When Medicare/Social Security become insolvent.

[BehindBlueI's]

https://www.cbsnews.com/news/5-dangerous-myths-about-social-security/

[h=3]Today's workers won't receive any benefits[/h]That's a commonly voiced fear, but it's far from the truth. If nothing is changed and the Social Security reserves run out by 2034, the program will still be able to pay three-quarters of its benefits.
Granted, that's harmful to seniors, especially for the millions of Americans who rely on Social Security as their primary source of income. But Social Security will still be paying out benefits for today's workers at least through 2092, which is as far as the Social Security administration has forecasted its operations.

(more at link)

The SSI sky isn't falling, the system isn't shutting down in 203X...

 

[dusty88]

https://www.cbsnews.com/news/5-dangerous-myths-about-social-security/


(more at link)

There are two things commonly glossed over by those who simply tell you it takes a few adjustments.
First, those adjustments could have been made more easily years ago but we did not because it's not politically palatable. Do you think it will get more palatable when it requires more extreme adjustments? I don't think it's so different from the Illinois pensioners demanding "what they were promised" until their taxpayers finally can't pay up anymore.

Second issue is more concrete: the "trust fund" is made up of bonds that are going to have to be paid back by the same taxpayers who will be funding future social security payments. It's phrased in the article more vaguely:

Instead, as CBS MoneyWatch columnist Steve Vernon explains, the reserves are invested in special U.S. Treasurys and become part of the government's overall funding. Other investors are also buying U.S. Treasurys, of course. The government mingles the proceeds from those bonds with other revenue, including the Social Security's special bonds.
Here's another way to think of it: When you buy newly issued stock from a company, the business then invests that money across its operations. The special Treasurys Social Security buys are legally obligated to pay the stated market interest rate and to prepay the principal at maturity.

Very bad analogy, that (my bold). Let's not interchange investment, trust fund, and debt, which is what this article does. The pictorial here is really much simpler. In order for that accounting step to occur where SS gets money back from its trust fund (government bonds), the government has to buy the bonds back using either tax collection OR it has to get cash by selling even more bonds. So using the trust fund means one of two things:
the same taxpayers that are being asked to increase SS payments will be asked to pay more in other taxes at the same time OR
the government continues to increase its debt

It will probably be plan B. And it doesn't take a rocket scientist or even a poor economist to know what happens when governments increase their borrowing. We have been lulled into an idea that the US debt has no limit. Meanwhile the debt to gdp ratio continues to increase.

You might see your SS payments. But certainly not everyone who has been promised them will get them at the purchasing value they have been promised.

The SSI sky isn't falling, the system isn't shutting down in 203X...

"sky falling", "gloom and doom", etc are often used as a dismissive straw man argument for recency bias or unwillingness to analyze

I don't see you personally as someone unwilling to analyze, btw. This actually should be a simple mathematical topic. The way the accounting system is used and the way money is created makes it somewhat more difficult to come to agreement on.

 

[BehindBlueI's]

"sky falling", "gloom and doom", etc are often used as a dismissive straw man argument for recency bias or unwillingness to analyze

I don't see you personally as someone unwilling to analyze, btw. This actually should be a simple mathematical topic. The way the accounting system is used and the way money is created makes it somewhat more difficult to come to agreement on.

In this instance, I think people see "becomes insolvent" and think the whole thing goes bankrupt and disappears like it's a retail store. That's the notion I was countering.

 

[dusty88]

In this instance, I think people see "becomes insolvent" and think the whole thing goes bankrupt and disappears like it's a retail store. That's the notion I was countering.

By all normal market or accounting standards it already is insolvent. Some people actually think they have an account because of the SS statement they can see online (the one you used to get in the mail).

To support this, you have to support the notion of future collections. The argument is that the economy will support this (very debatable considering the public and private debt to gdp ratios) AND that the workers will continue to pay it. The argument includes government force. But that government is in the end beholden to its voters. SS has continued because the older people (those on or approaching SS) are a significant voting block. Will that change?

What happens when more people simply become concerned and take SS as early as possible? And the younger folks become more concerned that they will never see it, thus it becomes a major political issue to elect reps who will not increasing SS taxes?

In total SS payments are probably as tied to the overall government debt to gdp ratio as to any specific facets of FICA tax or SS payments. When the government can't borrow money at a low rate, this will falter like anything else. HOW it goes down isn't really important. If SS is still active and making payments but only buys 1/10 of what a person expected, it's just as bad as if it goes away officially .

 

[Alpo]

There are people who worked and paid in to social security and became disabled during their working career. Social security provides them some relief.

And then there are those who "claim" injury because they don't want to work and the doctor/lawyer machine who derive fees from these individuals support their need for social security disability payments. That should be stopped. It is fraud.

And then there are those with dependent children with disabilities. Why am I paying for them? They didn't work. The system was never really designed to assist them. I support helping parents with children with disabilities, but not out of MY pension fund. Set it up separately and account for it as a direct expense.

Solve these problems and social security will be there for your grandchildren when they retire.

 

[GIJEW]

AARP won't let it happen. And no one will be screaming about the thuggery of the most powerful lobby there is.

SSI is at its core not horrible program. Keeping in mind the I stands for insurance, it has helped greatly reduce poverty among the elderly. But it was not meant to be your retirement alone. The age it kicked in, 65 yo, was approximately the average life expectancy when the system started. Thus it was intended for those who lived beyond the typical age. You are not "putting in" funds or investing. It is a tax. I suspect in the next decade or so they will:

Increase the retirement age.

Decrease the SSI income for those who have adequate retirement income.

