Social security is not socialism but it needs to be privatized

Should we not let people be obese and unhealthy too? Mandatory diet and exercise? Your life your choice to be old fat and broke or old healthy and financially stable.

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SS is basically a deferred annuity fund. Let professionals run it instead of politicians.

 

No reason stocks couldn't be a portion of the SS portfolio, especially stocks that would spur overall economic growth.

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That's fine,calling what it is and fund it accordingly

 

SS is only socialism in that you are forced to participate. Other than that it is nothing more than a horribly managed deferred annuity. You pay into it all your life and let the government invest it with the promise that at a certain age you get a monthly check until you die even if you outlive the funds you put into it. That is the definition of a deferred annuity.

 

Like I said, your SS ends up in general funds.

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Wrong. Government has always come up with new money to pay old debts and that system is soon to fail.

 

I'm not going to scroll through two hundred post but I also would swear you made that claim and have been reading all your post with that in mind and assuming you had some credibility on this issue.

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What's the distinction between the two?

 

Thanks for explaining, Kode.

 

Okay.

The Social Security Trust fund's current balance (yes, it's IOUs, but in your plan it would be an actual pile of money) is about $2.9 trillion.
https://www.ssa.gov/policy/trust-funds-summary.html

How much of that would be invested in stocks? If just a third of it was invested, then the government would be in control of $1 trillion in stock. Which translates to the the government owning a $1 trillion share of the private economy. Does that sound like a good idea? Do you want the government to own a majority stake (or even a large minority stake) in our biggest public companies?

It only ever hits 10% when inflation is out of control. Bank accounts currently pay a fraction of a percent in interest.

Er ... this is just straight up spending. That money would be gone, not invested: public-works projects do not pay a return.

Government is certainly not "incapable" of this. And while private firms could invest the money, you would still have the problem of the stock being owned by the government. Plus you would have extra costs (the investment firm management fees and profits), and the fact that the management firm's self-interest isn't fully aligned with that of taxpayers. You would need some significant regulatory oversight -- with actual staffing and actual muscle -- to keep the private firms from robbing us blind, or choosing unsuitable investments, etc.

#1, if that were the case, then federal taxes over the last 30-40 years would have been significantly higher. Raiding the SS trust fund kept overall taxes down. I disagree with having done so, but don't pretend the money just vanished. It was used to provide government services.

Similarly, why do you describe the IOUs as "worthless"? Are you of the opinion that the Treasury will simply default on its SS obligations? What is your basis for believing that?

Your description is in error. You do not need an "ever-growing source of new SS enrollment" to pay SS benefits to current retirees -- you just need enough of a tax base to fund the benefits, just like any other government program. A Ponzi scheme is unsustainable because the only source of money is new investors, who all expect to see an outsized return on their investment. Social Security, on the other hand, gets money through taxation -- of both old and new "investors" -- and the return isn't outsized -- it's based on actuarial tables. Sure, if you live long enough, you get back way more than you put in. But on average, you get back what you put in.

Yes, the money in the SS trust fund has been "borrowed" by the federal government and spent on other things. But that's something that happened outside of Social Security. Social Security itself is not a Ponzi scheme, any more than a bank that gets robbed is a Ponzi scheme because it no longer has the money to pay depositors. It was robbed; it wasn't an unsustainable fraud.

You benefited from that robbing in the form of lower taxes over the last several decades.

To me, the real scandal is generational:

1. Baby Boomers, being the largest generation in modern American history, were easily able to pay the SS benefits of preceding generations.
2. Then they decided to lower their own taxes by "borrowing" the SS trust fund.
3. Now they are retiring, and expect to have their SS benefits.
4. Meaning they have screwed over their kids and grandkids, who now have to pay for the Boomers' SS benefits, as well as pay the extra taxes needed to make up for the money the Boomers spent on themselves.

Personally, I think the SS trust fund should be made whole by a special surtax on Boomers. They made the mess; they should pay to clean it up. But of course it's not that easy or simple.

 

So you call me a liar on something you don't know, and you want to boast about how great you are. You really are a good Trump-kinda guy!

