The Problem with Social Security
David John, a Senior research Fellow at the Heritage Foundation, explains his position on Social Security as it relates to taxes and health care. He suggests it would be a good solution for the government to raise the age of retirement.
David John: The problem is that while I agree that these are “full faith and credits” securities and we haven’t defaulted since sometime in the 1770s or so and we have no plans to do so now, what is actually there is paper and it is a first call on tax revenues. Now, those are tax revenues that are going to come in from income taxes and various other things and, yes, it will all go to the Social Security system.
But at the same time, we still have a problem with healthcare and healthcare is running massive deficits as Mike mentioned, and we have problems with the economic measures we’ve taken in the last six months or so that deal with the economy and unfortunately, we have a lot more demand coming for that tax money than we’re going to have tax money coming in.
Ray Suarez: So when you say “first call on tax money,” after those two trends pass each other and we’re paying out more than we’re taking in.
David John: Right. Right.
Ray Suarez: The Social Security recipients in the 2020s of which I hope to be one, I think.
David John: Me, too.
Ray Suarez: As I hope to be… I mean, in that number, too.
David John: Right.
Ray Suarez: We will also be taking money, not only from people paying Social Security tax or working, but from the general tax revenues of the United States.
David John: Absolutely. And the fact is that we keep taxes to the same level historically, about 18 percent of the economy, the three programs that Mike mentioned, Medicare, Medicaid, and Social Security, are going to suck up every single dollar of that tax revenue starting around 2050 or so and unfortunately, if we could put healthcare issues off to the side and say, “We’ll deal with you later,” Social Security probably would be fairly a simple problem to fix, but we can’t. It’s all coming in together.
Ray Suarez: Well, the same people who are going to want that Social Security check are also going to want the healthcare.
David John: Exactly.
Ray Suarez: Again, all of us getting old and sitting around this table this morning.
David John: Right.
Ray Suarez: So what’s the solution in simple terms? I mean, obviously, you either got to increase the money you collect or say to the people who are hoping to get Social Security checks, “You’re going to get less.”
David John: That’s it.
Ray Suarez: Those are you choices, right?
David John: That’s the bottom line with it when it comes down to it. You can try to make your money work harder by increasing private savings and things like that and the Obama administration is working on that in increasing opportunities for retirement savings and that’s a very crucial element of this whole thing.
We really can’t look at Social Security separately from overall retirement income. But as far as Social Security goes, either we raise taxes and there are costs to that because it makes hiring somebody more expensive and that’s especially true with younger people and lower-skilled workers, or we’re going to have to go through, which is what I think is going to happen is to change benefits. We’re probably going to have raise the retirement age, probably up to 68, 69, something like that, and we’re going to have to focus the money that we got coming in to Social Security even more than we do now on those who need it most.
Chris Simcox speaks on Social Security, Health Care and Veterans Benefits
Chris Simcox, candidate for U.S. Senate, Arizona, speaks on Social Security, Health Care and Veterans Benefits
Interviewer: Now, what do you think about the proposal of Barack Obama about national health care?
Chris Simcox: It is just another opportunity for Obama to nationalize private industry in this country. Federal government has no business getting involved in health care beyond what they already have done and again, we’d go back to… just make Medicare and Medicaid work. Let’s make the state programs work. Let’s keep Obama out of it.
The private sector will deal with health care. Whatever we do, we keep the government out of it and we provide incentives for people to save for their own health care and their savings cannot be taxed and to provide perhaps incentives for business, which they already have as private enterprise. It’s their choice whether they want to provide health care to their employees or not. Read more
The Social Security Mess
Tom Lewis provides his insightful comments on the Social Security Mess.
Tom Lewis: So, the issue I want to discuss tonight is Social Security. I just started a new job in addition to my current job. So I’m a 1099 employee at my second job with a private contractor in real estate. I’m not making a lot of money but I’m doing well. So I just thought about paying off some debt and what not. But, before I went through this money I wanted to figure out how much I should set aside for taxes, what am I going to be hit with when next April comes. Everything I looked at pointed to about 25% or maybe some more. 25% is a lot, especially let’s say you take $1000 that’s $250 taken off, that’s a lot. That means basically 25% of the time you’re working for the government, but that’s not what I looked into there.
What I did look into and saw was 6.2% of that 25% was going to Social Security and 11% is going to Medicare. I don’t really care about that right now, that’s another issue for another day. But, then I said, ‘Okay, if start working at the age of 22 and worked up to the age of 65, how much will I pay into Social Security over that time period?’ And I figured the math that I did raised over a year and the final number came to $180,000 which would be paid out. And, by the way, if you want to see this chart email me, I’d be happy to share my data with you. Read more
How I Would Save Social Security
freedomfighters2007 presents a plan for saving Social Security:
Good afternoon, friends. I want to talk to you a little bit about Social Security today. The White House under Obama has announced that Social Security is going to become insolvent in 2037. While the Obama administration promises total transparency, which has not been fully realized to say the least, but even that tradition I call upon the Obama White House to ask the OMB, the Congressional Office of Budgetary Management, to count up all the money and all the times that the Congress has raided the surplus of Social Security since at least the 1960s or 1970s.
