30-05-2003 07:27									#211
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quote: Originally posted by Kidicious 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.

Since you have no choice but to pay it to one entity at rates it chooses, it's a tax. Insurance is something I can buy on the market at competitive rates and configure to meet my personal needs. Hey! I like that! Let's turn SS from a tax to an insurance policy.

	30-05-2003 07:41									#212
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quote: Originally posted by MichaeltheGreat Being able to "borrow" captive money at below market rates in a disguised tax isn't one of them.

You don't borrow from yourself. You use the money you have, or you get money from somewhere else. I say use the money. To do otherwise would not be rational.

	30-05-2003 07:50									#213
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quote: Originally posted by MichaeltheGreat Since you have no choice but to pay it to one entity at rates it chooses, it's a tax.

Ah, you just like the word premium better than the word tax. They both cost.

quote: Originally posted by MichaeltheGreat Insurance is something I can buy on the market at competitive rates and configure to meet my personal needs. Hey! I like that! Let's turn SS from a tax to an insurance policy.

The bottom line is that we can choose not to have a social security system. So far we haven't. I think the reason is than we can't do better than the system we have. We pay taxes for it and we get benefits. We can't get more bang for our buck with an alternative system, so we don't.

	30-05-2003 07:54									#214
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quote: Originally posted by Kidicious You don't borrow from yourself. You use the money you have, or you get money from somewhere else. I say use the money. To do otherwise would not be rational.

If you're pretending to be a trust administrator and you transfer "trust" money to your general operations funds you're borrowing from yourself. Unless that "trust" money is someone else's. In that case, the "owners" should have the right not to give it to you, and the right to get it back when they want it.

Funny, SSA tells me I can't do that, so I guess the money isn't mine, it's the government's now.

But you did finally hit on the fun-and-gamesmanship behind the SS scam.

	30-05-2003 07:57									#215
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quote: Originally posted by MichaeltheGreat Funny, SSA tells me I can't do that, so I guess the money isn't mine, it's the government's now.

The thing that your missing is that the govt doesn't own things the way people own things. The govt is an institution which we created to benefit ourselves. Unless there is some king or there's some corruption there is no scam.

	30-05-2003 07:58									#216
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quote: Originally posted by Kidicious Ah, you just like the word premium better than the word tax. They both cost.

One you have a choice over, the other you don't (unless you want to do time in a Federal prison).

quote: The bottom line is that we can choose not to have a social security system.

I'm ready to opt out tomorrow. I'll even sign waivers out the wazoo that I'll never whine to the government for benefits, or inconvenience them by panhandling or standing in soup lines.

quote: I think the reason is than we can't do better than the system we have. We pay taxes for it and we get benefits. We can't get more bang for our buck with an alternative system, so we don't.

We've never tried. I suppose we should reject all innovations, especially when the current system can be objectively proven to be worse than alternatives as simple as market rate treasury securities.

	30-05-2003 08:08									#217
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quote: Originally posted by MichaeltheGreat One you have a choice over, the other you don't (unless you want to do time in a Federal prison).

That's why it's SOCIAL insurance. It only works if everyone pays.

quote: Originally posted by MichaeltheGreat We've never tried. I suppose we should reject all innovations, especially when the current system can be objectively proven to be worse than alternatives as simple as market rate treasury securities.

From what I've seen alternatives have been tried in other countries, and as anticipated, they were/are more expensive and not as beneficial.

	30-05-2003 08:10									#218
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quote: Originally posted by MichaeltheGreat Those with less than ten years but more than five paid into the system get a one time tax free (if it goes into a qualifying plan) lump of 100% of what they've paid in, but the employer's matching side stays to partly handle the buyout of the old folks. Those with less than five years into the system, too bad, you wouldn't have seen a dime anyway.

How is this a "tax free" distribution? Haven't I already paid the taxes on it once? Also, what about the time value of my money? Shouldn't I get at least what a T-bill was earning?

quote: PLATO - a little inflation is nice. Right now, it's been so low for so long that people completely discount the notion of it in spending decisions.

I totally agree. It is good for inflation to be high after a surge of borrowing. The devaluation of the debt over time makes the burden on the future taxpayer much less. The problem is that the government figured this out in the early 1980's and I am afraid that they will count on it and will therefore increase deficet spending. This along with the politically unsolvable SS mess will lead to large burdens for future generations that can only be marginalized by near hyper inflation.

	30-05-2003 08:15									#219
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quote: Originally posted by Kidicious The thing that your missing is that the govt doesn't own things the way people own things. The govt is an institution which we created to benefit ourselves. Unless there is some king or there's some corruption there is no scam.

Did you really say that. Democracies are just as corrupt as a monarchy, it is just more hidden, as in Bush's connections with Big Oil, or Congess's pork-barreling.

	30-05-2003 08:19									#220
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quote: Originally posted by PLATO1003 How is this a "tax free" distribution? Haven't I already paid the taxes on it once? Also, what about the time value of my money? Shouldn't I get at least what a T-bill was earning?

