30-05-2003 05:23									#181
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quote: Originally posted by Imran Siddiqui Because of this thing called the baby boomers. There is no way that a small number of wage earners will be able to support a larger number of baby-boomer retirees. The only way to MAKE it work is to take money from the rest of the budget (and it's not going to be small). SS will be used up in a flash and won't even be close to enough to cover the rest.

Do you know what the deficits are projected to be when the trust fund runs out some time in the 2030s? Do you think you know what the tax base will be in 2030s? No you don't. This is the biggest Chicken Little bull ever. Even under reasonable forcasts there is know way a knowledgable person would make such a projection.

	30-05-2003 05:34									#182
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So what's the magic wand, if not tax increases and/or benefit cuts, that cures a declining tax payer/beneficiary ratio and longer beneficiary lifespan?

There's a lot of situations where I don't advocate privatization at all, but SSA isn't one of them.

As long as you have the same rules for the amounts that get paid in, and analogous rules for monthly benefits, any process that earns a superior return on investment will produce a higher benefit level for the input cost. Since the government's contrived formula is in essence a modeled low-interest loan at favorable rates to the government, it's pretty tough not to beat that crap rate of return.

One of the alternatives I suggested was simply privatizing the trust fund management, and allowing the money to be invested in qualifying types of real world investments.

As far as people falling through the cracks, they do anyway - if you're a low wage earner your whole life (say an Arkansas housewife who works WalMart after the kids move to their own doublewides, and your retired hubby (who made more money and worked longer - he was the assistant night shift supervisor at WalMart ) croaks from sunstroke while bass fishing two years into his retirement, you're SOL. His remaining benefits aren't transferable to you to combine with your own, you don't have a right of survivorship or inheritance, and the total amount you get is crapola.

If you privatize, once you hit retirement age under the IRS regs, there's nothing in the world that prevents you from taking the principle amount of your retirement and buying an annuity or combination of annuities that will pay out over ten years, twenty, or forever - it's just a matter of figuring how much present income you want vs. how much principle you want to diminish over time.

There's no reason that a properly structured privatized plan, working with the same contribution levels, shouldn't give you at least a 50% greater return, with superior survivorship and heritability rights.

	30-05-2003 05:36									#183
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This thread is all over the place...

Kidicious, when SS was first enacted the retirement age was set to 65... at a time when the average US lifespan was 61. Why? Because it was never designed to pay out in the first place - FDR and the New Dealers, looking back at Bismark, thought of using the idea of Social Security as a low-cost (political cost that is) means of raising taxes.

And I doubt that Odin really has any idea of just how "regressive" the Social Security tax is for some people. If you are a black male, you can expect to pay into SS for 40 years, and collect for 3... which was better than 1991 when you had a 50/50 chance to pay for 39.6 years and collect never.

What is the annual rate of return for Social Security for a child born in 1997? -1.5% - and it's getting worse (and has been declining ever since Ida Mae Fuller received her first check - she herself made $20,000+ in SS payments after contributing a whopping $22.00.)

Life expectency stats at (PDF document): http://www.cdc.gov/nchs/fastats/pdf/nvsr51_03tb12.pdf

	30-05-2003 05:37									#184
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quote: Originally posted by Kidicious Do you know what the deficits are projected to be when the trust fund runs out some time in the 2030s? Do you think you know what the tax base will be in 2030s? No you don't. This is the biggest Chicken Little bull ever. Even under reasonable forcasts there is know way a knowledgable person would make such a projection.

It's a basic forecasting problem. Of course, nobody knows anything of what will happen tomorrow, much beyond the sun rising in the east.

But you can forecast a range of scenarios, try to put some objectivity in it, and compare it against present growth and demographic trends. You solve for a range of reasonable answers, in other words.

	30-05-2003 05:42									#185
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quote: Originally posted by JohnT This thread is all over the place...

It's one of the unwritten rules of the OT that no thread survives subject drift beyond Page 2.

quote: What is the annual rate of return for Social Security for a child born in 1997? -1.5% - and it's getting worse (and has been declining ever since Ida Mae Fuller received her first check - she herself made $20,000+ in SS payments after contributing a whopping $22.00.) Life expectency stats at (PDF document): http://www.cdc.gov/nchs/fastats/pdf/nvsr51_03tb12.pdf

My grandfather on my mom's side had that beat - he never paid in a dime, never even got a card or number, and buffaloed them into benefits over a decade. They just probably wanted to get that obstinate kraut out of their office.