Add it all up, get a total on it and the Congress and Senate need to come up with a plan on how they’re going to pay all that money back to the Social Security fund between now and 2037. If they would just give us back the money they have stolen to balance the budget or to spend it on projects that they wanted, then we wouldn’t be in such bad shape.
Of course, you know when the New Deal stated there were 7 people supporting each one recipient, but now it’s more like 2 or 3 and it may slip down to 2 very shortly because of the baby boomers.
But anyway, I say let’s come up with a plan on how to pay back all this money to the Social Security trust fund by 2037 so we’ll be whole, and then to come with a plan on how to keep it going from there. It’s certainly going to take some tough decisions. It’s going to be very unpopular, but honestly Social Security is going to have to turn into something that only pays the people who really need money and the rich, you know, they don’t need to be drawing Social Security now. There has to be some concessions made to the rich for this, and maybe a window of time where the rich in between getting money and not getting money, maybe the rich can get paid back what they put in. There should be a window there so that people do not get ripped off and their whole lives changed and if they’re like 60 right now they’re fixing to retire 62 or 65 and they want to draw on Social Security, to have it stolen from them without any warning of this kind is not in the interest of the United States and not something that we would want to do because that was called the New Deal, and it was a promise to Americans.
But, at the same time, an order to save the fund we’re really going to have to make a situation where instead of keeping on upping the limit, of what you got to pay in, maybe people whose asses are over the limit… I’m not talking about their homes, I’m talking about liquid assets like cash, businesses and that sort of things… their home and their car or a couple of cars could be excluded. But if their net worth is over $91,000 or if their income is say a certain percentage, maybe what the amount of their check would be or something that they wouldn’t receive.
You kind of get one to saying, I don’t really know how to work it out, whether or not if their income is over $91,000 or if their income or assets is over $91,000, and then as they have to spend on their own medical needs and different things and give to their children as their assets fall below $91,000 then they would be able to receive benefits.
But, first things first. You’ve ripped us off, the Congress and the Presidents past, and please count it up and let’s go over the program to pay it back by 2037, we’ve got like 28 years. And let’s see what the outlook would be then and then export these other measures that I am talking about.
I thank you very much.
Entitlements, Social Security, Medicare, Medicaid
Mandatory spending on entitlements, specifically Social Security, Medicare, and Medicaid will explode as baby boomers retire and healthcare costs rise. In less than two generations, the amount the government currently spends on entitlements will double, claiming all federal tax revenues by 2052. These spending tsunami will in leave no room in the federal budget for other priorities like defense or low taxes. Left on autopilot, these entitlement-driven deficits will reach 24.5 percent of GDP over the long term.
When Will Social Security Run Out Of Money?
Bill Scher: “Hi, this is Bill Scher with LiberalOasis.com. When will Social Security run out of money? The answer is never, so you can be quite confident that your Social Security will be there for you when you reach 65. Some people say that is the case because the Social Security Trust Fund is scheduled to run out of money in the year 2049, but that does not mean that people will not access Social Security benefits. The trust fund is established to handle demographic shifts over time.
The very worst-case scenario, if no changes remain with the Social Security program by the year 2049, instead of having 100 percent of scheduled benefits, you would get 78 percent. But even that would actually be a larger amount of benefits than you would get if you accessed Social Security today because those benefits are expected to climb over time.
So there is no crisis in Social Security and to make sure that 100 percent of benefits are available by the year 2049, only very minor changes are needed to the program. For example, if we raise what’s known as the payroll tax cap. Right now, there is a cap on the level of income that is subject to Social Security taxes. It’s actually a flat progressive tax that allows higher-income Americans to pay a lower percentage of Social Security taxes. If we rectify that, that in and of itself would solve this very minor problem in Social Security.”
The Social Security Scam
The release of the 2009 Social Security Trustees Report indicates that the current economic crisis has negatively impacted the Social Security budget. It’s now projected that by 2016 Social Security spending will exceed revenues. According to the report, the financial condition of the Social Security program “remains challenging” and “need(s) to be addressed soon.” A look at the numbers shows us the severity of the Social Security budget problem.
Social Security is a “pay-as-you-go” system. This means that when you work, the government takes your money and gives it to Social Security recipients. In order to get workers to accept this system, the government promises to take other people’s money and give it to you when you retire. Think of it as an exponentially larger version of Bernie Madoff’s Ponzi scheme.
