Perry no longer thinks SS is a Ponzi scheme.

[mhaze]

temper, temper.
yours is the burden of proof.

Okay. How do I prove the absence of something?

Sure,,,,,bud.

 

[JoeTheJuggler]

If changes aren't made, the SS trustees report that it will be broke by 2036-2037.

That is their worst case scenario. In their best case scenario, it wouldn't happen for another 50 years after that.

At any rate, "If changes aren't made, the SS trustees report that it will be broke by 2036-2037" is not at all the same thing as saying Social Security is a Ponzi Scheme, or that it's like a Ponzi Scheme or even that it is already insolvent.

The trustees report also points out that relatively simple measures can be taken to guarantee the solvency of Social Security indefinitely, as I have said numerous times on this and the other recent thread on the same topic.

 

[johnny karate]

I'm not. We are talking about a book that's in the bookstores. Everything I've said can be verified, and if you are too lazy to go do it, then STFU.

Yes, I am too lazy to go to a bookstore to find a confirmed quote in Perry's book that seems to have eluded you.* Imagine that.

As far as the "STFU" option, I'll respectfully pass on that as well. But I will commend you on both the classiness and maturity of your response.

Or use your GoogleFU to provide the page numbers.

I've already provided sources. I don't feel a need to jump through any more hoops to satisfy your knee-jerk denialism.

If you think those sources are wrong, that is a positive claim which has to be substantiated.

*Perhaps you have the coloring book version?

 

[johnny karate]

At any rate, "If changes aren't made, the SS trustees report that it will be broke by 2036-2037" is not at all the same thing as saying Social Security is a Ponzi Scheme, or that it's like a Ponzi Scheme or even that it is already insolvent.

If there was a "Ponzi scheme" that guaranteed dividends for the next 25+ years, I'd probably invest in it.

 

[Random]

The SS trustees do not take into account the effect of the overall debt and money supply inflation on the value of the dollar, but consider the needs of "their department" in isolation. But it's not in isolation.

Like Rick Perry said, we need to have an "honest discussion" about SS.

Shame that no one in Washington wants to have an honest discussion about Social Security. Democrats don’t want to talk about Social Security falling apart because of unrelated financial issues with the Federal Government, and Republicans don’t want to talk about how $2.5 trillion dollars has been stolen from American workers in order to fund the Pentagon and tax breaks for the rich. Instead, everyone just talks really fast and hopes no one notices that its all gibberish.

 

[JoeTheJuggler]

Social Security can remain solvent independent of general budget tightening. It can happen by increasing the revenue, decreasing the payout, or both. This is fact, and can not be changed no matter how often or forcefully you state your opinion to the contrary.

Yep.

And again, in the very long term, this problematic change in the demographics of our population is not a permanent one.

Compared to most very long term problems we are facing, this is probably the easiest to handle. I predict Social Security will be solvent even after we have effectively run out of petroleum and been forced to switch to a different basis for our economy.

 

[mhaze]

....
Social Security has its own source of funds. Social Security can remain solvent independent of general budget tightening. It can happen by increasing the revenue, decreasing the payout, or both. ....

Hypothetically, I never denied that. In practice, it's inevitable that benefits will be cut and the minimum age raised as well other things. Including the dollars being paid out being worth far less in buying power.

More importantly, the Supreme Court has ruled Social Security has no contractual obligation to pay anyone anything. By the way, this in a way destroys the "Ponzi scheme" argument. If there's no contractual obligation, there can't be any illegal breaking of a contract.

But what you are arguing is sort of a "trust me" deal.

I like binding contractual relations way, way better. In "an honest discussion", all this would come out.

Shame that no one in Washington wants to have an honest discussion about Social Security. Democrats don’t want to talk about Social Security falling apart because of unrelated financial issues with the Federal Government, and Republicans don’t want to talk about how $2.5 trillion dollars has been stolen from American workers in order to fund the Pentagon and tax breaks for the rich. Instead, everyone just talks really fast and hopes no one notices that its all gibberish.

I have no argument with any of that.

 

[RandFan]

If changes aren't made, the SS trustees report that it will be broke by 2036-2037.

That is their worst case scenario. In their best case scenario, it wouldn't happen for another 50 years after that.

At any rate, "If changes aren't made, the SS trustees report that it will be broke by 2036-2037" is not at all the same thing as saying Social Security is a Ponzi Scheme, or that it's like a Ponzi Scheme or even that it is already insolvent.

