How to deal with Social Security and Medicare

[question everything]

These, or course, are the "third rail" of politics. Everyone knows that the funds are bleeding yet no one would have the courage do do anything.

Yes, I know, we waste a lot of money in Iraq but once our troops are back, these funds will be used to reduce the deficit and to fund many other government programs.

We should eliminate these taxes and payments as separate tax and budget items. Too many people who do not pay income tax are burdened with the 7.25% of Social Security and Medicare taxes. They are regressive taxes.

We should incorporate them into the progressive income tax brackets. Thus, if the lowest tax rate is 10%, raise it to 12%. The next is 15%, raise it to 18%, raise 25% to 30% and so on.

And them pay social security to senior citizens according to their means. There are many millionaires or simply wealthy folks who have very generous retirement portfolio. What do they need Social Security payments for? And they can afford to go the top doctors and hospital for their needs. What do they need Medicare for?

Instead, we keep slashing Medicare payments, forcing more and more physicians to not accept Medicare patients, and shifting the costs to regular insured patients.

Yes, I know, universal health should take care of that but... don't hold your breath for its immediate arrival.

Still, universal health will not address Social Security payments.

And if this sounds like - gasp - socialism - well, what is the alternative? Either we believe that as a society people should retire in dignity, or we do not.

I am not an economist. I don't have the numbers lined up, I just think that incorporating taxes and payments into the general funds make more sense. And we should be able to find the language that seniors will not be the first to pay the price for a recession. We can keep future payments in a separate fund, if this is the way to do it, but keep the means testing.

[liberal N proud]

1. Stop the stealing of the surplus would be a start

Then replace what was stolen to begin with. Problem solved, my day is done.

[Hannah Bell]

11. Under 1936 law...

any excess SS funds MUST be invested in US Treasuries & therefore borrowed into the general fund by the US gov't.

This was understood very well in 1983, when Reagans' special SS commission (led by alan greenspan) recommended collecting SS taxes in excess of what was needed to pay current retirees, supposedly to create a surplus to fund the boomers' retirements.

But the gov't isn't a savings bank; it can't "save" except through public investment. the rationale was economically ridiculous, & it's clear that it was when, on the brink of the boomers' retirement that they supposedly "saved" for for 25 years, the gov is crying "crisis" again.

The increase was a stealth tax hike on the lowest 90% of the income distribution to offset tax reductions for the top 10%, particularly the top 10th of that 10%.

The "fixes" they're proposing are more of the same.

I agree, pay it back & return to the original pay as you go design.

[liberal N proud]

12. "borrowed" that would mean that is gets paid back

[Hannah Bell]

20. Yes, it would.

There's no financial reason it won't or can't be, except that the public's bought into the "crisis" hype, so are primed to go along with a supposed fix for a problem that doesn't exist.

You & I agree. I'm simply pointing out that the problem isn't borrowing per se. SS has run small surpluses from its inception, like you would with a checking account so you wouldn't overdraw it. Those surpluses were borrowed into the general fund, then paid back without problems.

The problem now originated in the 1983 reagan/greenspan fix that jacked up rates to create large, ever-growing surpluses that were borrowed to the general budget to finance tax reductions for the super-rich.

Calls of "crisis" enabled the greenspan fix then, & calls of crisis will enable the next theft. The problem isn't that the surplus is put into the general fund, the problem is that they shouldn't be collecting big surplus SS in the first place.

Reduce SS taxation back to pay-go.

[Romulox]

23. There is no "trust fund"; in a few short years, any payments made will come from NEW TAXES

So to say "There's no financial reason it won't or can't be" makes no sense--the financial reason is that all things (including the ability of taxpayers to pay unfunded liabilities,)are finite

[lumberjack_jeff]

41. The trust fund is invested in government bonds.

Physical bonds, in physical file cabinets, imprinted with the words "backed by the full faith and credit of the United States of America".

There is a trust fund, and the government is obliged to redeem them when the Social Security trust administrators approach the bank window.

Retirees have done our part. We've been paying extra since 1983 so that we wouldn't be a burden on our children. It's withdrawal time.