	30-05-2003 05:45									#186
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Anything to collapse the Ponzi scheme faster!

	30-05-2003 05:46									#187
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quote: Originally posted by Kidicious Do you know what the deficits are projected to be when the trust fund runs out some time in the 2030s?

There is no trust fund. Seriously, all that's in it is a bunch of IOUs which the government pretends is a trust fund as a way to hoodwink voters. If SS going to get paid for then the money is going to come out of the General Fund.

	30-05-2003 05:50									#188
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quote: Originally posted by JohnT This thread is all over the place... Kidicious, when SS was first enacted the retirement age was set to 65... at a time when the average US lifespan was 61. Why? Because it was never designed to pay out in the first place - FDR and the New Dealers, looking back at Bismark, thought of using the idea of Social Security as a low-cost (political cost that is) means of raising taxes. And I doubt that Odin really has any idea of just how "regressive" the Social Security tax is for some people. If you are a black male, you can expect to pay into SS for 40 years, and collect for 3... which was better than 1991 when you had a 50/50 chance to pay for 39.6 years and collect never.

That's also why survivor's benefits have always been so screwed - women live longer, but have lower average earning histories, so if the husband kicks off earlier, it's more profitable to the government to be able to terminate that "benefit" and pay off on the widow's reduced benefit.

In a private plan, it's your money, so when the husband dies, the money passes on by survivorship to the widow. (or vice versa, but demographic reality is that men make more on average and die earlier on average)

Social Security, as set up in the US, is the biggest single con job of all time.

	30-05-2003 05:51									#189
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How should we fix SS? How about push back the retirement age to reflect the longer life span, if people want to retire at the same age then they can but they'll have to agree to reduced benifets, stop indexing SS to inflation so we can slowly inflate our way out of it, cut spending so we can afford to pay for the coming retirees, and lastly partially privatize the system for young people but charge them an "opt-out fee" to help pay for grandpa and his parents who most certainly will be recieving a SS check.

	30-05-2003 05:55									#190
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I figure mild corrective surgery (which may not work adequately) is just as politically volatile as euthanizing Dr. FDRankenstein's monster, so considering the damage it can do, we may as well just get the job done and finish it off as painlessly as possible.

	30-05-2003 05:58									#191
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Mtg,

You are proposing adding risk to get more return. That's not the same as adding return with the same risk.

Oerdin,

Check this out.

SSA FAQs

	30-05-2003 06:05									#192
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Not necessarily. If you just invested in guaranteed fixed rate money market funds or 13 week Treasuries, in the same amounts and the same contribution rates, you'd get a far higher lifetime return, AND have full legal title to the principle, so you could sell it for an annuity payment stream, etc.

My whole point about restricting the type of qualifying investments is that you'd have a set of regulations that prohibited an unscrupulous fund manager from taking your entire retirement and doing a coffee-futures against Starbucks put options straddle.

	30-05-2003 06:05									#193
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quote: Originally posted by Oerdin How should we fix SS? How about push back the retirement age to reflect the longer life span..

If you want to push back the retirement age to the same proportions vis-a-vis the life expectency rate so that they are the same as when the scam was enacted (1934), we would need to raise it to 81.8 years of age.

Try getting elected on that plank!

	30-05-2003 06:08									#194
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quote: Originally posted by MichaeltheGreat ...doing a coffee-futures against Starbucks put options straddle.

Hey! I'd like a piece of that action! Where can I sign up?

	30-05-2003 06:08									#195
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quote: Originally posted by MichaeltheGreat Not necessarily. If you just invested in guaranteed fixed rate money market funds or 13 week Treasuries, in the same amounts and the same contribution rates, you'd get a far higher lifetime return

Nah

	30-05-2003 06:10									#196
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Not exactly a rigorously thought-out rebuttal, Kid.

	30-05-2003 06:10									#197
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Yeah, that settled it Kidicious

MtG is totally correct on that score. Check out the long term success for the markets.

	30-05-2003 06:16									#198
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Return is related to risk. You can say that something is lower risk, but that's just your own perception.