The trustees report also points out that relatively simple measures can be taken to guarantee the solvency of Social Security indefinitely, as I have said numerous times on this and the other recent thread on the same topic.

This ^^^^ Thank you.

 

[Lurker]

Not sure what you are getting at, but we have already established that the SS securities are paid 4.6% for "loaning their money to the US government". I recall that the net return for an individual averaged 2%, but that would seem to vary with many circumstances. Full payments are provided for anyone who works at least 40 quarters or 10 years. Someone who works 40 years and contributes 4x as much does not get a dime more.

The conservatives complain that the SS $ is not in a "lockbox". I am saying that if we just squirreled the money under a mattress or put it in a lockbox the pile of money would earn no interest.

Conservatives also complain that they could get a better interest rate if they could invest the money themselves. Seems a bit contradictory, if you ask me.

 

[Lurker]

That is their worst case scenario. In their best case scenario, it wouldn't happen for another 50 years after that.

At any rate, "If changes aren't made, the SS trustees report that it will be broke by 2036-2037" is not at all the same thing as saying Social Security is a Ponzi Scheme, or that it's like a Ponzi Scheme or even that it is already insolvent.

The trustees report also points out that relatively simple measures can be taken to guarantee the solvency of Social Security indefinitely, as I have said numerous times on this and the other recent thread on the same topic.

Even if nothing is done to alter SS it is not as if checks will nto continue to arrive for those of us decades away from retirement. We would still get checks but might lose about 25% of what we expected to get.

And as Joe mentioned above, measures exist to close this gap. Raise taxable income limits, raise rates, raise retirement age, etc...

 

[sarge]

Yep.

And again, in the very long term, this problematic change in the demographics of our population is not a permanent one.

In the absence of a new baby boom, Social Security will be solvent after we solve the current bubble.

Compared to most very long term problems we are facing, this is probably the easiest to handle. I predict Social Security will be solvent even after we have effectively run out of petroleum and been forced to switch to a different basis for our economy.

All the hair pulling and clothes rending over the Social Security "problem" is particularly galling, as the Ss problem has such an easy, relatively pain free fix. Eliminate the income ceiling.

The regressive nature of the current funding scheme is a different problem entirely, and has two viable easy solutions. You prefer one (strick means testings for benefits), I prefer another (strict benefit caps). Congress, pick one then get on with the business of solving our real budget problems.

 

[mhaze]

The conservatives complain that the SS $ is not in a "lockbox". I am saying that if we just squirreled the money under a mattress or put it in a lockbox the pile of money would earn no interest.

Conservatives also complain that they could get a better interest rate if they could invest the money themselves. Seems a bit contradictory, if you ask me.

Since the US Government pays the "interest", that means you and I "pay the interest". The US government chooses to pay 4.6% to SS, but a low interest, like 0.1%, to you and I. The "interest " which they "Pay us on SS" is actually just another form of borrowing from the future.

No doubt someone that only worked for 10 years would "get a good deal" from SS, but someone that worked for 40 years would get an extremely bad deal.

The government could for example, pay 4.6% on Tbills bought by 401k and IRA accounts. They do not, thus giving their own scheme something of a competitive advantage in the free market.

 

[JoeTheJuggler]

Not sure what you are getting at, but we have already established that the SS securities are paid 4.6% for "loaning their money to the US government".

We have established no such thing. The rate for special issues is determined by a formula that varies. I'm not sure what securities are paying 4.6%, but I pointed out that public issue 30 year bonds are paying well over 3% right now.

In fact, since most of the securities the trust fund is holding were purchased prior to 2010, I suspect the average rate is quite a bit higher.

I'm paying 7% on my mortgage, with a very good credit rating, but I don't have enough income to re-finance better than that at the moment. (And I closed on this mortgage about 4 years ago.)

 

[mhaze]

We have established no such thing. The rate for special issues is determined by a formula that varies. I'm not sure what securities are paying 4.6%, but I pointed out that public issue 30 year bonds are paying well over 3% right now....

Irrelevant. The SS bonds are paying 4.6, and are immediately redeemable. The closest comparable are 90 Day Treasuries.

Of course you can get a different result by comparing apples and oranges.

Duhh.....

 

[mhaze]

Even if nothing is done to alter SS it is not as if checks will nto continue to arrive for those of us decades away from retirement. We would still get checks but might lose about 25% of what we expected to get.