It's true there'll be no more surplus payments to borrow to pay for tax cuts for the rich and wars abroad. To paraphrase Spiderman: "I missed the part where that's my problem"

[Romulox]

42. A "trust fund" has a legal definition--a pile of "I owe MYSELFs" ain't it.

" Physical bonds, in physical file cabinets, imprinted with the words 'backed by the full faith and credit of the United States of America'."

The US government is both payor and payee on those bonds--that's not a "trust fund", since there is no corpus (assets) in it. It is a unfunded promise, nothing more.

"Retirees have done our part. We've been paying extra since 1983 so that we wouldn't be a burden on our children."

You've paid less into the system than you propose to take out. It's welfare.

[lumberjack_jeff]

52. Money itself is "an unfunded promise, nothing more".

Less than one-quarter of the governments $10t debt is owed to retirees. If the government has no intention of honoring the debt it owes to those who purchase its bonds, it has a great deal bigger problem than just Social Security.

http://www.ssa.gov/OACT/ProgData/fundFAQ.html#n7

The driver for Social Security "reform" is the desire by the wealthy for permanent relief from their debt.

And almost all the boomers will be dead before the trust fund is depleted. Also, the estimates they use to project eventual depletion are pessimistic bordering on silly.

[Hannah Bell]

31. Well, let's see.

Yesterday I read of a new $750 billion bank bailout, plus new allocations for war spending, currently running ~200 billion/year.

That's about 1 trillion in new spending right there.

The Trust Fund debt is currently around 2 trillion. The first boomers have started retiring.

Seems it's possible, in one year to incur a trillion in new spending for banks & bombs, but to pay back 2 trillion over 30-odd years is some impossible Herculaean task.

Bull. It's about priorities. Bankers & munitions dealers are closer to power than ordinary workers, is all.

Second, it's unlikely that the entire debt will needed anyway. The prediction that it will is based on forecasting which has been proven massively in error by actual real-world outcomes.

It's a con, wise up.

[Hannah Bell]

32. PS: This is response to 23,

which for some reason, my computer wouldn't let me post to.

[Romulox]

44. So what's a few trillion more in debt on the backs of your children, eh?

The fact that the baby boomers have been such profligate spenders is not a good argument for saddling future generations for with even more debt.

It would be nice if you stood up to your government in the same way you "stand up" to unborn Americans, from whom you demand to be "paid back" monies you never loaned to them...

[lumberjack_jeff]

53. The boomers have saved $2.3t to pay for their retirement.

This was a bad thing?

[Romulox]

54. You both "saved" the money and spent it at the same time?

If you "saved" it, then why are you asking me to pay it to you? :crazy:

[lumberjack_jeff]

56. Because the only thing those savings can legally be invested in...

... is US treasury bonds.

I am not arguing that a $10 trillion debt is a good thing. I've voted for candidates who promise to reduce our debt for 20 years. I lost.

Nevertheless, your country has a $10t debt, one quarter of which is the social security trust fund. Beginning soon, workers will stop financing annual deficits, and soon thereafter they'll begin redeeming those bonds. Assuming we're going to honor our debt to the same degree that we force any third world country to do the same, we can either live within our means or escalate our borrowing from China.

Living within our means really is a possibility.

[ayeshahaqqiqa]

2. Both programs would be solvent

if the government didn't steal money from them.

[Hannah Bell]

14. what o you mean by "steal"? n/t

[ayeshahaqqiqa]

15. The monies from payroll taxes

that, by law, are to go to the SS and Medicare funds are regularly spent elsewhere. That's why I call it stealing.

[Hannah Bell]

17. By 1936 law, that's what's supposed to happen to any excess

SS collections. Nothing's changed except the 1983 Reagan tax hike that created the growing surplus collections.

Rescind the hike that created the surplus & return to pay-go.

[Winterblues]

26. They broke into Gore's "lock box" and took the money

:shrug:

[leftofcool]

3. I agree

One way to solve both is with good quality universal health care for all and a mandate for it. Then we dump all the medicare payments into social security, stop borrowing from it and that would probably solve the issue. If social security is 7% of your pay check, make it 10%, get rid of the medicare since we won't need it, create a special tax of another 3% for health care for those who can't afford it and I think it would, if not solve the problem at, least put us in the right direction.

Left of Cool

[antigop]

4. "Pay Social Security to senior citizens according to their means." -- uh, no.

Then it becomes a "welfare system".

