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Thread: College Exam... :)

  1. #41
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    Quote Originally Posted by sambo View Post
    SS has been broke (without funds) for a long time and our moms and dads are still getting paid. However, they did not want to pay to make sure it was fully funded either. So don't worry, some how you will get paid back much more than you put in as long as you don't die too soon.
    So where are the funds coming from? More debt?

  2. #42
    Senior Member menmon's Avatar
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    It depends how you slice the pie but debt is funding the shortfall of our obligations, and currently SS and Medicare are obligations. So if you don't tax enough with the social security and medicare tax to fund them, you have to turn to other revenue sources, such as federal income tax and if that falls short you have to borrow it.

    There are many things that are not funded but no one wants to cut spending or raise taxes. I've always said that if they engaged a war tax to fund the two wars we are in, American's both republican and democrat would say get the troops home, we don't need to be there.

    Now I'm going to go back to my argument about taxes...if they can't raise your taxes, they will pay by printing money (this is not borrowing money). This is by increasing the money supply relative to the goods and services, and they do this with fed funds and repos. Right now, the amount of money being held in reserve accounts to cover the expected debt failure is absorbing most of the excess money along with weaker economies holding our dollars. But inflation is much higher than taxes, remember that.

  3. #43
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    Quote Originally Posted by ducknwork View Post
    So where are the funds coming from? More debt?
    Actually, SS has reserves in the trillions (they hold the majority of the national debt) and is generating about $180 billion in surplus this year.

  4. #44
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    Quote Originally Posted by YardleyLabs View Post
    Actually, SS has reserves in the trillions (they hold the majority of the national debt) and is generating about $180 billion in surplus this year.
    They have reserves on paper, correct?

    When the piper comes knocking, there are various ways our government can respond. What do you predict they will do?
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  5. #45
    Senior Member menmon's Avatar
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    Correct....the accounting is cash disbursements - cash receipts equals shortfall.

    There is no fund holding government debt, that is another misleading statement that people use to argue why they should not raise taxes or cut benefits. If we buy debt, it is retired.

    Does this sound familar. They used my SS for other things...if they had left it alone we would be just fine.


    My earlier post should have proved that if they had left it alone, in other words, not funded the shortfalls, there would be a lot of hungry old people right now.

    I'm not advocating they did it right...what I'm saying is they put a good program in place years ago and then failed to fund it with taxes as more people starting living longer and cost of living went up.

  6. #46
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    Quote Originally Posted by sambo View Post
    SS has been broke (without funds) for a long time and our moms and dads are still getting paid. However, they did not want to pay to make sure it was fully funded either. So don't worry, some how you will get paid back much more than you put in as long as you don't die too soon.
    I think you are partially mistaken. It was funded okay, but congress has gotten its hand in the cookie jar. It would be in much better shape if congress would replace what was taken out of the cookie jar.
    Terry Britton, P.E.

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  7. #47
    Senior Member YardleyLabs's Avatar
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    Quote Originally Posted by Terry Britton View Post
    I think you are partially mistaken. It was funded okay, but congress has gotten its hand in the cookie jar. It would be in much better shape if congress would replace what was taken out of the cookie jar.
    I agree with Terry. The entire objective of the reform under Reagan was to place the social security trust fund on a sound actuarial basis. The tax rate was more than doubled over a period of years to create massive surpluses that would build reserves to pay not only current benefits, which had been the case previously, but build up reserves for the future when baby boomers would retire. The problem was that Reagan and every President since him except Clinton, proceeded to spend the social security surplus to fund current activities -- primarily cuts in general taxes. During the entire debate on the Bush tax cuts, the war cry was "Give the people back their money>" At no time was it mentioned that the money being given back was the money reserved to pay future social security benefits which were paid for in advance. Once the tax cuts had been adopted, Bush immediately began his litany about the unfunded social security deficit.

    The true unfunded portion of social security was far in the future and not a crisis. The crisis was that the reserves had been spent and massive spending cuts or a rescission of the tax cuts combined with spending cuts would be needed to pay that debt back. Had tax rates simply been left where they were, the social security trust would have been restored during Bush's first term and it would have been relatively easy to adjust payroll tax rates to restore actuarial balance for the long term. Instead, we got tax cuts, a $550 billion unfunded prescription plan, and almost $6 trillion in new debt. And with all that, we still have the original social security funding gap, a much bigger Medicare funding gap, and a budget where social security, Medicare, debt service and defense combined total our entire Federal revenue stream.

  8. #48
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    Lets think through that...let just say a fund as you know funds today was created and it earned some level of income and grew over time.

    So lets think through this. 100 people start partcipating and set money aside that is suppose to grow and take care of them down the road. As time goes by the cost of living goes up and the fund needs the monies being contributed by the 200 new people now also contributing to the fund to pay for the first 100. Now since the new contributors paid the shortfall of the first 100 people, their money is not staying in the fund and earning interest and now because of modern science the first 100 are living longer than orginally expected. So now they living longer and their cost of living is higher than it was when the percentage of contribution was established. I can keep going on with this, but I think you can see where a fund as you know one would become insolvent over time.