 

Uh ... since benefits are based on your earnings during your career, and since earnings in a place like SF or Manhattan are higher because of cost of living, then a person who worked in SF and then retires would have a higher retirement income than the same person doing the same job in Cincinnati.

Yes, if you spend your working years in Cincinnati and then retire to SF, you would be screwed. But that's true regardless of whether SS exists. The same would hold true for your 401(k) -- the same amount of money simply doesn't go as far if you move to a high-cost area.

 

That's only part of it. Why do you think so many public pensions are in trouble? -equity investments that fell when people retired and got benefits from a shrunken fund.

How is it wrong to invest those funds in the safest, most stable fixed asset in the world?

Right. They're not worthless, but they aren't "IOUs" either.



Your description is in error. You do not need an "ever-growing source of new SS enrollment" to pay SS benefits to current retirees -- you just need enough of a tax base to fund the benefits, just like any other government program. A Ponzi scheme is unsustainable because the only source of money is new investors, who all expect to see an outsized return on their investment. Social Security, on the other hand, gets money through taxation -- of both old and new "investors" -- and the return isn't outsized -- it's based on actuarial tables. Sure, if you live long enough, you get back way more than you put in. But on average, you get back what you put in.

You object to calling the Treasuries "worthless" but you call it "robbed". How was it "robbed"? What should have been done with the excess FICA taxes?

To me the real scandal is the ignorance of many of the American people on this subject.
(1) True.
(2) Totally wrong. Payroll taxes were increase on Baby Boomers to generate an excess to be put in a Trust Fund in anticipation of their increased future need. The excess was correctly and wisely invested in the safest, most reliable fixed asset in the world.
(3) True.
(4) Totally wrong. You make zero sense on this one. Nobody screwed their kids. That's why the Trust Fund is worth $2.9 trillion. And exactly what money did Boomers "spend on themselves" and need to be paid?

"Mess"? You mean the $2.8 trillion we socked away to help pay for our needs? That "mess"?

 

Well, at least you're smart enough to know when to back down.

 

A well thought out rebuttal but wow! You really are long winded and I just don't want to put out the time or effort to adequately respond right now. I'm retired but even I have things to do and places to go, LOL. Maybe later.

 

In post # 138 of this thread I asked you the following:

Did you charge a management fee that was transparent?

Did you receive commissions on products sold such as annuities and mutual funds?

Did you charge fees plus receive commissions?

Did you receive 12-B1 compensation from mutual funds you sold?

Was all of your compensation transparent to your clients?


Can you answer honestly?

 

He left out the part where SS funds have been raided by our politicians and the money we paid in all our lives is gone as in spent as in absconded with as in stolen as in embezzled. Its original intent was solid though except for being mandatory.

 

Yes I know about the Heritage Liars who cherry pick words to "prove" their fantasies. Of course there is no cash in the Trust Fund. There's non in your IRA or bank account either! You expect SSA to take dollar bills and stash them in a safe???? They're invested in Treasury securities which everyone with any knowledge in the world considers to be the safest and most reliable asset there is.

And BTW, "Retirement Security and Financial Institutions" is a Heritage Foundation propaganda department so the distortions shouldn't come as a surprise.

 

Yes I can honestly answer. What's it to you? You think you're going to judge me? Get lost.

 

BS. I explained that several times in this thread alone. When you deposit your paycheck in the bank and they give you a piece of paper saying you did, you don't even get an investment with your name on it. So I expect you would say they also raided your savings to loan to others for profit.

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We're just lucky you aren't making those decisions.

 

They're spelled differently.

 

You're not.



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Each security has a maturity date. On that date each security has been redeemed. Interest was paid in full. My statement is demonstrably true. You can explore the link I provided for further information.

I understand you are concerned about the trend of increasing debt. I am too. But your prediction that the U.S. government will soon fail is not fact. People have been making that prediction for over 200 years.



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Ah yes, the enlightened progressives figuring things out for the rest of us buffoons banality rears its ugly head again. This is the central conflict between lovers of freedom and the control freaks-- some smart people thinking that they can manage and control vast systems for the good of humanity at the point of a gun.

