Thom just spent minutes lecturing a caller about how SS is insurance and not a "retirement plan." At the same time, Thom and Bernie Sanders will talk until they're blue in the face about how the cap on SS earnings should be lifted above $110,100 (and allowed to float upwards) BUT neither will address whether or not the future benefits should be allowed to "float" upwards using the same existing formula that is in place today... http://www.ssa.gov/pubs/10070.html . What a hypocrit.

Thom and Bernie both argue that SS should never be means tested, because once that happens Republicans have the ammunition to classify it as "welfare" and they will then move to eliminate it. I agree.

I also agree, Social Security is in deed an Insurance plan. All insurance plans have two common elements. Premiums (the cost to buy the plan) and benefits (the payout that is due, if and when the insured becomes qualified).

Thom and Bernie want premiums to float up without the benefits following the same trajectory.

Doing that will most certainly invite Republicans to classify SS as a "welfare program" and all will be lost.

Thom must be forced to admit that benefits must be allowed to track premiums, or his plan is meaningless.

Comments

THISAA's picture
THISAA 2 years 19 weeks ago
#1

as stated before:

When you are about to be throttled with the facts the correct progressive procedure is:

talk over, talk louder, or dump the caller.

CARL OLSEN's picture
CARL OLSEN 2 years 19 weeks ago
#2

Hi THISAA,

It's always good to hear from you and I hope I can always count on you to show up and "poke me" into reality.

Anyway, Thom has a lot to say that I can really sign up to...But on this issue, I won't be silenced. My issue is to move a small part of Thom's audience to ask for the truth from "the man behind the Hartmann curtain." (He really is pretty shifty and his audience doesn't require much of him).

Before you say it, I know I shouldn't be holding my breath for very long...But this is a site with some good minds...So I won't be giving up anytime soon...I really want to be challenged by the sound thinkers out there and not just the Progressive rabble...the crowd that turns into "the mob" who's most effective form of protest is "the temper tantrum."

"There are solutions out there but they are not to be found where most of Thom's listeners are hoping to find them."

Thanks, Carl

P.S. I'm going to "play my hand" a bit on this post by saying, "I can't believe that not one of Thom's audience (who've read my posts, and seen my comment, "There are solutions out there but they are not to be found where most of Thom's listeners are hoping to find them.") have never asked my to give a "peek" into my idea of a solution."

So long my friend and I know you know what some of the solutions look like...For me too, I only know what some of them look like...not all of them...but some of them.

THISAA's picture
THISAA 2 years 19 weeks ago
#3

I see a couple of options. Go ahead and apply SS tax on all earned income with no limit. Raise the benefits commensurate with funds paid in. This should work because enough of the high earners income stream paid in will exceed the amount paid out in the short term. One of the real issues with the SS system is the increasing number of real and phoney disability cases depleteing the fund. Hartmann will never admit this, but the young people of the world would rather have it in their own private account with the government totally out of the picture. I think this is the ultimate answer. It it were set up so it was untouchable, coupled with, an insurance plan to protect the investor against disaster makes the most sense to me. Combine that with a 401k system and suddenly the individual is totally responsible for their own retirement. What a concept. Hartmann drones on how the republicans want to take your money and give it to the Wall Street brokers is B.S. Current participants over 55 are totally uneffected by any Republican plan. The affected people would have many choice as to where to put their investments, even T-Bills Thom. Because Hartmann keeps his money under his mattress does not make it correct for everyone. He just missed a 40% run up in the market in the last three years alone. Not to mention gold and farmland increases.

A real safety net for the truly disadvantaged would have to somehow fit into this plan but only if the ability of the government getting it's fingers into it for other purposes was removed.

Sounds simple? It isn't. To create a truly solid self reliable system is very difficult to do but it needs to be created, and soon. 2033 is not even close to the totally broke date. It will continue to move forward untill we are just issuing printing presses in every seinors home. Much like Obama is running the government today.

CARL OLSEN's picture
CARL OLSEN 2 years 19 weeks ago
#4

Hi THISAA,

You are right on. Especially about the part letting the benefits float. I've done the math using the current formula and the results are surprising...

