Posted on 12/02/2011 9:28:20 AM PST by tobyhill
Are you suggesting that the USA not collect any taxes?
I’m suggesting that your argument for raising taxes is the same one Nancy Pelosi makes.
I want to keep more of the money I earned, so I can invest it for my own retirement, and not rely on the Social Security fraud fund, a Ponzi Scheme if there ever was one.
You seem more interested in the government’s accounting issues, and getting money from taxpayers to shore up a government program. Feel free to send in as much of your own money as you’d like. But please don’t argue for a tax increase that would force me to join you in your generosity to the government.
If you look at your paystub, you’ll notice Federal Income Tax, Social Security and Medicare broken out as separate deductions from your gross pay.
Well...
Federal Income Tax is used for general Federal government spending, meaning paying the military, dept of state, department of energy, etc.
Social Security is program that was set up to be separately funded. It has it’s own payroll deduction that funds it. I’d like to see the amount I pay into Social Security stay inside the Social Security program - and only go to pay benefits for Social Security - not to go towards general discretionary Federal government spending.
Medicare is program that was set up to be separately funded. It has it’s own payroll deduction that funds it. I’d like to see the amount I pay into Medicare stay inside the Medicare program - and only go to pay benefits for Medicare - not to go towards general discretionary Federal government spending.
If the American citizen allows it, you know what will happen ?
Social Security and Medicare spending will be cut to almost nothing. A soup kitchen and a third-world health clinic.
But the Social Security and Medicare payroll deductions will continue to be collected - and the money will be spent on Federal employees and contractors. Big government.
This has already happened - to the tune of about $2.5 trillion dollars.
Over the years, the Trust Funds for Social Security and Medicare, the OASDI trust funds, had annual surpluses - they took in MORE than they paid out.
The surplus built up in the Funds.
And where to “invest” this cash ?
The Funds were required to only invest in U.S. Treasury bonds. Because they’re “safe” don’t you know.
Well, the U.S. government SPENT the cash it received for those bonds as the cash was received.
Now the OASDI Trust Funds sit there with well over $2 trillion dollars of these Treasury bonds.
And since the U.S. government is borrowing 43% (and that percentage is increasing) of what it spends - and has only a few months cash on hand at best - it does not want to pay cash for those bonds.
Unless the Trust funds get their cash back and then immediately reinvest. The Treasury is simply “rolling over” the government’s debt.
So can OASDI Trust funds really use the $2.5 trillion in surplus paid in from years ago ? The only way is if they sold those bonds on the open market to say some investor, European bank, China, etc. So, in reality, no, those surpluses will never be returned to the funds unless the Federal goverment starts running enormous annual surpluses. So EXCESS Social Security and Medicate cash was, in effect, taken from the funds by Congress and spent. Clever way to get more cash to spend without raising Federal Income Tax rates. If the Trust funds had invested in Corporate bonds, they’d be selling them right now and using the cash to pay the difference between benefits paid and cash collected from payroll deductions.
But guess what - I believe over half of the bonds are “special” and redeemable ONLY by the U.S. Treasury.
The U.S. Treasury continues to need to SELL MORE BONDS to borrow - since the Federal government spends almost twice what it takes in. It keeps issuing NEW DEBT.
So the last thing it wants is for investors who hold Treasury bonds to sell them on the open market. Since investors buying bonds could buy already existing ones instead of the new ones it needs to sell.
So the government does not want the OASDI fund to sell it’s bonds on the open market for cash. They want them to hold the bonds and keep accepting interest payments only.
The Federal Reserve bank is, more and more, becoming THE buyer of Treasury bonds, thereby being an “enabler”, allowing the government to spend more than it receives in taxes.
It’s coming down to this:
Federal employees versus American citizens who are retired
competing for tax dollars.
With all Federal revenue being a only a little more than 1/2 of all Federal outlays, it’s a nasty fight.
