drewtam-
My reply #39 to your post #37 was unnecessarily rude, and for that I apologize.
Thank you, too many men are too weak to say such a thing these days. I appreciate that quality. I am sorry for my part in stirring up further rudeness and strife. Can't we all just get along... uh nevermind...
So then continuing on with the productive discussion...
Your "facts" and conclusion are purposefully misleading and therefore inherently dishonest. Dishonest because you quote an amount for SS disbursements
without regard to any offsetting revenues for FY2007. You not only ignore the revenues for 2007, but also the
total accumulated surpluses of revenues in excess of disbursements for prior years. Where did those surpluses come from? They came from those of us who have been working and paying into SS for the last 40 years. IOW, if you add up all the contributions (through payroll taxes) paid into SS by the Boomer generation, and deduct all the payments from SS to the GG, you have a huge net surplus of cash. Your $586.1 billion number is a reduction of that surplus, not an out of pocket expense.
OTOH, there is no offsetting revenue for Defense, the number 2 expense on your list. There is no tax labelled 'for Defense', is there? There is no paid in accumulated surplus against which to charge the waste, fraud and mismanagement known as "Defense". Defense is truly the 'dead weight'.
Do you honestly not understand why it won't work in the future? I can't believe you don't know why.
Apparently not to your satisfaction. So why don't you just explain it so that everyone can understand why you won't get any of your SS benefits when the time comes?
Let me start by restating the two arguments I will be answering from this post more concisely. If I restate it inaccurately, I will be sure to address the error. There were more than just the two major points, but I will address the minor ones at the end.
1. SS isn't a burden because a special tax is levied to support the program. In fact, it collects more by this levy than it is required to pay out. For that cause, its not dead weight but rather a bonus to the rest of the Federal budget.
2. The government has legislated obligation to pay the SS benefits. It has lived up to that law for 60+ years, and therefore has a track record for delivering on its promise that should not be disregarded lightly.
Response:
#1
There are a couple major problems with point number one. The first is a presumption of responsibility and authority. I see no basis for the Federal government to support a program like SS. They lack responsibility because it is not the job of a national government to pretend to support an individual retirement. They lack authority from the Constitution to implement such a system.
The second major problem is much more subtle. The problem rests on government ineffectiveness. We all surrender to a 15% tax rate for SS (for many half of it is hidden, but its still there).
If an individual were to invest that money rather than give it to the government, then they could see a 7-12% yearly appreciation on that asset. Instead, the economy only sees a few percentage points, if any. So rather than having millions waiting for the individual when they retire, it will only (at best) be a few hundred thousand. So they are basically giving money away with no benefit (much more can be said about opportunity cost). This large taxation percent without economic benefit is very powerful at the national level. It has been proved that tax reductions spur even greater levels of wealth for all, even when the tax reduction is poorly designed. There is an upper limit for taxation rates our nation can withstand before the rate causes unavoidable consequences. If the aggregate rate is too large then the economy will suffer and actually reduce total tax receipts. So the subtle but major problem is that the SS tax takes a large chunk of that maximum taxation rate. So the current SS structure is a burden, not on the front end, but on the back end. It prevents greater growth in economic activity because it removes assets from useful work and creates an opportunity cost.
Opportunity cost:
In response to the miserly payouts from SS, individuals are now required to create their own supplemental retirement account. In fact, this supplemental becomes the primary because even with fewer assets it will mature to a much larger value. Furthermore, a retired person with an IRA now has the cash advantage. They do not need to plan their costs based on their SS monthly benefits. Under such a monthly restriction, large purchases must be financed. But with the cash advantage, no money is wasted on monthly interest from installment plans.
#2
The primary motivator for argument #1 immediately shows the fallacy of argument #2 above. The govt has a history of supporting its outlays because it set the rate so high that it was always bringing in more than the program needed. The rest was snorted up its crack addicted nose (A GWB pun for you Riley
, you deserve it if you read this long of a post ). If the outlays exceed the levy then there are two options. Raise taxes again to support both SS and the other programs. Or cut benefits. The outlays are expected to exceed the levies at around 2012 2016.
If you cut benefits, then my generation will be paying for benefits for yours but the favor cannot be returned by the next generation. As explained in detail above, raising taxes is now a suicide pact. The tax rate for the middle class is approx 50%. This high rate makes our whole economy very sensitive to changes in tax rates. A small percentage drop sees huge increases in available money and economic boom. So if rates are raised to cover the program costs, then economy will slow. Then we will need to raise rates again because of the shortfall in receipts. The suicide pact becomes apparent. Another major component of this tax shortfall is that there are not enough young to support the old. The boomers dont have enough children and grand children.
Heres another way of explaining it:
http://www.socialsecurity.org/daily/05-11-99.htmlWhy is Social Security often called a Ponzi scheme?
May 11, 1999
Charles Ponzi, an Italian immigrant, started the first such scheme in Boston in 1916. He convinced some people to allow him to invest their money, but he never made any real investments. He just took the money from later investors and gave it to the earlier investors, paying them a handsome profit on what they originally paid in. He then used the early investors as advertisements to get more investors, using their money to pay a profit to previous investors, and so on.
To keep paying a profit to previous investors, Ponzi had to continue to find more and more new investors. Eventually, he couldn't expand the number of new investors fast enough and the system collapsed. Because he never made any real investments, he had no funds to pay back the newer investors. They lost all the money they "invested" with Ponzi.
Ponzi was convicted of fraud and sent to prison for two years. When he came out, he returned to Italy, where he became a top economic adviser to Benito Mussolini.
Just like Ponzi's plan, Social Security does not make any real investments -- it just takes money from later "investors," or taxpayers, to pay benefits to earlier, now retired, taxpayers. Like Ponzi, Social Security will not be able to recruit new "investors" fast enough to continue paying promised benefits to previous investors. Because each year there are fewer young workers relative to the number of retirees, Social Security will eventually collapse, just like Ponzi's scheme.
Closing minor points:
I agree the DoD is deadweight. The defense department creates very little productive beside some scientific and engineering research. Research is a small portion of what the DoD does. But from my engineering perspective, DoD is not productive. But nobody should be under the illusion that they are; and it doesnt change its necessity. They create death and carnage and thats what we want them to do. Just as the DoD is unproductive, police are unproductive. Police and DoDs main function is to limit the destructive power of criminals and threatening nations. They are loss prevention, not industry. If we didnt have criminals, there would be no police. If we didnt have war, there would be no soldiers. To tie it back to my main points, defense is the job of the federal govt as strictly enumerated in its powers. And its a well understood sap on a nations economy that has no other choice, whereas SS is not needed due to much more effective private investment.
Whew&good night everybody.