There is a very interesting phenomenon that takes place when you let benefits float.

First, a real quick over-view on how benefits are calculated. You can follow along on this link http://www.ssa.gov/pubs/10070.html . First point, no matter how long you've worked, SS only lets you count 35 years. Every year is "indexed" to account for the "time value of money." The total of your 35 "indexed" years of "CAPPED" earnings is then divided by 420 (the number of months in 35 years) to come to your average "indexed" monthly earning. Here comes the good part...you only get 90% credit on the first $767. On the amount between $767 and $4,624 your credit drops to 32%. On everything above $4,624 the credit drops to only 15%.

Now here is what happens to these figures:

A person who's earned at about 50% of the capped wages would get a monthly benefit of about $1,850 a month. If that person had worked for 41 years, retired at 66 and lives until 100 he'll take out more than $450,000 over what was put in.

For a person who's earned at 100% of capped wages the monthly benefit rises to about $2,470 a month. Making the same assumptions about retirement, working life and longevity they take out about $430,000 over what was contributed.

Now, if you keep everything the same within the formulas and lift the cap and let benefits float this is what would happen. A person making a million a year would get a monthly benefit of about $26,500, not bad. But here is where it gets real interesting. Making the same assumptions about work, retirement and longevity, the million dollar earner would FORFEIT, over $3.2MILLION of contributions. For a person making $10MILLION a year, the benefit jumps to more than $250,000 a month and the forfeiture climbs to more than $36,000,000.

I have a spread sheet on this that proves the point and I'd be happy to share it with you...

Sincerely, Carl Olsen

Bush_Wacker's picture
Bush_Wacker 2 years 19 weeks ago
#5

You seem to miss the whole point of social security. It's not designed to be an insurance program. It's designed to be a safety net for people who would have nothing at retirement age if not for SS. It's also designed to be an addition to retirement savings for the middle class. First and foremost it is a safety net. A person making 1 million dollars a year will likely never be in need of a safety net at retirement age. The reason there is a cap on SS contributions is because rich people put it there. They know that they will never need SS benefits and therefore don't want to contribute any more than they have to. SS is designed to help you pay bills after retirement; it's not a supplemental income for the rich. They don't want to see the cap lifted to a higher amount because they know that just costs them more money now for a future benefit that they will never need.

That 36,000,000 dollar "forfeiture" you show would be redeemed in 12 years according to your numbers. Anything after that would be a substantial suck on the system. 3 million dollars a year is a huge drain on the system for one person to aquire.

CARL OLSEN's picture
CARL OLSEN 2 years 19 weeks ago
#6

"Safety net" or "insurance" in Old Age. It's all the same to me. You can split hairs all you want.

Rich people may have put the cap there but it's immaterial who put it there. Republicans will not last another decade (or two at the most) and tax hikes are just around the corner. The rich COULD become simpathetic to having the cap on SS lifted if benefits could float as in my example.

Your comments about the $36M forfeiture are not accurate. It is infact a forfeiture. In my example the "rich guy" pays in about $140M and takes out about $104M forfeiting $36M. You, on the other hand, will take out more than you pay in if you live beyond 80 (a real possibility today).

Bush_Wacker's picture
Bush_Wacker 2 years 19 weeks ago
#7

All I know is that the SS system was not designed in any way shape or form to be an investment for rich people. It's designed to be a safety net or "insurance" for people who during their laborous lifetime do not have the means in which to save enough money to get away from the work force before they die. It's a humane approach to our seniors who while working helped other seniors in the same fashion. It's has absolutely nothing to do with providing for those who will never need help. Senior citizens are still "citizens" and 40% of those senior citizens have stayed out of complete poverty because of SS. It's not about who paid in how much or who takes out how much, it's about humanity in a civilized society.

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Last week, the United States Senate actually considered a constitutional amendment on campaign finance. Last Monday, the Senate advanced Tom Udall's proposed amendment, which would allow Congress to regulate money in politics. Seventy-nine senators voted to allow debate on the measure.