I ask this: who would like to see the Social Security and Medicare taxes stay in place as they are, but see Social Security and Medicare benefits reduced to zero ? All the revenue from those payroll deductions would go right to Federal employee paychecks and government spending. That seems wrong, right ? Collecting these “separate” deductions then spending them on general spending. But that is what politicians want to see happening. They like the idea of separate deductions - because it makes the total they collect out of a paycheck “seem” like less to the rube with a paycheck. They just want to be able to spend them as they want and not have to actually spend medicare revenue for medicare expenses.
Of course, it would be far more free market and much more true to the bounds of the Constitution to eliminate the Social Security and Medicare/Medicaid programs entirely and have those functions returned to the private sector, where they were before FDR and LBJ started the programs.
They would have to be phased out over a number of years since people rely on them so much at this point.
But the payroll deductions for them would need to be phased out as well !
Having paid in over 300k to SS in the last 50 years (mine plus employer in my name) I will be more then happy to just get back what I put in, plus interest of course. Then I won’t give a damn what you think, but if you think I will go along with you stealing my money you are very much mistaken.
That's great, and I agree wholeheartedly. I think that people would be astonished at just how much they would have in the bank right now if they had simply invested their contributions (and their employer's match) in long-term US Treasury bonds at the prevailing annual interest rates.
You seem more interested in the government’s accounting issues, and getting money from taxpayers to shore up a government program.
I see you are new here. If you took a moment to go back through my posting history, you'll see that I agree with you, and I have probably forgotten more about the intricacies of Social Security than you think you know about it. I've been studying and writing about it for three decades.
However, the reality is that you can't just shut off the spigot to Social Security. Phasing it out is possible, but it will require an orderly transition, similar to what Chile did back in the 80's.
Social Security is already underfunded, due to overly- optimistic economic assumptions, demographic implosion, and just plain political manipulation. The "trust fund" (which really isn't, but that's a longer discussion) is already being drawn down, starting 5 years earlier than expected. It was expected to be exhausted in 2036, but I think that date will also occur earlier. At that point, currently legislated payroll taxes will fund only 75% of the currently legislated benefits.
Decreasing the level of funding aggravates the existing problem, and makes it that much more difficult to solve it in an orderly manner. And if it's not done in an orderly manner, we'll find ourselves in the same predicament as Greece.
But, let me put it in terms that you should understand:
If you aren't paying income taxes (perhaps because you are in the 47% that don't), then the shortage has to be collected from someone else. And with an annual deficit that already exceeds 1 trillion, that "somebody else" is most likely your children, or grandchildren.
But hey, at least you didn't have to pay it now.
The Funds were required to only invest in U.S. Treasury bonds. Because they’re “safe” don’t you know.
Yeah, it was kinda convenient, wasn't it. :-(
But seriously: can you imagine what would have happened if the SSA had invested it in anything else, like corporate bonds (as you suggested later)? You know that Congress would have never left the matter to competent investment advisors. They would have put all kinds of pre-conditions on what were acceptable investments, and would probably have been mandating certain investments, like:
Solyendra
General Motors
Chrysler
I could go on, but I think you get my point. Imagine the current "crony capitalism" of this administration, multiplied by thousands.
An aside: you probably know that the Obama administration voided a century of precedent in bankruptcy law by bypassing the secured bondholders that loaned money to Chrysler and GM, and gave company assets to the UAW.
Do you know who got burned? Yes, there were some "fat cat" investors, but there were also a lot of individual investors that had bought what they thought were safe investments for their IRAs. But, who really got shafted: public pension plans for teachers, police, firefighters, etc. Now, those pensioners will either get smaller cost of living adjustments in the future, or the state/local taxpayers will have to make up the shortages.
But, I digress. Back to your posting:
I believe over half of the bonds are “special” and redeemable ONLY by the U.S. Treasury.