	30-05-2003 06:20									#199
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quote: Originally posted by Kidicious Oerdin, Check this out. SSA FAQs

That's great.

quote: Is there really a Social Security trust fund? Yes. Presently, Social Security collects more in taxes than it pays in benefits. The excess is borrowed by the U.S. Treasury, which in turn issues special-issue Treasury bonds to Social Security. These bonds totaled $1.4 trillion at the beginning of 2003, and Social Security receives more than $80 billion annually in interest from them. However, Social Security is still basically a "pay-as-you-go" system as the $1.4 trillion is a small percent of benefit obligations.

The "trust administrator" (SSA) loans your money to an affiliated entity (the Treasury) in a non-arms length transactions, at a below market interest rate (less than the rates paid for that week's issue of 30 year T-bonds, less than the 13 week T-bill rate, and every one in between) and does so while the trust is technically insolvent ("as the $1.4 trillion is a small percent of benefit obligations.")

If you used the common legal definition of trust fund, the Federal government could be sued by a class consisting of all payees and beneficiaries for causes of action including fraud, conversion, and breach of fiduciary duties, and should be criminally prosecuted.

If a private trust administrator did that, he'd be facing prison time and any lawyer would be looking to make a plea bargain rather than taking all the heat at trial, with no chance of acquittal.

	30-05-2003 06:26									#200
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quote: Originally posted by Kidicious Return is related to risk. You can say that something is lower risk, but that's just your own perception.

Let's say it's my "perception" that the risk the US government will legislatively dance around what would otherwise be a default on SS obligations by altering the time and manner in which benefits are payable is a helluva lot higher than the risk of the US triggering a global financial collapse by defaulting on Treasury bonds.

Besides, leaving the State of California aside as a big default risk, there's a ton of high-rated tax exempt munis and special purpose district bonds that could be mixed in an aggregated tax free bond fund that would significantly exceed the yield you'd get from a mixed spread of US treasuries.

edit - you can objectively verify it. Past bond rates for US treasuries can be researched, and you can take the SS formulas, plug in contributions at any level, and compare the returns. The whole reason the government is so attached to SS and propagandizes it so much is that they tax your money to create below market transfers for their benefit, then give you back some of your money years later, like they're doing you a favor. They do this so well, they get people to ardently buy into it and get all adament that "no way we're going to let you get away with not screwing us silly."

	30-05-2003 06:29									#201
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It's not the same thing as a private trust. They aren't doing it for profit, or did you think they were?

	30-05-2003 06:36									#202
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quote: Originally posted by JohnT Hey! I'd like a piece of that action! Where can I sign up?

Hey, it can be structured to have a nice return with the vast majority of risks fully hedged out. Coffee is certainly volatile enough. The only drawback is that Starbucks stock only weakly responds to coffee price movements, since it's still growth and consumer spending driven. Once store growth slows down a lot, unless they expand their non-coffee product lines, their stock will be a lot more responsive to coffee commodity movements.

	30-05-2003 06:37									#203
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quote: Originally posted by MichaeltheGreat edit - you can objectively verify it. Past bond rates for US treasuries can be researched, and you can take the SS formulas, plug in contributions at any level, and compare the returns. The whole reason the government is so attached to SS and propagandizes it so much is that they tax your money to create below market transfers for their benefit, then give you back some of your money years later, like they're doing you a favor. They do this so well, they get people to ardently buy into it and get all adament that "no way we're going to let you get away with not screwing us silly."

Fundamental diference between conservatives and the rest of us is that conservatives believe that govt is some monster which must be destroyed to save us. I'm not making that assumption, but you might impress some others with that . These transfers are no threat to us. It's all done for our benefit. The govt isn't stealing from us. They are providing a valuable service and doing it better than the private sector can.

	30-05-2003 06:41									#204
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quote: Originally posted by Kidicious It's not the same thing as a private trust. They aren't doing it for profit, or did you think they were?

That doesn't matter. States and special purpose public agencies have non-profit trust funds for a number of purposes, which all have arm's length and fiduciary standards. SS is the only claimed "trust" which is exempt from those standards, so to call it a trust totally stretches the legal definition to create a one-off example of a totally unique trust which has no features in common with any other type of trust, which all share that common set of features.

It's analogous to a Papul Bull (appropriately named in this case) in the Spanish colonial days in Latinamerica, which proclaimed that a capybara was a type of fish, so it could be eaten on Fridays and during lent, because fish was a lot harder to come by.

Despite spin from official authorities, a capybara is no more a fish than the SS "trust fund" is a trust.

