Medicare and Social Security will go bust sooner

[DC Tom]

Who said "broken"? I said it's not broke, as in the system will NOT be out of money as the article implied, and what most of the responders seem to think. And, yes, under current projections the system won't be able to meet 100% of obligations, because, as a pay-as-you-go system, there won't be enough workers contributing in 25 years to meet the retirees' obligations.

 

The main point is that UNDER THE CURRENT SYSTEM, raising taxes today to create a bogus future fund to provide future benefits is BS because the government spends SS taxes today like general revenue--you know that DC.

 

Something will have to change, yes. But don't give us the same BS that you (3rd person) sold people on in the 1980s. Either change the system so what I contribute is mine, or make it a true needs-based program, thus trimming benefits.

 

I misread "broke" as "broken". It is, of course, your fault, since I'm never wrong.

 

New glasses get here the first week of June.

[birdog1960]

There is no way around it, the only sustainable solution is to either milk those filthy rich for more funds or to cut benefits. Most likely it will be a mixture of the two. Until then, we'll just settle for TPS's solution of kicking the can down the old proverbial road which of course heightens the pain once we do decide to seriously address the issue.

i'm amazed that i totally agree with you again today...the number crunchers all know this but too few of our legislators are brave enough to lay it on the line yet.

 

I misread "broke" as "broken". It is, of course, your fault, since I'm never wrong.

 

New glasses get here the first week of June.

waiting on your ssi check to pay for them?

[DC Tom]

waiting on your ssi check to pay for them?

 

I miss the fyou smiley.

 

High-index progressive lenses, had to be special ordered. Takes about a month.

 

 

And I can go on disability any time I want...but I'd rather work for a living. Not lazy enough to be a liberal yet.

[birdog1960]

I miss the fyou smiley.

 

High-index progressive lenses, had to be special ordered. Takes about a month.

 

 

And I can go on disability any time I want...but I'd rather work for a living. Not lazy enough to be a liberal yet.

"fyou" will suffice....and if you're disabled secondary to your vision, then i sincerely apologize

[TPS]

There is no way around it, the only sustainable solution is to either milk those filthy rich for more funds or to cut benefits. Most likely it will be a mixture of the two. Until then, we'll just settle for TPS's solution of kicking the can down the old proverbial road which of course heightens the pain once we do decide to seriously address the issue.

I'll try to make this simple for you. Here's how the system worked:

- SS taxes were raised in the 1980s because of this exact situation--a projected future shortfall.

- However, the govt used the excess revenues just like general purpose income tax revenues, and put pieces of paper (special purpose bonds)into a "trust fund" that promised to make good on those obligations--no different from any other govt bond.

-Fast forward to 2011. Because of the recession, benefits exceed revenues a few years earlier than expected. So the govt has these (previously non-marketable) bonds to meet the deficit on the SS account. How does it make good on them? It has to sell new bonds in order to get cash to "buy back" those obligations, or it can simply sell those special purpose bonds, making them marketable; or the govt can use general purpose revenues (income tax revenues) to meet the obligation. This is how the govt always operates when it needs funds--use current revenues or sell more bonds.

 

Again, the way the system is set up, as long as the govt spends excess SS revenues like they are general purpose funds, it can't transfer funds that it already spent to meet future obligations. Instead, they create a promise to pay in the form of a special purpose bond to meet those future obligations. But you can't make SS payments with bonds, you need cash. How does it get the cash? See above. I guess if I repeate the argument enough you might understand it...

 

The remedy:

If what anyone is suggesting is that we need to remedy today's (2011) shortfall by making changes that balance the account today, AND that we need to continue to make changes on the account to keep the pay-as-you-go system in balance annually over time, then I agree. But you can't remedy a future obligation by creating an excess today that gets spent today. Creating a surplus on the account today simply transfers more resources from workers to the government that govt spends today--I guess that's what you guys want to see right?

 

I misread "broke" as "broken". It is, of course, your fault, since I'm never wrong.

 

Enough with the reduncancy.

[Magox]

I'll try to make this simple for you. Here's how the system worked:

- SS taxes were raised in the 1980s because of this exact situation--a projected future shortfall.

- However, the govt used the excess revenues just like general purpose income tax revenues, and put pieces of paper (special purpose bonds)into a "trust fund" that promised to make good on those obligations--no different from any other govt bond.

-Fast forward to 2011. Because of the recession, benefits exceed revenues a few years earlier than expected. So the govt has these (previously non-marketable) bonds to meet the deficit on the SS account. How does it make good on them? It has to sell new bonds in order to get cash to "buy back" those obligations, or it can simply sell those special purpose bonds, making them marketable; or the govt can use general purpose revenues (income tax revenues) to meet the obligation. This is how the govt always operates when it needs funds--use current revenues or sell more bonds.