I think you are referring to the "trust fund". It's all of them. According to ssa.gov, they held 2.6 trillion in "special issue" bonds at the end of 2010, and none in marketable securities.
BTW, the bonds are printed on "real" paper, and stored in a file cabinet in Parkersburg, WV.
But hey, at least you didn’t have to pay it now.
Yup, and that’s what counts. Everything else is speculation. Everything you say could also be said about the Bush tax cuts — by lowering the rates, it decreases revenues, and increases pressure for more taxes later. That’s what the Democrats have been telling us. Problem is, when you raise taxes, they don’t bank the money, the spend it. That goes for SS too — they grab the money out of there, and spend it on general gov’t programs.
I’m glad you know so much about Social Security. I don’t like the program myself, and the less we’re forced to pay into it, the better IMHO.
if you think I will go along with you stealing my money you are very much mistaken.
You’re saying that if I pay less taxes out of my paycheck, I’d be “stealing” your money? Wow. Socialism has come FreeRepublic!
All of this loving by freepers for Socialist Security. Maybe I shouldn’t be shocked. That was FD Roosevelt’s idea. Get people hooked on a government program and they’ll oppose any cuts in the taxes to fund it.
I suppose it will be the same with Obamacare in 10 or 15 years. There will be “conservatives” saying we can’t cut Obamacare taxes or it would undermine the system’s finances!
Well when you force someone to contribute all of their working life on a promise to pay X at retirement you had better keep the promise. I am find with just being repaid what I put it plus interest. I don’t think that is being unreasonable at all.
Well when you force someone to contribute all of their working life on a promise to pay X at retirement you had better keep the promise
1. I’m not on the hook for the government’s promise. I didn’t make the promise. I’m not stealing from you by not letting the federal government swipe more of the money that I earned at my employment.
2. Even the government isn’t on the hook for its own promise. Social Security benefits are not a contractual obligation, and they can be changed, lowered, even eliminated without any legal impediments. “Entitlement reform” is a fancy term for lowering SS benefits.
3. You’ve bought into the whole fraudulent presentation of Social Security as some kind of retirement fund. It’s not like a mutual fund, annuity, or the equities in a 401-k. You have no claim to the money that was taxed away from your pay check. It was spent as soon as the government got it. On the street, they call this kind of scam a “Ponzi scheme”
Nobody is loving anything. If you wont change it you have to pay for it. Doing otherwise just adds to our problems. End it or amend it or pay up. That is pretty simple.
If you wont change it you have to pay for it.
No, I don’t have to pay for it — or, rather, I don’t have to pay as much, if the payroll tax is cut. If the GOP votes to raise my payroll taxes, I’m voting third party.
I’m a Republican because I believe in lower taxes, not in raising taxes to fund the welfare state (including Social Security). If the GOP is going to adopt its pre-Reagan stance of being the tax collector for the welfare state, I’ll say goodbye to the party.
If the GOP is going to continue its stance of adding to the National debt, I’ll say goodbye to the party. Apparently you don’t mind the spending as long as you aren’t taxed for it. I say cut the spending then cut the taxes.
Even if it's a flat tax, that's all Social Security is. The only distinction is that it's "inter-generational", unlike other transfer payments that happen in the same fiscal year.
But, you've grasped the real point I've been trying to make: lowering the Social Security tax simply shifts the burden elsewhere. Without changes to the benefit side, the burden doesn't disappear.
Depending on the balance of payments, that burden is either being shifted further onto future generations, or it's being shifted onto the people that already pay most of the income taxes: the top 10% of taxpayers.
If you find that acceptable just because you don't have to pay it, then you've joined the protestors at Occupy Wall Street in principle.
If the GOP is going to continue its stance of adding to the National debt, I’ll say goodbye to the party. Apparently you don’t mind the spending as long as you aren’t taxed for it. I say cut the spending then cut the taxes.
So you’re fine with having the Bush tax cuts expire at the end of next year?
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