	30-05-2003 06:46									#205
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quote: Originally posted by Kidicious Fundamental diference between conservatives and the rest of us is that conservatives believe that govt is some monster which must be destroyed to save us. I'm not making that assumption, but you might impress some others with that . These transfers are no threat to us. It's all done for our benefit. The govt isn't stealing from us. They are providing a valuable service and doing it better than the private sector can.

They're taking your money, loaning it to themselves at half the minimum market rates to fund their own pork projects and lack of fiscal discipline, then threatening tax increases and benefit deferrals because otherwise they won't have enough money to give you back what you put in?

Why don't they just give you the option of putting that money into US Savings Bonds or T-Bonds, at prevailing market rates? Because that would be borrowing your money and paying market rates for it, not taking it in the guise of giving you a "benefit" some decades down the road, by giving you back some of your own money.

And I'm only "conservative" to you lefties. Most of the conservatives consistently dismiss me as a lefty, and I'm a lifelong third generation plus Democrat. (Descended from a New Dealer political dynasty, no less ) I just recognize fiscal bullshit for what it is.

	30-05-2003 06:49									#206
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quote: Originally posted by MichaeltheGreat That doesn't matter. States and special purpose public agencies have non-profit trust funds for a number of purposes, which all have arm's length and fiduciary standards.

The difference is that your going to get your social security at the cheapest cost possible. There is no risk to you and no one is ripping you off .

	30-05-2003 06:55									#207
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If I was allowed market rate returns on those Treasury loans, I'd be subject to no more risk and get my "benefits" for half what I have to pay.

Since I'm paying at least double the market value of what I (may) eventually receive, I'm being ripped off by definition. (semantic argument killer: I will receive something, assuming I don't croak beforehand {another SS scam}, the operative question is how much will I receive and when will I first receive it?)

Yes, young Skywalker, I know it's hard to realize what you've believed in is really the dark side of the force, but it's not too late - join the rebellion.

	30-05-2003 06:56									#208
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quote: Originally posted by MichaeltheGreat loaning it to themselves

They do this in our benefit. Otherwise our taxes would be higher. If the money is there we should use it. You want to pay higher taxes and use the trust fund to make risky investments? What happens if the trust fund loses money. Then you will have to pay more taxes. It's working well the way it is. There is no scam.

	30-05-2003 07:00									#209
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quote: Originally posted by MichaeltheGreat Since I'm paying at least double the market value of what I (may) eventually receive, I'm being ripped off by definition. (semantic argument killer: I will receive something, assuming I don't croak beforehand {another SS scam}, the operative question is how much will I receive and when will I first receive it?)

True, but you have to look at it how it is designed, as social insurance. It's not really an investment. It's insurance. Some people don't recieve benefits.

	30-05-2003 07:25									#210
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quote: Originally posted by Kidicious They do this in our benefit. Otherwise our taxes would be higher.

Or they'd have to evaluate the true cost of money, take current "transfers" out of calculating deficits and surpluses, and the increased awareness of real costs would alter spending priorities, force increased fiscal discipline, decrease tolerance for bloat and waste, etc. with a gradual lowering of the net cost of government services.

quote: If the money is there we should use it.

I think that's pretty much the view Jimmy Hoffa, Allen Dorfman and Joe Lombardo had about the Teamster's Pension Fund too.

quote: You want to pay higher taxes and use the trust fund to make risky investments?

Now you're spinning my statements into strawmen. Higher taxes is a function of a lot of things, including the state of the economy, fiscal discipline and spending priorities. Being able to "borrow" captive money at below market rates in a disguised tax isn't one of them.

quote: What happens if the trust fund loses money. Then you will have to pay more taxes.

The so-called "trust fund" will make more money if it's removed from the Treasury's ability to tap it for below market interest internal loans-on-demand. If that income is in turn taxed in the same manner as present SS benefits, under the same criteria, then there will be more tax revenues collected due to the higher gains, not less. Do the math.

quote: It's working well the way it is. There is no scam.

Since you trust the government so much (everything they're doing is for our benefit, right? They wouldn't lie. ), then I guess you have to take the SSA at it's word when they say the system will have to increase taxes and/or cut benefits and/or defer the earliest date at which you can receive benefits.

If the government you trust so much says benefits will go down and taxes will go up, that's no worse a result than you claim will occur with privatization.