance, so you can figure that an equivalent insurance policy would cost about $1,000 a year or so. So perhaps my numbers are a little high, but only a little. They were only meant to be ballpark anyway.
Ya, you always think your posts are based in reality. If so why aren't you standing by your numbers?

And I'll bet the average rate on the 30 year T Bill over the last 30 years is right around 7% (it was double figures for a lot of the 1980's).

So in other words, since you never cited a credible source, you really didn't have any facts as to the actual average T Bill yield. Why didn't you just say so.

And Medicare and Medicaid are even in worse shape. How those programs are going to survive I have no idea. At least Social Security will survive.

That's because the GOP and many Dems refuse to go the Single Payer route which would bring the efficiencies that would fix these problems. There are reasons why a nation like Canada can cover EVERYONE with about 60% of the per capita spending we spend to leave out 50 million people. Sure Canada isn't perfect. But think what they could do with 70% or 80% of what we spend. The GOP simply refuses to go along with any plan that doesn't enrich their buddies at the public's expense. After all, that's what they want for SS as well.

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Pierpont
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Feb. 29, 2012 1:19 pm
Quote chilidog:

If we imagine a world without inflation and you start working at 18, by 63 you will have worked 45 years, saving 12.4% of your earnings every year, thereby accumulating 558% of your average annual wage (45 * 12.4).

So you will have had to average $269,000 annual wage to accumulate $1.5 million. Which isn't possible under today's laws that cap FICA taxes at $100k.

The cap for 2012 is $110k.

The most you will accumulate after 45 years of working is 614k (110k x 12.4% x 45.) Assuming you'll make 110k the day after you graduate high school and every year thereafter without fail.

There aren't many publicly traded companies that have been around for 65+ years in the same form. I'd be curious to see the total return on stock compared to gold for General Electric, Ford, Exxon. I'm willing to bet they don't beat the price of gold (i.e. inflation) over a 45 year cycle. Kodak and Pets.com sure haven't. And that's including the post-war period of American hegemony and the last 30 years of labor arbitrage.

chilidog
Joined:
Jul. 31, 2007 3:01 pm

Quote chilidog:

I'm willing to bet they don't beat the price of gold (i.e. inflation) over a 45 year cycle. Kodak and Pets.com sure haven't. And that's including the post-war period of American hegemony and the last 30 years of labor arbitrage.

Gold prices suffer from the same problem stock prices do... that any high price is maintained by more dollars chasing stocks than cashing in. The stock market was pretty stagnant for about 25 years until the combination of IRAs and the Baby Boomers increased demand. But once that demographic bubble starts to cash in... what then happens to the price of stocks if the next generation or Wall St don't keep that level of demand up to compensate for sales of stock? As for gold, I can't think of a more manipulated market all designed to increase demand. Bottom line... there's no free lunch and any hope for retirement plans really depends on the further expansion of the economy. And this is where I see the Right as so dangerous. They want to destroy the mutually beneficial relationship between the public and private sectors that bootstrap each other.... and they want to hijack government and divert public monies to pump up profits for their buddies instead of investing in the nation as a whole.

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Pierpont
Joined:
Feb. 29, 2012 1:19 pm
Quote Pierpont:
Quote WorkerBee:When the T-Bills that make up the fund are cashed in where does that cash come from?

The money needed to repay the SS IOUs will have to come from the on-budget side of the ledger... which is why it was critical to maintain the Clinton Surplus and pay down debt back in 2001. Bush KNEW this... he RAN on paying down debt to protect SS... then he did everything possible to sabotage debt paydown and create massive amounts of new debt. So as the SS surpluses run out, there will be less money loaned to cover on-budget expenses... and if we're still running a deficit, we'll have add to that deficit with SS payback... and the GOP isn't going to make it easy. They'll extract a high price because if they can't kill SS they'll try to kill some other Democratic programs..

You will get no disagreement out of me on this point, Bush and the Republican led congress were spending like drunken Democrats. Or is the proper term Democratics?

But assigning blame does not fix the problem. When people say that the SS trust fund will allow us to keep the system soluable they are being disingenuous, that is my point.

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WorkerBee
Joined:
Apr. 28, 2012 11:22 am

Quote WorkerBee:You will get no disagreement out of me on this point, Bush and the Republican led congress were spending like drunken Democrats. Or is the proper term Democratics?
It's a rather unfair accusation. When Democrats were in control the entire national debt was about 960 billion in 1981. That was cumulative from all past admins... at least going back to about 1960 when the last time debt was paid down. Not a perfect record, but Reagan increased debt to about 2700 billion. You might deny it but the GOP changed at that point from the penny pinching party to the party of fiscal irresponsibility. Bush1 was perhaps the last of the old time fiscal conservatives. Clinton cut the deficit and got to a surplus... Newt's spending cuts helped but not my much. Clinton would have gotten to at least a unified surplus without Newt. And soon as there was a surplus, Newt tried to sabotage it in 1999. Where Newt failed Bush2 succeeded with tax rates so low that in constant dollars they've only exceeded Clinton's last year in 2 of the past 11 years... and then only by a total of 140 billion (2005 constant dollars). Then there was the GOP's reckless spending. The unanswered question was why Bush ran on preserving the surplus and paying down debt... then went fiscally insane?