[Cleita]

5. Lifting the caps on the FICA deduction alone would fund the

programs just fine. I also believe it would have the result of bringing outrageous CEO salaries back into the mundane. Progressive income tax would also accomplish that. If you don't want FICA to be regressive then it should be progressive too where the lower the wage, the lower the percentage and the higher the wage the higher the percentage. As a person of a certain age who relies on Social Security and Medicare to keep afloat, I know how important these programs are to the elderly and I know that there is a simple and equitable solution to keep them afloat.

[question everything]

8. Yes, making it progressive would be a good start

Individuals who make less than $8,000 (I think that this is the cut off for not paying income tax) should be taxed only 2%, or so, and then gradually increase it. And don't stop at 7.25% either for top executives.

I once had a job where I was processing stock options. It was the beginning of the year and the president of the company paid his whole annual social security taxes in just one transaction of redeeming his stock options.

[Hannah Bell]

18. The beauty of the original design was that it

wasn't "welfare". It's funded by workers, for workers.

When folks like your boss can legitimately say "their" money is funding it, they can kill it.

[Romulox]

22. It will become "welfare" the second general payroll taxes are used to pay back the "loans"

that the "trust fund" has lent to the federal government.

So the welfare distinction isn't terribly compelling at this point.

[Hannah Bell]

27. How so? n/t

[Romulox]

28. Because a third party will be paying you monies that you didn't earn

for an obligation that the third party did not incur.

1. Let's say you put your entire fortune into your mattress (SS "trust fund")

2. Let's say someone stole that money from your mattress one night (or spent it on the general fund.)

3. If you demand that I give you money to substitute for your loss, it is charity or welfare.

If it weren't welfare, and there truly existed a "trust fund", then you wouldn't be demanding a third party pay your way ("welfare").

QED

[Hannah Bell]

29. Workers' payments were borrowed into the General Fund.

It's a legitimate debt.

The General Fund will pay it back.

QED.

[Romulox]

30. "Borrowed" by *exactly the same people* who now demand that they be "paid back"

monies that they spent on themselves by people who were not alive when the money was spent.

There is no legal basis to bind a third party to a debt which the third party did not agree to or benefit from. You can't take out a "loan" in the name of an unborn child.

It's therefore not a debt. It's welfare.

[Hannah Bell]

33. Nope.

The money was borrowed by the Federal Government, not by individuals, from excess Social Security collections made by individuals, according to laws passed by elected reprentativess of both parties.

Social Security has always been financed by a younger generation who was not party to the original deal.

[Romulox]

43. The boomers are the first generation to bankrupt the system

Destroying the Social Security system such that it will not be available for future generations is most assuredly not a part of the original deal.

[sinkingfeeling]

50. Oh, it's the boomer's fault? Sorry, but we're the ones who have been paying into the system

our entire lives and approved the Raygun increase in the tax, so that we'd have a surplus for our retirement.

[Romulox]

55. People younger than you also pay into the system. So that's not a good argument. nt

[sinkingfeeling]

57. Talk to me when you've paid in as much as some of us (and our employers have).

I just said that we've paid into it our entire working lives, about 44 years for me and others about 50 years. We were promised in 1983 that by increasing the % for SS, the 'problem' (which doesn't really exist) would be taken care of.

[TahitiNut]

6. A 2% increase in the payrolls for the "bottom 80%" of workers would increase SoSec funds by 2%.

The projected "weakness" in Social Security is WHOLLY attributable to the appalling economic oppression of the working class. Proposed "solutions" that fail to address this fundamental cause are brain-dead, imho. Equitable compensation for human labor is imperative!

[napi21]

7. I don't agree with eliminating the 7.85% deduction from all paychecks.

The MAIN reason SS is n trouble is that the increase that was established back in the last 70's or early 80's was designed to create a surplus to take care of the boomer retirements, bu the damn Pubs couldn't keep their hands off that $$ just sitting there!!!!! They insisted on getting it BACK! Well, they got it back, and now we're faced with the boomer retirement and everybody's fliping out!

I've been paying into SS since my first job in 1961, and I'm going to be filing for benefits in Sept. 08. I admit, every time I got close to making enough $$ that I would go over the SS cap, they'd raise the cap again! All this handwringing on what to do is just silly! Increasing the cap has worked almost since the inception of the program. THAT'S the answer now too! I don't really CARE that some of the rich Pubs are crying about haveing to pay a few thousand $$ more each year! Quit paying attention to the crybabies and just increase the damn cap!

