Posted on 06/20/2011 1:08:08 PM PDT by jazusamo
Drs. Sowell and Williams are such a pleasure to read for the way they make things plain and use such boundless common sense to support their points, along with sound economics, of course. Bookmarking for later reference...
Small nit: The money was first laundered (in a way) by buying US Treasury debt issued as Congress spent more money than we had tax revenues coming in.
So the SS surplus wasn’t ‘spent’ so much as ‘used to buy debt payable by future tax revenues.’ The proceeds from selling that debt (to the Social Security fund, among other investors) was then spent.
You’re right that the banks had nothing to do with it. This is all the fault of Congress.
I think what happened some years ago was that they created a “unified budget” for counting SS receipts against other spending to make deficits look smaller. Before that the money was still being spent as it came in.
Yes, but the Treasury debt was special non-negotiable issue. In essence, the feds were writing themselves IOUs that amounted to a promise to tax the living daylights out of children not yet born to keep the Ponzi scheme going. Of course, Ponzi schemes must always collapse, and many of us here are part of the “lucky” generation that will be left holding the bag. Still, that is better than continuing with intergenerational theft that SS represents.
And must be a US citizen to collect.
The real hell of it is, if means testing happens I am so truly screwed.
The idea here is basically correct. However, this statement is usually joined to a second statement to the effect that this principle was violated by subsequent Administrations. However, there has never been any change in the way the Social Security program is financed or the way that Social Security payroll taxes are used by the federal government.
The Social Security Trust Fund was created in 1939 as part of the Amendments enacted in that year. From its inception, the Trust Fund has always worked the same way. The Social Security Trust Fund has never been "put into the general fund of the government."
Most likely this myth comes from a confusion between the financing of the Social Security program and the way the Social Security Trust Fund is treated in federal budget accounting. Starting in 1969 (due to action by the Johnson Administration in 1968) the transactions to the Trust Fund were included in what is known as the "unified budget." This means that every function of the federal government is included in a single budget. This is sometimes described by saying that the Social Security Trust Funds are "on-budget." This budget treatment of the Social Security Trust Fund continued until 1990 when the Trust Funds were again taken "off-budget." This means only that they are shown as a separate account in the federal budget. But whether the Trust Funds are "on-budget" or "off-budget" is primarily a question of accounting practices--it has no affect on the actual operations of the Trust Fund itself.
It started with LBJ's "war on poverty" and spread to just general throw around money.
Yes, you’re right.
The problem is that the SS fund had all this surplus cash.... and the question becomes “OK, what do we DO with this cash?”
Well, they could leave it as cash, returning 0% yield, and suffer the effective negative return of inflation.
Or they could invest it in something.
Now things start going sideways, *fast*. How do you “invest” this surplus from this regular income stream and not distort some debt issuance? To be as “safe as possible,” you can’t invest it in private sector debt, or stocks, or even state debt.
Because of the size of the funds involved, there’s no way you could invest it in a great many things without causing a bubble.
But as you say, all Ponzi schemes collapse. This one’s collapse is being accelerated by the size and persistence of the US budget deficit.
“I would be more than delighted if the government would return to me all the money that they have deducted, in constant dollars with the meager return of treasury certificates.”
If it makes you feel better, whatever you’re losing on SS you likely are making up on Medicare. That’s why Medicare is going seriously broke. The average recipient is getting about $3 in benefits for every dollar paid in taxes. Today’s youngsters are paying the lion’s share of your Medicare, not you.
http://www.urban.org/UploadedPDF/social-security-medicare-benefits-over-lifetime.pdf
Yeah. He’s right on target with that one.
An aside: I’d like to see everything the Left has glued onto our Constitutional Republic steamed, and lifted off like the wallpaper it is. Bad wallpaper too.
The Left feeds off everything they have instilled in our system since Woodrow Wilson’s time. There isn’t one damned thing they put in place that isn’t a means for them to route monies into circulation off the left side of the government back porch for their own benefit.
It’s like ALL the corrupt types of any political party that go into the “Profession” for the purpose of enhancing their own bank accounts. Get some project going using blocks of taxpayer money, and once in circulation on the project it becomes fair game. It’s an old trick.
The Left, all of those we can point to as “the Left” have made a killing off of taxpayers. (includes RINO’s)
“How do you “invest” this surplus from this regular income stream and not distort some debt issuance? To be as “safe as possible,” you can’t invest it in private sector debt, or stocks, or even state debt.”
I must be missing something. If you had invested this in a stock index fund, how would that distort things? True, it would have increased aggregate investment in the stock market, but had this been done from the get-go, there would have been a slow and steady increase, followed by a slow and steady withdrawal. Again, unless the Feds tried to pick winners or losers, I don’t see a big downside in this approach.
Admittedly, it would be even better if we’d started off with individual accounts and let everyone make their own independent decisions about where to invest. But note that the latter would have changed the mix of investments, but not the aggregate amount. So any alleged problem associated with the sheer size of this investment pool presumably would occur even if every SS recipient had invested on their own. As I say, I don’t see the downside.
Unfortunately I am the exception. I have paid the max in social security and Medicare for the last 45 years. If you look at the amount of money taken, I could have been far better off in private plans without SS or Medicare.
Although retired I continue to pay into my private insurance plans as I do want good medical care. I am one of the few that would have been better off without social security or medicare. I guess I am one of the elite rich living off the backs of the poor. /sarcasm I was 18 years old when I went to work on a drilling rig as a roughneck. I owe not one person anything except for those that can not care for themselves due to physical or mental disabilities. I owe not one person anything except for those that are handicaped by physical or mental disabilities. Post Reply | Private Reply | To 26 | View Replies
I'm there with you. If I can keep a halfway decent job where I can take a couple of week-long vacations during the year I'll consider myself doing well.
My mom had a hip replacement and was given a brand new walker which she used once or twice. Nobody would take it back. Every hip replacement gets a brand new walker to use once or twice.
Her husband died tragically and the hospital billed Medicare for surgical services that were not performed. When she complained to Medicare, they encouraged her to ‘work with the hospital on that’. They didn’t care one whit.
So much of Medicare is just plain wasted. I would estimate 50%. IMO, it’s not the seniors who are getting excessive benefits, it’s the providers who are enriching themselves at everyone’s expense.
The primary beneficiary of a socialist program is the socialist politician.
Don't knock the "providers", as a group. Sure, there are some who abuse the system -- but it's not the ordinary doctors, hospitals or services. It's a venal few -- I'd wager that 90% of the fraud is traceable to 2% of the providers.
That said, have you ever tried to reconcile a Medicare statement?
What you'll find is absolute chaos -- a total disconnect between real costs and arbitrary payments. The system defies rational accounting procedures; instead, it is an incoherent fabrication that nobody truly understands. Including those who are in charge of administering it -- either on the professional side or the government bureaucracy.
Like most government programs, it's a structure tailor-made for stealing.
Under the Ryan plan, with government vouchers available for the purchase of private health insurance, thus placing insurance companies in charge of administering the program, I would expect Medicare fraud to immediately drop by 90%.
“Their anger should be directed instead against those politicians who were irresponsible enough to set up these costly programs without putting aside enough money to pay for the promises that were made.”
Normally I would comment that it is impossible for a society to save dollars for the future. That’s still true. Our government though could have used that money to buy foreign bonds or gold. It did not. There was never a plan to do it. There was no “lock box” or savings account with anyone’s name on it.
great as usual jaz...at my age, galt is the only way togo...
Lacking so much in imagination, huh?
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