It's a tax free distro in the sense that even though you paid income taxes on the original income (same as you would overcontributing to an IRA or SEP), you won't have the distro treated as taxable income, like you could be if the statute deciced to treat it that way (lots of things are double taxed), and you wouldn't be penalized, like you would under early withdrawal rules for SEPs, IRAs, etc.

You could also be compensated for time value of money, or any other value, if you wanted, but that would be a phantom benefit, because the old folks already in the system would have to be paid out. Not much point (although the government does it all the time) in putting money in your pocket, to take more out later. I figure just getting a lump of money out would be the simplest way, because this isn't an ongoing process, but a one-time exit from an insolvent system.

quote: I totally agree. It is good for inflation to be high after a surge of borrowing. The devaluation of the debt over time makes the burden on the future taxpayer much less. The problem is that the government figured this out in the early 1980's and I am afraid that they will count on it and will therefore increase deficet spending. This along with the politically unsolvable SS mess will lead to large burdens for future generations that can only be marginalized by near hyper inflation.

That is the problem, so I see the only viable solution as a little pain now, couple with moderate inflation. SS is a winning game for the government now, but the artificially low interest rates "earned" on the SS surplus, coupled with demographic changes, make for hell to pay if the government stays in the game. The longer it stays in, the worse things will get.

	30-05-2003 08:26									#221
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quote: Originally posted by Odin Did you really say that. Democracies are just as corrupt as a monarchy, it is just more hidden, as in Bush's connections with Big Oil, or Congess's pork-barreling.

You don't like the corporate subsidies and MtG doesn't like SS, but the people elect the politicians who make these spending plans. If there is unwanted spending it's the voters' fault.

	30-05-2003 08:27									#222
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quote: a one-time exit from an insolvent system.

Okay, this makes sense. I guess its better than settling for pennies on the dollar.

quote: That is the problem, so I see the only viable solution as a little pain now, couple with moderate inflation. SS is a winning game for the government now, but the artificially low interest rates "earned" on the SS surplus, coupled with demographic changes, make for hell to pay if the government stays in the game. The longer it stays in, the worse things will get.

I agree with this also. The problem I see is that even if we were to get a politician with the guts to try, then political in-fighting and public reaction wouldn't let them be around long enough to barely get started.

Hmm...I wonder. Is it possible to file some type of lawsuit that would let the court take control of the system?

	30-05-2003 08:32									#223
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The government would have to waive sovereign immunity (which it wouldn't), the right of taxation would be upheld as a basis for dismissal for failure to state a claim (so the Federal District Court and CCA would dump it), and the Supremes would decline to hear it as a political issue, not a judicial one.

Unfortunately, I don't think it will get changed substantially until it's nearly blown up in everyone's faces.

	30-05-2003 08:34									#224
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quote: Originally posted by Kidicious That's why it's SOCIAL insurance. It only works if everyone pays.

SOCIALism. I'm glad you're seeing the light that it's a scam, though.

quote: From what I've seen alternatives have been tried in other countries, and as anticipated, they were/are more expensive and not as beneficial.

And their markets, fiscal, tax and legal systems, and compliance rates, let alone their tax bases, aren't comparable. Do you really want to use France as a model for US policy, or vice versa?

	30-05-2003 08:35									#225
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quote: Originally posted by MichaeltheGreat Unfortunately, I don't think it will get changed substantially until it's nearly blown up in everyone's faces.

Agreed

	30-05-2003 08:37									#226
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quote: Originally posted by Kidicious You don't like the corporate subsidies and MtG doesn't like SS, but the people elect the politicians who make these spending plans.

Not me, I left the country.

	30-05-2003 08:50									#227
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quote: Originally posted by MichaeltheGreat And their markets, fiscal, tax and legal systems, and compliance rates, let alone their tax bases, aren't comparable. Do you really want to use France as a model for US policy, or vice versa?

No, I don't want to follow their poor example, especially when the system we have is working and not going to blow up in our faces. And you don't get to vote on it since you aren't a citizen.

	30-05-2003 08:52									#228
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I'm a citizen, I just left.

And our system is going to cause the biggest financial meltdown in history unless it's fixed or scrapped.

	30-05-2003 08:55									#229
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quote: Originally posted by MichaeltheGreat I'm a citizen, I just left.

You still get to vote then don't you.

quote: Originally posted by MichaeltheGreat And our system is going to cause the biggest financial meltdown in history unless it's fixed or scrapped.

Nah, if we have to we will just raise taxes or cut benefits.

	30-05-2003 08:57									#230
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quote: Originally posted by Kidicious You still get to vote then don't you.

Only for President, and my vote gets lumped in (with all the other non-resident expats and territorial scum) with the whopping three electoral votes of the non-sovereign territory of Puerto Rico.

quote: Nah, if we have to we will just raise taxes or cut benefits.

Hey, sounds like a perfectly functioning system to me.