 

Again, the way the system is set up, as long as the govt spends excess SS revenues like they are general purpose funds, it can't transfer funds that it already spent to meet future obligations. Instead, they create a promise to pay in the form of a special purpose bond to meet those future obligations. But you can't make SS payments with bonds, you need cash. How does it get the cash? See above. I guess if I repeate the argument enough you might understand it...

 

The remedy:

If what anyone is suggesting is that we need to remedy today's (2011) shortfall by making changes that balance the account today, AND that we need to continue to make changes on the account to keep the pay-as-you-go system in balance annually over time, then I agree. But you can't remedy a future obligation by creating an excess today that gets spent today. Creating a surplus on the account today simply transfers more resources from workers to the government that govt spends today--I guess that's what you guys want to see right?

 

 

Enough with the reduncancy.

Everything is all well and good until they aren't. Meaning, that sure the bond markets aren't signaling any sort of threat (at this point), but these things can turn on a dime, we've seen it play out time and time again, not just in the debt markets but almost in all spectrums of the capital markets.

 

No one is suggesting that we cut benefits TODAY, but put in place a sustainable long-term solution that suffices the bond markets.

 

 

As I said before and I always say, It's all good until it isn't.

Edited May 19, 2011 by Magox

[Peace]

Shouldn't he benefits age be something like 70-72?

 

That way it's not the retirement plan but it's the support system it was intended to be.

 

I don't calculate it in my retirement planning in any scenario but if it's there, it's a bonus.

[GG]

The remedy:

If what anyone is suggesting is that we need to remedy today's (2011) shortfall by making changes that balance the account today, AND that we need to continue to make changes on the account to keep the pay-as-you-go system in balance annually over time, then I agree. But you can't remedy a future obligation by creating an excess today that gets spent today. Creating a surplus on the account today simply transfers more resources from workers to the government that govt spends today--I guess that's what you guys want to see right?

 

And yet again, accounting arguments get twisted up. All these acounts you refer to are actuarial assumptions, not true obligations. But in the end, real money will need to be paid to real people and the actuarial estimates are a good insight into that payment sustainability.

 

So, SSI or any other defined benefit plan works well if your working population keeps growing above the retired population, there is no marked increase in life expectancy, and tax revenues are growing faster than inflation. But if the above aren't happening, then the system needs to be reformed ASAP, because it will be come unsustainable at a certain point.

[TPS]

And yet again, accounting arguments get twisted up. All these acounts you refer to are actuarial assumptions, not true obligations. But in the end, real money will need to be paid to real people and the actuarial estimates are a good insight into that payment sustainability.

 

So, SSI or any other defined benefit plan works well if your working population keeps growing above the retired population, there is no marked increase in life expectancy, and tax revenues are growing faster than inflation. But if the above aren't happening, then the system needs to be reformed ASAP, because it will be come unsustainable at a certain point.

Just explain what you would do TODAY to fix a problem that won't occur until 2035? And if your solution creates a surplus today, what do you do with it today?

[GG]

Just explain what you would do TODAY to fix a problem that won't occur until 2035? And if your solution creates a surplus today, what do you do with it today?

 

Today, I would raise the SS eligibility age by 3 years for everyone younger than 45-50. Longer term, I would introduce more defined contribution accounts into the retirement schemes.

[TPS]

Today, I would raise the SS eligibility age by 3 years for everyone younger than 45-50. Longer term, I would introduce more defined contribution accounts into the retirement schemes.

Good answers.

[DC Tom]

Good answers.

 

Hey, watch it. We don't tolerate that kind of behavior here. That sort of lack of abuse will get you a vacation...

[Captain Hindsight]

If I may pose a question. Why do we have funds to keep the old alive and well but cut education? It seems like an odd trade off when the rest of the world focuses on education and is kicking our asses in R and D

[Joe Miner]

If I may pose a question. Why do we have funds to keep the old alive and well but cut education? It seems like an odd trade off when the rest of the world focuses on education and is kicking our asses in R and D

 

Carfeul.

 

Are you sure you want to equate the level of funding to the quality of education?

 

Are you sure you want to equate quality of R&D with quality of education in this country?

[DC Tom]

If I may pose a question. Why do we have funds to keep the old alive and well but cut education? It seems like an odd trade off when the rest of the world focuses on education and is kicking our asses in R and D

 

Because if we don't keep the geezers geezing, who's going to teach the kids?

[IDBillzFan]

That sort of lack of abuse will get you a vacation...

That and catching a mod in mid-menstrual cycle.

[TPS]

Hey, watch it. We don't tolerate that kind of behavior here. That sort of lack of abuse will get you a vacation...

I may be due for another self-imposted one, assuming I wake up tomorrow...