AP: Social Security not deal it once was for workers

[Omaha Steve]

http://apnews.excite.com/article/20120805/DA0FCAI00.html

By STEPHEN OHLEMACHER

WASHINGTON (AP) - People retiring today are part of the first generation of workers who have paid more in Social Security taxes during their careers than they will receive in benefits after they retire. It's a historic shift that will only get worse for future retirees, according to an analysis by The Associated Press.

Previous generations got a much better bargain, mainly because payroll taxes were very low when Social Security was enacted in the 1930s and remained so for decades.


In this July 26, 2012, photo, Neta Homier looks over bills in her home in Toledo, Ohio. Homier says she relies on Social Security to pay her bills and while she is confident the program will continue to help her she fears it will not be able to rely on it. "Social Security is what’s carrying me," Homier said. "It pays all my bills." People retiring today are part of the first generation of workers who have paid more in Social Security taxes during their careers than they will receive in benefits after they retire. It’s a historic shift that will only get worse for future retirees, according to an analysis by The Associated Press. Previous generations got a much better bargain, mainly because payroll taxes were very low when Social Security was enacted in the 1930s and remained so for decades. (AP Photo/Carlos Osorio)


"For the early generations, it was an incredibly good deal," said Andrew Biggs, a former deputy Social Security commissioner who is now a scholar at the American Enterprise Institute. "The government gave you free money and getting free money is popular."

If you retired in 1960, you could expect to get back seven times more in benefits than you paid in Social Security taxes, and more if you were a low-income worker, as long you made it to age 78 for men and 81 for women.

FULL story at link.

[KansDem]

1. "The government gave you free money and getting free money is popular."

The American Enterprise Institute is correct. Just ask Wall Street, the bankers, the oil companies, the biggest corporations, and the Mitt Romneys of the world...

[PSPS]

4. Leave it to the right-wing AEI to come up with that nonsense

To them, getting the payout on a policy you have dutifully paid your premiums on (which is what Social Security is) equals "getting money for free." But, then, the financiers behind AEI, like the Kochs and the Coors, really want to get their hands on those trillions of premium payments.

[PSPS]

2. "according to an analysis by The Associated Press"

When I saw that, I stopped reading because I knew it was really an opinion-molding piece.

[customerserviceguy]

3. The only thing that kept Social Security afloat for so long

was the baby boomers. The tax rates started going dramatically upwards as we reached our earning years, and the sheer numbers of boomers paying increased taxes was the only thing keeping this pyramid going. Now that we're retiring, the 'airplane' is crashing.

[PSPS]

6. Sorry, you're wrong

The "airplane" isn't "crashing." Social Security is doing just fine and will continue to do so for at least decades into the future (perhaps in perpetuity) even with no adjustments at all.

You would do well to find facts without the spin provided by those who want to steal the trust fund.

[customerserviceguy]

7. Every time I talk about SS here

I always get two kinds of answers:

1) Nothing's wrong, everything will be fine if we all just keep believing.
2) Somebody had better make sure those filthy crooks give our money back!

By the way, the 'trust fund' has already been completely pilfered. All the fund has is a stack of IOU's (Bernie Sanders used that term before I did) that the present and all future Congresses have no intention of redeeming. It would take budget surpluses to do that, and there is not the political will to either cut spending, raise taxes or both that would be needed to produce those surpluses.

We're like Bernie Madoff's clients were in December, 2008. The only difference was that he announced that it was all a fraud, instead of waiting to let it all seep out slowly, such as the news article from the OP. The Simpson commission should have told us all we needed to know about how Congress is going to 'fix' Social Security and Medicare. Do you dispute the facts in the article, or that the Cat Food Commission was cobbled together to cut benefits?

Oh, there's another difference, Bernie ran a Ponzi scheme, where investors don't know that their returns are coming from new investments. In a pyramid, everybody knows that the folks coming in are the ones paying the benefits for those who originally got in cheaply.

[SalviaBlue]

8. SS is only in trouble if we allow your framing to stand. Bernie Sanders says:

"Social Security has not contributed to the deficit or national debt.  It has a $2.7 trillion surplus and will be able to pay 100 percent of promised benefits to every eligible recipient for the next 21 years.  Even with no changes, there will still be enough funding to pay more than 75 percent of promised benefits after that. "

[girl gone mad]

13. You should stick to customer service.

The trust fund "IOU's" are as good as any other government security. Our federal government does not need to run a budget surplus in order to repay the trust fund bonds. Nor would taxes need to be raised or spending cut.