	30-05-2003 09:06									#231
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quote: Originally posted by MichaeltheGreat Hey, sounds like a perfectly functioning system to me.

Well, we can either take care of our elderly or not. If we want to take care of them it's going to cost us. There's no getting around it.

	30-05-2003 12:42									#232
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quote: Originally posted by MichaeltheGreat 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.")

MtG,

We weren't looking at the correct rate of return here. To figure out the rate of return first we have to know what the investment is. The investment is not the taxes collected on SS. The investment is the amount of taxes collected minus the amount paid out in benefits. That is, when SS trust fund is running a surplus, as it is now, the surplus is invested. When the SS fund will run a deficit there will be no investment at all. There will only be transfer payments from payees to beneficiaries.

So the true rate of return on the money which is now invested in the SS trust fund is comparable to whatever the government would have to pay to borrow the same amount of money, not the amount that is transfered between funds as interest. If the govt were to leave the funds in the SS trust fund there would be no return on investment at all.

Looking at it this way the rate of return isn't so low.

If we privatize the system we will still have to make the transfer payments to the beneficiaries of the old system while the beneficiaries of the new system would have to pay into a system for themselves. What's the difference in doing this and just raising taxes? Now what I want to know is where all this funding is going to come from if not from higher taxes. Or are you going to have the youngest generations pay into the old system and the new system at the same time?

	30-05-2003 14:19									#233
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quote: Originally posted by MichaeltheGreat Do you really want to use France as a model for US policy, or vice versa?

Now that would be good for some fun.

Btw, how are SS pensions calculated?
I think the contributions are capped at a 70k$ tax base... what is the maximum pension, and what is required to achieve it?

Btw2, for millionaires... quite meaningless due to inflation. Roughly: 400 $ a month saved and invested at 7 % return leave you with a million $ after 40 years.

	30-05-2003 18:17									#234
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"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."

There are no obligations for the government to pay any SS funds according to Nestor vs. Fleming and another (earlier) USSC decision that I can't remember right now.

	30-05-2003 18:21									#235
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quote: Originally posted by Kidicious 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.

No, it is not. In a USSC decision (possibly the aforementioned Nestor case) the Supreme Court decidedly ruled against the idea of SS as "insurance" because:

1. There is no guarantee that the individual will get any money back.
2. There are no ownership rights to ones' SS funds
3. The benefits cannot be passed down through the generations.
4. The Social Security "contribution" is a tax, with no choice among the citizenry but to pay it. Insurance coverage tends to be, you know, voluntary.

and a few other "minor" details.

	30-05-2003 18:37									#236
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quote: And our system is going to cause the biggest financial meltdown in history unless it's fixed or scrapped

I agree. I'm no expert, but I'd give it 50-100 years before the whole house of cards comes tumbling down.

-Arrian

	30-05-2003 20:57									#237
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quote: Originally posted by JohnT "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." There are no obligations for the government to pay any SS funds according to Nestor vs. Fleming and another (earlier) USSC decision that I can't remember right now.

True, the govt has no obligation to pay you your SS. Your contributions go to pay current retirees, and yes it's a tax, not a personal investment or personal insurance. Future generations could decide that when you retire you shouldn't get benefits even though you paid for others to recieve benefits.

	30-05-2003 20:59									#238
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quote: Originally posted by Arrian I agree. I'm no expert, but I'd give it 50-100 years before the whole house of cards comes tumbling down. -Arrian

By that time it will be running a surplus again. We just have to get through the next 20 years or so.

	30-05-2003 21:07									#239
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The government should allow ppl to "opt out" of SS for some other kind of break, i.e. wave capital gains on a specific portion of a traditional IRA, reduction in tax braket if they continue to work, or a reduction in tax on estate planning vehicles... I know that there are a lot of people out there who don't "need" SS, but only take it because they have been paying into their whole lives, and now they are being offered it.

My mom, for one, asked me if she should take the SS, she doesn't need it. I told her that she should, because I am still paying it, and I will never see a penny of it again. Without a kickback SS will always be a big mess. Thanks for the tax deferred invest vehicles, but that didn't really help my parents, or any of the baby boomers...

Deficit spending suks because of this whole mess.

	30-05-2003 21:17									#240
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quote: Originally posted by Japher The government should allow ppl to "opt out" of SS for some other kind of break, i.e. wave capital gains on a specific portion of a traditional IRA, reduction in tax braket if they continue to work, or a reduction in tax on estate planning vehicles... I know that there are a lot of people out there who don't "need" SS, but only take it because they have been paying into their whole lives, and now they are being offered it. My mom, for one, asked me if she should take the SS, she doesn't need it. I told her that she should, because I am still paying it, and I will never see a penny of it again. Without a kickback SS will always be a big mess. Thanks for the tax deferred invest vehicles, but that didn't really help my parents, or any of the baby boomers... Deficit spending suks because of this whole mess.

Japher,

Let's say that all the 20 somethings opted out. That would create a shortfall in payments. Where would the money come from to pay the current retirees?