[sinkingfeeling]

9. What are you smoking if you think that once our 'troops are back these funds will be used to

reduce the deficit and to fund many other government programs."? That ain't goin' happen. The federal budget is out-of-balance due to Raygun's and Bush's tax cuts to the wealthiest and corporations. There is no additional money to be saved from ending our occupation of Iraq since every single penny spent there has been borrowed.

Social Security is an 'insurance' type of program, so I don't agree that those making less should pay in less (percentage wise). The solution is to eliminate the cap (over 30% of the taxpayers are making more than the cap) and universal healthcare for all.

While I believe in progressive taxes, I cannot support that those with limited incomes should pay nothing. I already have some problems with the earned income credit as a dis-incentive for bettering one's position. I know at least three younger women who have a total of 5 children outside of marriage and rely on EIC returns to buy new HD TV's and cars. They work a minimum of hours at grocery stores and MickeyD's .. about $7 to $8K a year. Only one of the 3 is trying to get more education and hoping to pull herself and child out of prover ty. One wants to have more kids she can't provide for. (She receives food stamps, HUD housing allowance, Medicaid care, and will get a $1200 tax 'rebate'.)

I pay about $18,000 a year in federal income taxes (single and after deductions) and the maximum into SS and Medicare, and have been in the higher brackets for 30 years. I have a 30 year old color TV and 1991 and 1999 cars. I guess I'm getting crankier in my senior years because I'm beginning to resent paying for other people to have kids they can't afford. I'm not about to give up my Social Security benefits in 2 years when I finally retire. I've paid into the system since 1964 and it is the third leg of my retirement plans. I consider myself to middle middle class and I won't see a dime in a 'rebate'.

[Lydia Leftcoast]

16. Getting rich off the EIC, huh?

Please explain how a person buys a new car on even the maximum EIC payment for a single person with two or more children of $4,716 when making between $11,500 and $15,400 a year (the income range that qualifies for the maximum benefit)?

To pay $18,000 in federal income tax as a single person, you have to have an adjusted income of about $85,000.

Excuse me if I don't join your self-pity party.

If those young women have it so cushy, maybe you should offer to trade places with them. :sarcasm:

I'm sure they'd be happy to make the trade.

[sinkingfeeling]

19. Don't want to trade places, but I limited myself to only having the number of children I could

afford. And yes, she bought a 42-inch TV last May. So again, she took , let's say $4716 and spent it outright. Why should she use the money for putting her children in a good pre-school or setting it aside for future educational expenses?

I beginning to think there are few people in the country who want to pay their own way. Let's just default on those credit cards and walk away from properties with negative equity. Have as many kids as you want, don't worry about providing a decent quality of life for them. Hey, let's double the national debt as well so those kids can figure out how to pay it off later.

[Lydia Leftcoast]

21. Have you ever been poor?

I have, and I have friends who are newly poor in middle age do to our deteriorating economy.

One thing that poor people do is spend money on luxuries that others may think are foolish, because they have it so damned hard most of the time, even with food stamps and Medicaid and such, that when they get a little money, they want to do something FUN for a change.

I'm not saying that a 42" TV was the best investment, but you're uncomfortably close to the rich person's attitude of "There wouldn't be any poverty if everyone were like me."

As for not having more children than they can afford, some women have accidental pregnancies. Others are just careless about birth control. Others feel that having lots of children gives their life meaning. They're not having more children just to get more EIC, because one DOESN'T get more EIC for any children after the second.

You have more than enough to live on. $85,000 adjusted income for one person is more than twice what I live on, and I don't get EIC either. Why do you think you have the right to tell people how to spend their money? How are the EIC recipients hurting you? What's next, looking into the shopping baskets of food stamp recipients to make sure that they're buying food that you approve of?

[sinkingfeeling]

24. Yes, I've been poor. I was a divorced single mother at age 21 in 1970. Back then, you

didn't get a government tax credit for the child nor a child care tax credit, you got an exemption. I did not receive court-ordered child support for over 15 years ($110 a month). I started out as a key-punch operator making a whopping $73 a week.