[customerserviceguy]

14. And a mortgage on an underwater house

is just as "good" as a mortgage on a house where the owner has plenty of equity. It's just a matter of whether the borrower (in this case, the Federal government) is willing to pay it back.

How do you propose they pay back those specialized Treasury securities (if you don't like the term IOU)? It either has to be from revenues over expenses, other borrowing with fully negotiable Treasury securities, or run the printing press. There is simply no other way.

If you have no answer to that question, I'd put you in category #1 of my post above.

[PSPS]

16. Sorry, you're still wrong.

Your entire belief stems from the false idea that "the 'trust fund' has already been completely pilfered."

I'm not trying to be snarky, but you really should read up on how the fund is managed, where it is parked, and how the mechanics of bond redemption versus payouts works.

[customerserviceguy]

17. How do you propose that the trust fund's

specialized Treasury securities (non-negotiable on the open market) be redeemed? From budget surpluses, exchange for traditional Treasury securities (in other words, more borrowing from China) or running the printing press?

If I took out a loan for $300,000 to buy a house that is now worth $100,000, that mortgage will still be nominally worth about $300K, but the thing securitizing it just won't back it up if I decide to walk away from the house. Congress wants to walk away from redeeming those trust fund securities that you seem to have so much faith in.

Look at the fact that for the last few years, outflows have exceeded inflows to the system from FICA taxes. As ever-rising waves of baby boomers hit the system, and job creation (especially of really good paying jobs) stagnates, I don't see how the system is sustainable anymore. There's not enough sucker money in at the bottom to keep the pyramid going.

[Selatius]

19. As it stands now, those securities are redeemed for cash.

If you monetized all 2.7 trillion of the fund tomorrow, you'd have massive inflation two days later, but the trust fund won't be monetized that quickly.

[customerserviceguy]

20. Monetized = printing press

by your definition. Yes, you would have massive inflation. If we ever got the flicker of a genuine recovery, the borrowing that's been done over the last decade would indeed ignite inflation, all by itself.

Add whatever it takes to convert the 2.7 trillion into paper dolllars without much worth, add in the COLAs to the baby boom retirements, and the nominal amount in the so-called trust fund would disappear within a few years.

The whole thing is running out of steam. The baby boom that kept it going for the last four decades is exhausted.

[begin_within]

5. If they hadn't robbed the SS funds, it would be in better shape today.

[onethatcares]

9. just think of how much better off we would be

if all that would have been put in the stock market or credit default swaps, or mortgage based securities.

Take a good look at your 401ks and other retirement plans. Will the losses of 2007 ever be replaced?

[RebelOne]

11. I lost a lot of money in my 401K and my IRA.

I was working until I was 70 to try to build up more money in my 401K, but I was forced into retirement because of a layoff. So, I only had a few thousand in my accounts. Thank goodness for social security.

[RebelOne]

10. "Monthly benefits average $1,235 for retired workers and $1,111 for disabled workers,,,,".

That is wrong. I am collecting over $1,400 a month. And out of that I pay $100 for Medicare.

[SickOfTheOnePct]

12. It's an average

You're collecting more, but that doesn't mean that their $1235 number is wrong.

[Zorra]

15. Tax the rich. Raise the cap on Social Security from $110,000 to infinity.

For starters.

[customerserviceguy]

21. You'd also have to change the payout formula

Right now, there are three tiers of payout, which favor the most lowly paid. It might be good to create at least a couple more tiers, so that added taxes do not deplete the fund through payouts to people who really don't need them all that badly.

As for the employer's share, there's absolutely no reason that the sky shouldn't be the limit, without affecting the worker's benefits. If a bailed-out megabank wants to pay it's CEO ten million dollars a year to run the damned thing into the ground, then they should pay the employer's percentage of taxes on all ten million.

[NNN0LHI]

18. Walmart cashiers and burger flippers don't contribute very much into FICA

And the well paying union factory jobs we once had contributing into FICA are in other countries now. And those workers building our imported stuff don't contribute anything at all.

All those cheap imported goods aren't as cheap as we once thought.

So there you go.

This is not rocket science.

Don