And as Joe mentioned above, measures exist to close this gap. Raise taxable income limits, raise rates, raise retirement age, etc...

You mean that you "hope and trust" you would get checks. You don't have a contractual right to anything.

 

[JoeTheJuggler]

In the absence of a new baby boom, Social Security will be solvent after we solve the current bubble.

Yep, and since the "bubble" will last long enough that the measures taken will be permanent, after me and my cohort die off, the system will be flush. Our descendants will face the "problem" of a demographic shift going the other way and be able to increase benefits and/or cut tax rates or (I hope not) how much of earnings the tax rate applies to.

All the hair pulling and clothes rending over the Social Security "problem" is particularly galling, as the Ss problem has such an easy, relatively pain free fix. Eliminate the income ceiling.

The regressive nature of the current funding scheme is a different problem entirely, and has two viable easy solutions. You prefer one (strick means testings for benefits), I prefer another (strict benefit caps). Congress, pick one then get on with the business of solving our real budget problems.

Amen! If we actually taxed all earnings, the rate needed to cover the increased spending would doubtless be a lower rate.

Since eliminating the ceiling altogether will probably be blocked politically, we should at least aim for a series of increases in the ceiling to make it less regressive. Since in the worst case scenario the trust fund will continue to grow for another 10 years, we could even phase in those ceiling increases year by year to make it less of a shock to everyone concerned.

 

[JoeTheJuggler]

The SS bonds are paying 4.6, and are immediately redeemable.

False--no matter how many times you say it.

The interest rate of special issue securities is calculated by formula and varies month to month. Special issue securities are both short and long term. Long term securities (bonds) vary in term from 1 to 15 years.

When Social Security cashes in securities they follow two policies:
redeem them in order of earliest maturity date, and redeem lower interest securities of the same maturity date first.

You seem to think that the rate is determined on the date the securities are redeemed and that they are all simply securities of indebtedness (which still have a minimal maturity term--that is, they mature "the next June 30th" following the date of purchase).

 

[mhaze]

False--no matter how many times you say it.

The interest rate of special issue securities is calculated by formula and varies month to month. Special issue securities are both short and long term. Long term securities (bonds) vary in term from 1 to 15 years.

When Social Security cashes in securities they follow two policies:
redeem them in order of earliest maturity date, and redeem lower interest securities of the same maturity date first.

You seem to think that the rate is determined on the date the securities are redeemed and that they are all simply securities of indebtedness (which still have a minimal maturity term--that is, they mature "the next June 30th" following the date of purchase).

Big Yawn.

http://www.ssa.gov/oact/progdata/fundFAQ.html#n3

The annual effective interest rate (the average rate of return on all investments over a one-year period) for the OASI and DI Trust Funds, combined, was 4.642 percent in 2010.

All securities held by the trust funds are "special issues" of the United States Treasury. Such securities are available only to the trust funds. ...Unlike marketable securities, special issues can be redeemed at any time at face value.

 

[Lurker]

You mean that you "hope and trust" you would get checks. You don't have a contractual right to anything.

Hmm, should I trust;
1. 80 years of checks going out exactly as promised

or

2. Guy on Internets using scare tactics?


Look, I am not saying that SS does not need help but to make silly charges to insinuate that I might not get checks is ludricous. Do you really think it possible that I would get no check in the future (assuming SS is not dismantled)? Where does the money from the incoming SS tax go?

I'll add that the CBO said if nothing is changed that benefits would be reduced around 2036 or so. The reduction would be approximately 25%. Sounds like checks would still be going out to me. How do you interpret it differently?

 

[RandFan]

Hmm, should I trust;
1. 80 years of checks going out exactly as promised

or

2. Guy on Internets using scare tactics?


Look, I am not saying that SS does not need help but to make silly charges to insinuate that I might not get checks is ludricous. Do you really think it possible that I would get no check in the future (assuming SS is not dismantled)? Where does the money from the incoming SS tax go?

I'll add that the CBO said if nothing is changed that benefits would be reduced around 2036 or so. The reduction would be approximately 25%. Sounds like checks would still be going out to me. How do you interpret it differently?

Thanks, I've tried to keep an open mind but the argument that SS is simply a Ponzi scheme is just so much nonsense. Yes, do to changes in life span and a significant bump in the Baby Boom there will be problems but no ones we can't fix without destroying SS or assuming SS is a Ponzi scheme.