EIC recipients aren't hurting me, but as I said, I think it doesn't inspire the 'adult' to take responsibility for their lives. I guess I could turn the tables on you and ask why you think you have a right to tell me I have 'more than enough to live on'. I've tried, and so far succeeded, at saving my money and assets to pass something on to my son and his daughter so that their lives will be of a higher quality and she will get a good education. Isn't that what parents are supposed to do?

I think this thread was about exempting wealthier people from collecting Social Security and I said that I was totally unwilling to give up my SS after paying into for 40 plus years. I'm for progressive taxation, but I'm not for mandatory redistribution of personal assets.

[Lydia Leftcoast]

36. So in other words, it's the "I suffered, why can't they suffer?" syndrome

:shrug:

[sinkingfeeling]

49. Well, all I know is I gotten my ass out of bed every day for over 40 years to go to work. I didn't

expect to give myself 'perks' nor have somebody else pay my bills for having as many kids as I 'personally' wanted, all the while working the minimum required hours per month to obtain public assistance.

There's this attitude of 'entitlement' among people today that didn't exist 30 or 40 years ago. I see only one of the three women I talked about with any sense of responsibility, yet you seem to claim that because I (and many others like me) managed to improve our financial stance through our own hard work and sacrifice, that we should gladly pay for those who refuse to even try. People have to take some sort of responsibility for their own choices.

There are a hell of a lot more opportunities for assistance with education and career development today than there was decades ago. There are many good programs that provide child care so that young mothers can finish a degree, etc. But when people opt not take advantage of them and still expect to get a 'big tax return', I say they've elected to suffer.

Maybe you're an idealist who truly believes that every penny of assistance goes to deserving people who are just 'down on their luck' for a while. The woman I was talking about with the new flat screen TV, just spent six weeks in another state with her boyfriend. She 'took a little break' from her grueling 20 hour a week job at McDonald's. Public assistance is her way of life and she has no desire to change it.

[Lydia Leftcoast]

58. Sometimes people who live like that are genuinely clueless about other ways to live

Nobody they know has "made it," so they think that it's all sheer luck or a fantasy that you see only on TV.

They literally "can't get there from here," or it seems like such a huge effort with no guarantees of success that the very thought of striving discourages them.

(By the way, how do you know that that one young woman's boyfriend didn't buy her the TV or pay for the trip out of state?)

Since you're a success story, have you ever thought of gently mentoring some of these young women? Strike up a conversation with, "You know, I used to be in your situation..."

[sinkingfeeling]

59. Absolutely, I've talked to them and attempt to encourage them. And about the boyfriend, he's

on SSI (although he makes a lot of money pirating DVDs and goes 4-wheeling on ATVs).

[Lydia Leftcoast]

60. There's a lot of money in illegal activities

When I worked with street kids, one of the hardest parts of weaning them away from the streets was that they could make more money selling drugs or selling themselves than they could at a regular job.

[Hannah Bell]

10. You've bought the hype.

Where'd you get the idea that Social Security was in trouble?

You heard it on TV or read it in the paper. The numbers you heard are from a government projection with an infinite timeline; that's where the big deficit numbers come from. This is the SS administration's "intermediate" forecast.

SSa also makes 2 other forecasts, a "pessimistic" one (outcome even worse than the intermediate forecast) & an "optimistic" one (SS cruises along forever in surplus).

But this forecast has proved inaccurate, even in the short term. Over the last ten years, the economic data has come in nowhere near the intermediate forecast. In fact, the real numbers, on average, have come in even better than the so-called "optimistic" forecast.

So if they can't predict the short term, why should we trust their predictions for the long term? and if their models are consistently wrong, why don't they adjust them to bring them into line with reality?

Well, I suspect it's because they want to sell the crisis story. If they can get the public to believe there's a problem, they can "fix" it without resistance.

SS has been collecting $ in excess of program needs since 1983, in violation of its original set-up. This money, collected on income from $0 to $90K (bottom 90% of income) has been borrowed into the general budget while the upper 10% of income (especially the top tier) received massive tax cuts.

What a clever way to rob the poor to give to the rich, eh?

There is no SS crisis except the larcenous tendency of elites. The only fix needed is to rescind the Greenspan hikes & move SS back to pay as you go. Under the original design it is self-funding forever. The only way it can go broke is if the entire economy does. But if that happens, nothing else will work any better.