    Public entities (US government is a public entity) use a type of accounting called fund accounting and there are budget buckets are funds that monies are committed to fund. So the way they are funded is with taxes and if their expenses exceed their tax reciepts they borrow money.

    This is another lie meant to mislead. There has never been a mutual fund type fund for funding the benefits of SS. The real truth is that in years when more money was paid in than needed, these monies either paid other government expenses or paid debt obligations of the government. Once upon a time, the program was overfunded, but it was understood that at some point it would not be as more people retired. Now again as the needs of the program grew and were visable to congress, taxes should have increase to assure funding, unless you wanted to cut the program.

    Now your republicans always want to cut benefits and yell the loudest to the voters that nothing is going to be there for you, except at election time, and then they lie to old folks and scare them into voting for them.

    See the old folks don't want their benefits cut and the younger working folks don't want their taxes to increase. So they lie and say that the democrats robbed SS fund when there was not any mutual type fund to begin with. They are all guilty of robbing it with inflation and unfunded cost of living increases. But if the democrats try to increase taxes to fund it and increase the benefits to keep pace with cost of living, the republicans call them tax and spenders.

    As my smart old daddy use to say, we ain't rich enough to vote republican boy, because we may need these programs one day. The Steve Forbes of the world would rather our mothers and fathers being eating out of dumbster than pay taxes. Think about it, when you start thinking that those few thousands you have in your 401k are going to take care of you in your old age.

  9. #49
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    Quote Originally Posted by sambo View Post
    As my smart old daddy use to say, we ain't rich enough to vote republican boy, because we may need these programs one day. The Steve Forbes of the world would rather our mothers and fathers being eating out of dumbster than pay taxes. Think about it, when you start thinking that those few thousands you have in your 401k are going to take care of you in your old age.
    Things have changed somewhat since your daddy made that statement!

    SS is a well intentioned program that has been truly mismanaged. But here is what it does!

    It provides a level of income based on your lifetime earnings skewered to give more to the lower wage people than those such as myself. It also provides a level of income to a widow/er with children who loses their source of income. With all the info the bureaucrats have they should be able to keep the program solvent. Anyone who counts on SS as their major source of income is mathematically challenged!

    Medicare is a different ball of wax - We pay a monthly premium along with the 1.45% x 2 paid into our account. Those premiums amounted to not quite $3,200 last year. Though we have had some procedures over the years I believe we have more than covered out of pocket costs. Again, it's a management problem.

    Now if our input into the system during the '80's were now to be cashed in, it would be considerably more than what you state. I believe T Bonds were doing 9-15% during that time. It was only when Clinton's boy Rubin started selling to the Chinese that interest rates were driven down. If this country was financing it own debt our politico's would not be spending like we actually had money.

    The problem does not lie with the average joe getting his SS check, it lies with the non earners let into the system & the public employee retirements we are bering asked to fund. JMO
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  10. #50
    Senior Member menmon's Avatar
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    Never in the history of the US Treasuries have any of them paid a coupon of 9-15% Hoverever during the Bush 1 years and the early Clinton years, you may have earned that type of return as rates went down and the principal value of your treasuries went up.

    Obviously we have a lot of people not working that don't want to work either. However, we have a lot of people that want jobs and there are not any for them. Given this, a country of our means should take care of those that want or can't take care of themself or won't take care of themselves. When you look at the US budget only a small fractual goes to wellfare programs, but that is what people yell the loudest about since it hits close to home, i.e., the bum getting by and not working for it, while you are working and paying taxes and they are not.

    Let's look past that for a minute. That wellfare money makes itself into the pockets of businessmen, such as farmers, food merchants, clothing merchants, oil companies, and everything in between. Albeit the government gives it to the orginal receipant, the profits these companies make on it are taxed, and if you take Freedman's aurgument for trinkle down economics and his example of a pencil maker and all the people that are involved in bringing a pencil to market, for every dollar that is spent, numerous people touch it and pay taxes on it. The velocity of it is mind blowing.

    Given how families are spread out these days, people don't have traditional family to turn too, and I don't have a problem with my tax dollars helping someone in distress. I get a lot for my taxes, i.e, great highways to drive to field trials, great airports to fly in getting to a trial, great parks to train and compete on, safe food to eat, public education, higher education, safe drugs, safe buildings to work in, and on and on. However, that low income earner never uses all these interstates or airports, they don't own any property that needs books and records kept on, etc., etc., so I should pay more because I use more.

    I don't like paying taxes, and I agree that there is waste in the system. But I have no problem taking care of the less fortunate because I've been blessed. However, an illness in my family or some other unfortunate tragedy, such as an earthquake of Hurricane or Bernie Maydoff can change my life in a heartbeat, and I might need some charity myself. Hopefully I never have to burdan anyone, but I know it could happen.

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