And set an income limit which if exceeded eliminates SSI for you.

Fed.gov has already done the first two. As for the third, they do that with tax brackets

 

[doddg]

They need to put the stolen funds back into it. Nuff said.

1. Thank-you! I wondered if I was the only one who knew both major parties are guilty of taking OUR Social Security monies and spending it.
2. In other countries, is has been a practice to change the currency to defraud the citizenry.
3. And we think there is no penalty to spending more than we take in, whether it be an individual, a family, a business, or a country.
4. People do not realize that countries in history do and have become insolvent and go bankrupt (with the citizenry's money).
5. Let me spell it out for you: b/c of overspending.

 

[Ark]

This country coughed up trillions of dollars for the GWOT while passing massive tax cuts for the wealthy. Medicare and Social Security aren't going to "go away". We'll just pay for them with deficit spending like anything else until somebody comes to their senses and raises taxes to match the demand on the system.

Either we do modest increases in revenue and modest tweaks to benefits now, or we do harsh increases in revenue and decreases in benefits later. Either way, the programs aren't going to "go away" unless some clown manages to privatize them.

Of course, the Medicare funds would go a lot further if Medicare was allowed to negotiate drug prices instead of paying massive, profit-inflating sticker prices, or if Medicare was the only payer in the land and could therefore dictate more reasonable service prices instead of paying $55 per ibuprofen pill in the ER, but that's crazy talk.

There are much higher-ranked items on my worry list. Besides, in the ultimate SHTF, all industrialized healthcare operations cease and everyone who is dependent on recurring care or recurring medication simply dies in short order.

 

[spencer rifle]

I see that recent polls supposedly show that huge majorities of Americans don’t want any modifications to Medicare or Social Security. So what? It doesn’t matter what you “want.” The country’s broke, and you can vote yourself unsustainable quantities of government lollipops all you like, but all you’re doing is ensuring that when, eventually, you’re obliged to reacquaint yourself with reality, the shock will be far more devastating and convulsive.
- Mark Steyn, 2011

"A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, (which is) always followed by a dictatorship." - Alexander Tyler, 1787

 

[BigBoxaJunk]

There are people who worked and paid in to social security and became disabled during their working career. Social security provides them some relief.

And then there are those who "claim" injury because they don't want to work and the doctor/lawyer machine who derive fees from these individuals support their need for social security disability payments. That should be stopped. It is fraud.

And then there are those with dependent children with disabilities. Why am I paying for them? They didn't work. The system was never really designed to assist them. I support helping parents with children with disabilities, but not out of MY pension fund. Set it up separately and account for it as a direct expense.

Solve these problems and social security will be there for your grandchildren when they retire.

Why do you hate the disabled?

 

[Alpo]

Are you reading comprehension disabled?

 

[BigBoxaJunk]

Are you reading comprehension disabled?

No, but I'm afraid I might be satire-disabled.

 

[GLOCKMAN23C]

Let me keep the money stolen from me every paycheck and save/invest it myself. /thread.

 

[Lex Concord]

It's not secure, it's not insurance.

It's essentially a Ponzi scheme, albeit one far less likely to collapse quickly because gun (i.e. you are compelled to contribute by the government if you want to earn and eat).

Show of hands: who here would actually participate if you could opt out?

 

[BluedSteel]

First, i don't see Social security as an entitlement. Some do abuse the system thats for sure. Ive been paying into it for 30 years now. I wont be eligible till 2038. Guess im screwed, but i already knew that. There needs to be a way to recoup the money that people have been putting into it. One giant ponzi scheme! Actually surprised they've been able to carry the scheme this long.

If I remember my American History correctly it wasn't a "Ponzi Scheme" until the administration of a certain long-dead president when the CASH on deposit with the government was replaced with a government IOU so those funds could be used "elsewhere". Then the IOU was itself replaced with an equal value of Treasury Bonds. Did I get this timeline right?

 

[churchmouse]

This country coughed up trillions of dollars for the GWOT while passing massive tax cuts for the wealthy. Medicare and Social Security aren't going to "go away". We'll just pay for them with deficit spending like anything else until somebody comes to their senses and raises taxes to match the demand on the system.

Either we do modest increases in revenue and modest tweaks to benefits now, or we do harsh increases in revenue and decreases in benefits later. Either way, the programs aren't going to "go away" unless some clown manages to privatize them.

Of course, the Medicare funds would go a lot further if Medicare was allowed to negotiate drug prices instead of paying massive, profit-inflating sticker prices, or if Medicare was the only payer in the land and could therefore dictate more reasonable service prices instead of paying $55 per ibuprofen pill in the ER, but that's crazy talk.

There are much higher-ranked items on my worry list. Besides, in the ultimate SHTF, all industrialized healthcare operations cease and everyone who is dependent on recurring care or recurring medication simply dies in short order.

2 words................flat tax.

 

[jedi]

all good info and sadly all true.

 

[Alpo]

If I remember my American History correctly it wasn't a "Ponzi Scheme" until the administration of a certain long-dead president when the CASH on deposit with the government was replaced with a government IOU so those funds could be used "elsewhere". Then the IOU was itself replaced with an equal value of Treasury Bonds. Did I get this timeline right?

There is no difference in a Federal Reserve Note and a Treasury Bond. We are not on the gold standard.

 

[Dean C.]

As someone who will most likely never receive any of these benefits (age 25 and younger) I would honestly like the option to opt out of social security.

 

[dusty88]

As someone who will most likely never receive any of these benefits (age 25 and younger) I would honestly like the option to opt out of social security.

heck I'm 54 and I'd like the option to get out of it