According to Enron accounting the DI fund will go broke in 2016. In reality, DI, Medicare and SS have been running deficits for years now. Earlier surpluses(replaced with special bond iou's) were spent on other government spending/waste. So, get ready for either higher payroll taxes, lower benefits or draw down on current SS magical IOU bonds. http://www.zerohedge.com/news/2015-09-08/social-security-disability-fund-will-be-broke-next-year
How many here would be ok with the government accessing your retirement accounts to fund government spending? Essentially, this is what is happening with the entitlements.
Well, if you are a conservative pension fund investor looking at your clients long term retirement needs you would put a good portion of your funds into US government debt, which is exactly what SS does just like a lot of other pension funds including national pension funds in places like China, Japan, Germany, UK, France etc etc and most of private pension funds. The only difference is that SS is required by law to put its excess funds into US government debt. SS gets the same interest as other debt holders and gets to cash its bonds in when it needs them instead of waiting for some fixed maturity date like other bond holders. It is not a bad deal for SS. SS retirement fund has a large investment in US Treasuries, something around $2Trillion and cashed a few in 2010-12 to pay for retiring baby boomers until the economy recovered. The DI fund is separate from the retirement fund and it has been cashing in its bonds for a while now. Unfortunately, Congress has repeatedly expanded its mandate while not increasing its revenue so, sometime in 2016 the DI fund will not be able to meet 100% of its obligations and will be forced to reduce payments to the disabled and orphans in order to stay in the black. So what's your point? Are you trying to convince all those people who paid into SS for all those years that the government does not have to pay the money it required SS to lend it? Are you arguing that the government does not have to pay SS back because it cannot afford to so it should just screw all those people?
I think what has really been happening is all that "hidden unemployment" has been driving more people into the ranks of the benefit-collecting disabled. This is not to say that all this people are just faking it, but very often people can have borderline disabilities, and the prevailing economic climate can tip the scales one way or the other. For example, a construction worker with a back injury might keep pushing himself to work if there are good job prospects, or maybe he will be able to find an alternate career in the office where he will not have to strain his back. But if he is having trouble finding work, or the limited job prospects that are available are unattractive, he is much more inclined to just give up and drop out of the workforce. The other problem, very much related to the first, is that the workforce participation rate is at an all time low. These people are not counted as 'unemployed', but they are not working either. Or they are stuck in part-time work, so are not able to pay as much money into the system. The current benefit system, as it was designed, is simply not sustainable in a prolonged bad job market, and people are going to find this out the hard way, eventually. Poorer countries in other parts of the world, for example, simply cannot afford these types of generous benefit schemes. And the U.S. has taken on many poor people from other parts of the world.
The one thing that is constant is higher taxes and deficits pushed to future Americans. The Ponzi schemes are failures and a growing generational burden.
The truth is that all these entitlements are running deficits and none have real money saved. This is why I say the government is doing Enron accounting. In order for these entitlements to be solvent they should be collecting as much as they are paying out. For years now they have been funding deficits with borrowed general fund deficits. These deficits are being shoved on future generations that will likely have to pay higher interest rates on the large deficits, which will cause much higher taxes and lower standards of living due to our excesses. This is why I am vehemently against these government ponzi's. They are not fair from one generation to the next. They should be privatized.
They will just be funded directly out of the federal budget. They are anyways albeit indirectly through debt service instead of line items.
These funds have been collecting more than they pay out for decades, which is why they have so much money in government bonds. The government's fiscal deficits have nothing to do with and are not caused by SS but by imbecile politicians and the brain dead people who support them, like those who have been led to wrongly believe that SS has been running a deficit forever.
Wrong, it has increased its taxes to compensate for government theft for decades. It is now, again, in a position it is distributing much more than it takes in. The fact that it has had surpluses is meaningless today. Those "special bonds" are nothing but generational theft bonds. The fact is that fewer people are now having to support more people. It has been a failed system from inception. It just took time to fail like all ponzi's do. - - - Updated - - - Which means that fewer people are supporting more people. The system is a moral hazard. This is not different than a wife taking the rent money and buying jewelry and putting a written IOU in the rent stash. Good luck taking those to the landlord.
Fewer people supporting more people has nothing to do with "moral hazard". It is the result of the demographic trends shifting since the Baby Boomers were born. If you want more people supporting fewer people, then you should support liberal immigration policies for workers, particularly at the low end of the spectrum. - - - Updated - - - We could sell some nuclear missiles to Iran's neighbors if you prefer to fund social security.
The moral hazard is that is that we are dumping debt and support expectations on Americans that get no votes. The system is nothing but a moral hazard. Private accounts stop this nonsense.
I've read that the financial shortfall can be resolved without increasing the tax rate by merely lifting all caps and imposing the FICA/Payroll/Self-Employment tax on all income regardless of source (i.e. impose the tax on both earned and unearned income).
I suppose that is one way to look at it. To others the moral hazard is knowingly letting corporations avoid massive amounts of taxes in the face of a growing national debt. To others, swelling he ranks of the disabled by unnecessarily invading Iraq and tremendous costs in limbs and treasure is a moral hazard. Either way, there is nothing that prevents you from setting up your own private account and there is nothing that prevents you from electing not to draw your social security benefits. - - - Updated - - - I don't really care if we fund it or not. I have always operated under the assumption there will be no social security system when I reach retirement age.
Word. That is why I am stockpiling depends and denture cream. By the time I reach retirement, I should be set. I am a prepper like that.
Corporations do not pay taxes. Consumers(higher prices), workers(lower wages) and investors(lower returns) pay the corporate tax. The problem is not tax collections it is big government waste. - - - Updated - - - Of course, more redistribution/socialism. You know, as well as I, it is not a tax problem, but a government control problem. Privatization is the only solution.
So, you believe in Bigfoot too? Only people pay taxes. There is no corporate boogiemen paying the tax.
You really should research the difference between a C-corp and an S-Corp if you want to be taken seriously.
Doesn't matter. All taxes are passed to people. Mainly consumers and workers. It is just another cost of doing business.