[Lydia Leftcoast]

13. Means testing for benefits would destroy the program

Rich Republicans are knee-jerk against any form of "welfare" that doesn't benefit them personally.

When their house is destroyed in a natural disaster, they squeal and holler for federal funds. As far as they're concerned, that kind of welfare is okay, but let a person who is making minimum wage qualify for food stamps, and that person is a "deadbeat" and "living off the taxes of hard-working Americans."

If rich people were no longer eligible for SS, they would start raving against it and say that their taxes were going to support lazy old people who weren't smart or virtuous enough to become rich like themselves.

That's why other countries make their old age pensions, their national health care systems, their child allowances, and their low-cost university systems available to everyone, regardless of income. Were they to bar the rich from taking advantage, these benefits would be stigmatized as "welfare for lazy people" and would be subject to cost-cutting measures.

[Romulox]

25. Taking money from young workers and giving it to the boomers

to "repay loans" that boomers took out and spent on themselves is welfare on its face.

[Hannah Bell]

34. The "boomers spent on themselves?"

Really?

Gee, how do you figure?

[Hannah Bell]

35. In fact, here's what happened.

In 1983, the Reagan Administration & a bipartisan Congress accelerated scheduled SS tax increases to generate a continuing surplus in collections beyond what was needed to support retirees.

These surplus collections were taken from the bottom 90% of income.

Then taxes were lowered on capital-based income (as opposed to work-based income), effectively the top 10%.

Thus the boomers, + Gens X & Y, have been over-paying into SS since 1983, so that folks like Bill Gates could take home more. Current retirees have also paid more, since the same 1983 deal started collecting taxes on their SS retirement. Self-employed also started paying more, since the deal made them responsible for employee & employer portions, which hadn't previously been the case.

How you get a generational war out of that, I don't know.

The full cost of the borrowing can be recouped by repealing Bush's tax cuts, which amount to about 2 trillion plus over 20 years.

[Romulox]

45. So despite the fact that the President and virtually all members of Congress are boomers...

Boomers have no responsibility whatsoever for the disastrous course their generation has led us on?

Talk about self-serving! :eyes:

[Lydia Leftcoast]

48. So I take it you're responsible for the atrocities being committed in Iraq?

After all, the soldiers are mostly YOUR generation. :eyes:

With a broad brush like that, you could paint your whole bedroom in four strokes.

[sinkingfeeling]

51. Ronald Reagan was born in 1911, hardly a bommer!

[Hannah Bell]

39. PS.

The oldest of the Gen-Xers was 21 in 1983, so they've been overpaying their entire working lives, as has each cohort since.

When you put issues in terms of generational war, you play right into the hands of your "betters," who love to watch the "little people" fight amongst themselves over scraps.

[Lydia Leftcoast]

37. Eh, we boomers are paying for previous generations RIGHT NOW

Most of us are only in our fifties, not yet eligible for SS.

[Hannah Bell]

38. Plus, even if we only make $5.15/hour...

we're putting our surplus SS payments into the general budget so that folks like GWB & Halliburton can pay at 15%. Less, with loopholes.

[Romulox]

46. So is everyone younger than boomers. The difference is, boomers will be the LAST generation

to collect Social Security.

You are destroying the social compact.

[Lydia Leftcoast]

47. I'M destroying the social compact?

I have consistently worked against the military-industrial complex that is squandering this country's wealth, and so have a lot of other boomers. Those of us who kept one foot outside the mass culture were ignored by the mass culture, but we have marched against militarism and foreign intervention all along.

The airheaded suburbanites who go around with "support the troops" on their SUVs are just as likely (more likely) to be Generation Xers as boomers.

If you younger people are concerned about Social Security, read up on THE FACTS, not the right-wing tactics designed to scare you into handing your earnings over to Wall Street greedheads. The posts of DUer papau, who, I believe, is an actuary, are very illuminating.

[lumberjack_jeff]

40. No, it doesn't sound like socialism, it sounds like welfare.

There's nothing inherently wrong with that, but people have gotten used to the idea that Social Security is insurance, and that's why it's a third rail.

It's a very good thing it's a third rail, actually, because Bushco would have gotten rid of it 30 years ago if they could. If it's welfare, they will.