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mikevago t1_jc25ick wrote

Reply to comment by ThePurpleDuckling in [OC] US Social Security Fund History by PM_Ur_Illiac_Furrows

If anyone's talking about Social Security failing, it's because they want to shake confidence in the system so they can carve it up somehow. The Social Security trust fund is one of the biggest piles of money on Earth, so a lot of Republicans look at it the way Wile E. Coyote looks at the Road Runner.

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detox665 t1_jc2z4vr wrote

One small detail that gets overlooked is that the fund is empty. All of the money put into it was exchanged for IOUs from Congress and then spent. It wasn't invested. It was spent.

The only way turn those IOUs back into cash are to tax current and future taxpayers to raise the money.

Pushing total tax rates to over 50% might not be a great plan if we want to have a growing economy.

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thunder-thumbs t1_jc33f9m wrote

That’s part of the messaging meant to shake confidence. That messaging had its peak when GWB was trying to introduce private accounts, back when SS was about to dip into those reserves. Lots of rhetoric about how those reserves didn’t exist, and why we therefore urgently needed those private accounts now.

The fund is very much real; its value is backed by the most stable investment that exists. It’s empty only in the same way that your “mortgage” or “rent” account is empty, if it is paid out of an account that other expenses come out of too.

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detox665 t1_jc3fld4 wrote

The bonds that the trust fund holds are a unique series issued to the trust fund. You cannot buy them anywhere else. Makes it easy to default on them without harming the value/credit associated with other US bond series.

"The full faith and credit of the United States" is valuable only for as long as we can levy sufficient taxes to cover our bills. After that point, very bad things start happening very quickly.

I've been advocating for privatization since the Reagan administration. As things stand right now, I and my cohort are about to take it in the shorts because propaganda beats facts.

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windershinwishes t1_jc459n7 wrote

OK so just eliminate the income cap that the SS tax is applicable to. Or collect more from 401ks and IRAs.

Privatization of Social Security is non-sense. It would cease to be Social Security, as it would no longer provide a guaranteed income to all Americans.

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TracyMorganFreeman t1_jc48qng wrote

Sweden privatized its social security decades ago.

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windershinwishes t1_jc7tub6 wrote

Is a person in Sweden guaranteed a certain income from it upon retirement, regardless of how much they paid in?

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TracyMorganFreeman t1_jc7x3bc wrote

Given that isn't the case for any retirement plan, SS included, no.

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windershinwishes t1_jc80sns wrote

"Regardless" was a bit too broad, sure. So how about "even if it is much much more than they paid in?"

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detox665 t1_jc6o2ts wrote

Eliminating the income cap will not generate enough revenue to cover the shortage. It isn't even close.

A privatized plan could still provide a minimum guaranteed income to all workers. (the "workers" part there is important, IMO).

If you take the FICA taxes that I generated (taken directly from my paycheck and my employer's "share"), and pretend that it was invested in a variety of index funds with a long-term growth of 5% (actual long-term growth is closer to 7%), I should have a bit over a million dollars at retirement age (+/-65). That includes the various "crashes" that have happened over the years.

If my retirement income is kept to less than long-term growth, I would have roughly $50k per year. Right now I'm projected to get $20-$25k depending on when the "haircut" hits and I have to work until almost 68.

Make it so half of any unused funds go back to the feds to cover those with lower lifetime earnings.

Even a person that works for nearly the minimum wage can generate $500-700k of retirement. But we can sweeten that a little from the government.

In the case of people with significant old-age issues (i.e. dementia) there is a pile of money that can be used for their care. That reduces the amount of money that the government must pay.

Social security as currently established is a Ponzi scheme. Sweden has privatized successfully as has Columbia. The only thing Social Security does well is to ensure that seniors are as equally poor as possible.

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windershinwishes t1_jc7vq7r wrote

Calling SS a Ponzi scheme while calling for all of that money to instead be injected into the financial market to be managed by private bankers is just funny.

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detox665 t1_jc8ofvd wrote

Private bankers have a better track record for fiscal responsibility that congresscritters. I know that isn’t saying much but it is true.

The important thing is that the money be actually invested in something real and not just congress’s ability to tax future citizens.

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TheBioethicist87 t1_jc2cxt3 wrote

IIRC the plurality of US debt is held be social security, so the people whining about the debt are creating 2 problems out of nothing.

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NoPeach180 t1_jc2ky5a wrote

And not raising the debt limit means not paying the interest to social security funds and thus destroying it. I think some republicans see it getting two birds with one strike. Destroying the social security funds and wrecking up u.s. economy while democrats hold the white house. Perhaps getting some nice golden parachute from russian or chinese oligarchs.

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TracyMorganFreeman t1_jc48ilu wrote

And yet there are hundreds of trillions of unfunded liabilities, and not just for SS.

The system needs reform, not kicking the can 2 generations down the road.

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SsurebreC t1_jc8e40l wrote

Every single time I read "hundreds of trillions of unfunded liabilities", it's always a sum of these liabilities over decades.

Sure, that's a lot of money and the number can also be true. However, that's weighted against quadrillions of government income.

It's always used as a big scary number to make it seem like we need to fuck with future generations because they don't matter since they don't vote.

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TracyMorganFreeman t1_jc8h6zf wrote

>Sure, that's a lot of money and the number can also be true. However,that's weighted against quadrillions of government income.

No it isn't. It's *unfunded* liabilities. It's taking into account current government income trends. It's speaking to insolvent programs for people *who current exist* for which there is no funding to speak of in the future.

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SsurebreC t1_jc8kiry wrote

OK, say your income is one quadrillion dollars. Your liabilities are 900 trillion. You have 200 trillion in unfunded liabilities. Is it a scary number now?

You can't take into account current government income trends. We simply have no idea what the budget will be like in, say, 50 years. In addition, the number usually doesn't mention which programs and what levels they're currently funded or will be funded in the future and what is an actual liability. Case in point: Social Security is a liability - it's literally our money - but welfare is not because it's an optional social program.

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TracyMorganFreeman t1_jc9d6gu wrote

Oh you can't predict it, but somehow you can assume the budget of the US government will be in the quadrillions?

Their predictions are impossible, but your handwaving is sufficient. Got it.

The assumption is current levels, and it is only liabilities, as in entitlements.

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