As long as a lot of people die before collecting any benefits, or die without collecting many benefits, the system is financially sound. In 1950, the worker-to-beneficiary ratio was 16.5-to-1. With people living longer, the worker to beneficiary ratio has fallen to 3.1-to-1 and within 20 years it’s expected to drop to 2.1-to-1. Due to this falling ratio, over the years the feds have raised tax rates and now must consider further adjustments.
Let’s look at the revenue side of things. Each worker’s income below about $106,800 is taxed at a 12.4 percent rate. There are no deductions for this tax. All income is taxable income. Even those in the lowest income brackets have roughly one-eighth of their income taken from them to fund the Social Security system. Read more
“Just like you and I, Social Security is going to change”
Nicole Livas: 10 On Your Side wants to help you plan for a comfortable retirement. So we headed to Langley Federal Credit Union to sort out part of a Social Security mystery.
Tom Schaad: It’s a financial forms set up to explain the current status of Social Security and what it may hold for your future. 10 On Your Side Eric Harryman joins us now with more on what you can do now to prepare.
Eric Harryman: Tom, Nicole, it comes down to realistic expectations and staying informed long before retirement age. Don’t get me wrong though. The daunting question of “Will there be any money left when I retire?” remains. But the experts say, “Worry less, plan more”.
Commentator: With the US economy in crisis mode, many believe Social Security could disappear.
Marsha Kilburn: Are there going to be funds there when we are ready to retire?
Read more
Forced Into Slavery to Pay For Somebody’s Elses Retirement?
Devvy Kidd: Welcome to “One for the Road” and I’m Devvy Kidd, your commentator. “One for the Road” was developed and created to help the busy commuter and Americans who don’t have access to the Internet find out what Congress and the media won’t tell you.
Social Security, of course, is the sacred cow of politics. We mustn’t talk about Social Security. Social Security is a ponzi scheme. Social Security can be funded by constitutionally generated revenues for the government. It must be funded out for the people who need it. But the American people have been lied to about this system and how it actually works and that has to come to a stop.
Social Security is a ponzi scheme that is so mathematically flawed that it can’t be saved and it certainly can’t be fixed. However, there is a fair and equitable solution to this monstrous problem that has become nothing more than every politician’s favorite campaign issue election after election with never a solution in sight. It is truly reprehensible how politicians over the past six decades have used Social Security to scare old people for a vote.
Please remember that Social Security is a tax. It’s a tax that goes into the general fund of the treasury and is not earmarked for any specific spending purpose. There is no such thing as a Social Security trust fund, or lock box or anything else. Social Security is a tax. That tax goes into the general fund and is spent for things like a million dollar contract for prophylactics for the people of Pakistan.
The way the system is set up, even if you chose your right not to ever obtain this insidious Social Security number that has been the biggest contributor to identity theft, you still are forced to pay a Social Security tax for a system that you will never be a participant in. This is the clearest, most gross example of indentured servitude that I have ever seen in my life.
Truly, the American people are made slaves to pay for somebody else’s retirement. Let me go into a little bit more here. No one is required to obtain a Social Security number. If you wish to ask someone from the government about this fact, let me demonstrate how you will be lied to by the same person. Read more
Obama’s Blueprint for Change on Social Security and Medicare
Barack Obama: “We can extend the promise of Social Security without shifting the burden on seniors. I think that’s why the best way forward is to first look to adjust the cap on the payroll tax, so that people like me, because I am earning more than $102,000, pay a little bit more and people in need are protected.
And by the way, I think that we should exempt anyone making under $250,000 from this increase. So it will not burden the middle class. 97% of Americans will see absolutely no change in their taxes under my proposal. 97%. What it does allow us to do is to extend the life of Social Security without cutting benefits or raising the retirement age.
Even if we keep Social Security strong for future generations, it’s not enough to help seniors who are struggling with the cost of everything from gas to groceries, because we know that rising costs are hardest for folks on fixed incomes. That’s why I want to make retirement more secure by eliminating the income tax for retirees who are making less than $50,000 a year. This would completely eliminate income taxes for 7 million seniors.
If a company goes bankrupt workers should be a top priority and not just an afterthought. So as President, I’ll limit the circumstances when retirement benefits can be cut and increase the wages and benefits that workers can claim in bankruptcy court. We’ll require companies to disclose their pension fund investments. We’ll put an end to the outrage of executives getting bonuses while workers watch pensions disappear, and we’ll make sure that no American goes bankrupt just because they get sick.
75 million working Americans today don’t have the employer-based retirement plans that the previous generation counted on. And that’s why I’ve proposed an automatic workplace pension. There’s going to be no red tape or complicated forms. Employers will provide a direct deposit of a small percentage of each paycheck into your account. You can add to it or you can opt out of it at any time.
Medicare is not allowed to negotiate. That makes no sense, that’s why some people are getting hit with this doughnut hole where after a certain amount of medication they suddenly have to pay out of their pocket. That’s not fair to seniors, it’s made a lot of profits for drug companies. We’re going to change it when I am President of the United States.”
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