Some progressives are indeed smart, but they're not as smart as they think they are. This same instinct is what led some to believe they could manage economies just as they believe they can handle national retirement. We all-- well, those of us who are too "stupid" to understand the "virtues" of socialism-- know how that has turned out. Our primary enemy is conceit and hubris, the same kind of conceit and hubris which led to liberals declaring that Hillary had it in the bag and Hillary failing to even visit the rust belt states in the final days of the campaign.

I'm not saying that SS should invest in the stock market and make more risky investments, I'm saying if you gave that money to individuals and they put it in the stock market, the returns are much better. It's even better if the individuals invest it in Treasuries.

Again, this is not the individual this is the Social Security fund. If you take the money that is forced to be put into Social Security and just let people invest it, they get much better returns.

Why might wages be lower? Could it be because employers automatically have to calculate 20% extra labor cost on employees that they don't end up receiving?

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So I would still have to pay some percentage into Social Security (I like that it's now an individual trust account) and I can invest the rest?

Sounds like we're saying, just half the taxes and the payouts for Social Security.

 

Yes, the IOUs in the SS trust fund are special Treasury securities. As such, they are nominally a safe investment.

But it's a huge obligation. In the years ahead, the government is going to have to raise non-SS taxes, or cut spending, or both, to pay its obligations to SS.

The problem here is severalfold:
-- The entirety of the trust fund is invested in a single place
-- Those securities are not sellable on the secondary market -- they can only be redeemed with the federal government.
-- It's a huge amount of money, which puts financial pressure even on the federal government.
-- Its money the federal government owes itself. So if the political climate favors a default on SS, it can do so with less fallout than if it screwed over private investors in regular Treasuries.

For those reasons, I think the idea that the trust fund is invested in ultra-safe investments is a polite, paper fiction. It's too big, too illiquid, and too subject to political whims. All things that aren't true of regular Treasuries.

To be clear, I do not expect the federal government to default on its SS obligations anytime soon. I also understand that even if it did, SS could still pay out something like 76% of promised benefits, because only a portion of promised benefits depend on the trust fund.

I just am not impressed by the idea of the SS trust fund. The trust fund portion of SS has no more or less financial security than any other program dependent on funding from the Treasury.

 

Hello,

with my european point of view the american society is also getting more devided by class. And the fact that good education at your universuties can be extremely expensive, other than in Germany where education is for free, could be a reason for that because students with poor parents need to take large loans, which could take them nearly a life time to pay off, when at the same time it gets more important to visit a college because increasingly more industrial jobs were gone in the last decades. I dont think that you should do it like many european countries, so that college education is completely free but i think more and larger state funded study loans which can be pay back flexibly could be a option.

On the topic of walfare i think nobody should freeze or starve to death so the state should provide a minimum income for people who dont work. For example in Germany people without work get so called Arbeitslosengeld 2 (unemployment benefit 2) which everyone can get who is without work and bigger amounts of wealth. Some people already get this or the former version already for decades. In the moment its 409 Euro for a single adult (432,61 US Dollars) and theyget paid a flat up to a certain price or size and also the heating. That pretty much sums up to more then 800$. But still many people and politicians say its not enough.

 

Here you go.

http://www.investopedia.com/articles/insurance/09/insurance-company-guarantee-fund.asp

 

1. I noticed that you didn't respond to my earlier point and am curious as to why.

2. Again, it is fantastic that you feel this way personally, but what gives you the right to impose this moral motivation on others? And who are you to decide whether or not Social Security is "desirable" for the populace?

3. What if I don't want to lose more than 6% of my income right off the bat to pay into a system that I do not plan on using due to funds I have saved of my own volition other financial avenues? Like the issue of government-subsidized health insurance, is an individual mandate to purchase insurance a responsible policy prescription given the fact that we operate (or, at least, are supposed to operate) under a capitalist system?

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So, like QuantumNerd, you chose not to respond after you pressed me to give you a concrete explanation for the 2008 financial collapse. Why is this?