But assigning blame does not fix the problem. When people say that the SS trust fund will allow us to keep the system soluble they are being disingenuous, that is my point.
Sure we need to assign blame if we're to make sure the GOP doesn't get away with further sabotaging the fiscal health of the nation. If we don't discredit their insanity and kick the Dems in the butt for not exposing it and getting their own house in order, the SS will be at risk... which is exactly what the GOP wants. They run up debt then use it as a pretense to say they must be trusted to fix a program they've always wanted to abolish.

As for the trust fund, it's purpose was never to last forever... but if it can be increased or stretched out, then it will help close the gap. Just having an expanding economy will help as will pumping up wages... something the GOP seems determined to beat down.

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Pierpont
Joined:
Feb. 29, 2012 1:19 pm
Quote Pierpont:First the 10-year Treasury yield has only been above 7% for about ONE year in the past 20. That's already half your 40 year time frame. http://research.stlouisfed.org/fred2/data/GS10.txt.

Are there any intelligent right wingers out there?

That is just god damn funny. He says 40 years, He's right, You cherry 20 years to argue. Then give your bullshit tag line. LOL.... Good stuff Pier...

Capital's picture
Capital
Joined:
Sep. 30, 2011 2:51 pm
Quote Pierpont:

Not a perfect record, but Reagan increased debt to about 2700 billion.

Sorry... Reagan did what?

That should read. Democrats increased the debt to about 2700 Billion. And I think we already covered the reasons why that is.

Clinton cut the deficit and got to a surplus Newt's spending cuts helped but not my much

Liar liar pants on fire.

Seemsk this thread is going as well as any thread PeirPont play's in.

Capital's picture
Capital
Joined:
Sep. 30, 2011 2:51 pm
Quote Capital: blah blah
Sorry Cap, your Orwellian rewrite of history has already be discredited. But I know you have no respect for anything but such fantasies, so I knew you'd crawl back from out from beneath your rock,.

Pierpont's picture
Pierpont
Joined:
Feb. 29, 2012 1:19 pm
Quote Pierpont:

Blah Blah Blah

Sorry Pier. Apparently Facts cannot pierce dogmatic delusion bubble. Just find it funny where you delude yourself into thinking you smart them Dumb and you think you can barrel over people with your lies.

You want me to scare you. As of a couple months ago. I’m am now a City Councilor.

Capital's picture
Capital
Joined:
Sep. 30, 2011 2:51 pm

Quote Capital:

Quote Pierpont:First the 10-year Treasury yield has only been above 7% for about ONE year in the past 20. That's already half your 40 year time frame. http://research.stlouisfed.org/fred2/data/GS10.txt.

Are there any intelligent right wingers out there?

I'm aware of that report. But I've already brought up the two difference between SS and the stock market. One is SS does more than cover one's retirement. As a social insurance program it covers survivor's benefits and disability as well. Two, stocks have been going up the past 30 years after about 25 years of stagnation because of two main factors... baby boom demographics and government policy to make IRAs contributions tax free. Are you saying both those factors will never change? Using the S&P in that study the FED ignores those factors.

That is just god damn funny. He says 40 years, He's right, You cherry 20 years to argue. Then give your bullshit tag line. LOL.... Good stuff Pier...

So in your mind picking HALF of the last 40 years is "cherry picking"? It's not as if I went back to 1952. I'm close to retirement so you're saying I should NOT use 20 years that apply to me? ROTF And what if someone started to buy T Bills in 92 and already had 20 years of low interest? Compounding works better if the high interest is at the beginning not at the end of a set time period. I see you totally ignore the key point I made which is Maui's $8000 a year contribution was pure bull. But then you always did ignore whatever you found inconvenient.


Now, have anything intelligent to say?

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Pierpont
Joined:
Feb. 29, 2012 1:19 pm
Quote Pierpont:

I'm aware of that report. But I've already brought up the two difference between SS and the stock market. One is SS does more than cover one's retirement. As a social insurance program it covers survivor's benefits and disability as well. Two, stocks have been going up the past 30 years after about 25 years of stagnation because of two main factors... baby boom demographics and government policy to make IRAs contributions tax free. Are you saying both those factors will never change? Using the S&P in that study the FED ignores those factors.

Of course you are aware of the report, you posted it. So clearly you already looked back further than the 20 years and choose not to answer the question on the terms offered. He said 7% in 40 years. NOT 7% in 20 years. You purposely cherry picked his question. Than chastised his intelligence. I find that funny.

You got caught being a disingenuous A-hole, Don't try to make a discussion out of it.

So in your mind picking HALF of the last 40 years is "cherry picking"?

Did you not say "First the 10-year Treasury yield has only been above 7% for about ONE year in the past 20"

You can answer your own question. I'll assume it was rhetorical.

Capital's picture
Capital
Joined:
Sep. 30, 2011 2:51 pm
Quote Pierpont:
Now, have anything intelligent to say?

I was thinking the same thing. Me to you... might be a waste of time. But maybe I'll read the entire thread and see where I have some interest.

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Capital
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Sep. 30, 2011 2:51 pm

Currently Chatting

The other way we're subsidizing Walmart...

Most of us know how taxpayers subsidize Walmart's low wages with billions of dollars in Medicaid, food stamps, and other financial assistance for workers. But, did you know that we're also subsidizing the retail giant by paying the cost of their environmental destruction.

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