To make that statement you live from the proceeds of well-planned investments producing nothing but capital gains or a recent windfall inheritance and ignore government economic capital injections based on debt. With a regular job or as a student you realized no tax reduction, actually quite the opposite as state and muni taxes expanded to absorb federal revenue sharing reductions as federal policy placed priorities on military and domestic security spending at the cost of domestic programs. Ever hear of what's called a shell game or Ponzi scheme?

Name me one area of domestic spending that has had a substantial CUT (thus neccesitating increased state spending) since the 2000 budget? That some states have seen fit to increase taxes to fund more spending is the choice of those states, but it is not because the Federal Government has cut back on the largess domestically.


Yep, and Social Security is the biggest one ever devised in the history of mankind, and unlike MOST ponzi schemes, people have been forced into it (as opposed to most where participation is completely voluntary).

It never ceases to amaze me the utter ignorance (willful or otherwise) that people who support the Social Security program running at the lips about deficits, when the single greatest unfunded liability in history is the Social Security system, followed closely by Medicare. Go figure

__________________
"It's a good feeling to shoot a bad guy. Something you democrats would never understand. Americans are homesteaders, we want a safe home, keep the money we make, and shoot bad guys!"

----Denny Crane

Medicaid and rural schools. Both have suffered severe cutbacks, rural school funding to the point where it becomes a complete state responsibility this year but retaining federal education requirements which if not met restrict other federal spending on non-rural schools. Hospitals are running in the red and experiencing financial failure as federal Medicaid assistance for those unable to furnish their own health care dries up. Reduced schooling federal revenue is a direct impact on property taxes at county and state levels while health care affects state, county and muni costs.

Why not put the annual 'surplus' funds being skimmed to general revenue since the 1980s and replaced with internal, non-trading, interest bearing debt back in and take a fresh look? Does the word trust fund mean anything to those who don't understand federal accounting practices? In 2006 alone, that's $177B.

Grandfather Trust Fund & Deficit Report - by MWHodges

Since SS is funded but being annually raided to eventual insolvency, when you say unfunded liabilities I assume you're referring to current administration's Medicare prescription plan? The largest unfunded entitlement program in the history of the US, so vast no solid numbers are available due to escalating health care costs?

What is this bullshit about spending the Social Security surplus?
It gets invested in United States Treasury obligations, the same bonds that Japan and China buy, and are considered the worlds "risk-free" investment.
Would you rather see a large vault filled with cash?
Cash is just a non-interest bearing obligation of the exact same government.
Would you rather see it invested in corporate bonds?
Then you would have elected officials investing public funds in private companies?

__________________
“ The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.”

Adam Smith , The Wealth of Nations 1776

"We have always known that heedless self-interest was bad morals; we know now that it is bad economics"
FDR's second Inaugural Address

Not exactly. The excess SS funds are eventually placed into the general fund under non marketable US Government Bonds. It provides no real savings account into the national income. It is there for accounting purposes only. Thus, there is really no "trust fund" in Social Security. It has been that way since 1954 when Congress passed the Federal Insurance Compensation Act of 1954 where it separated the funding of Social Security, and Medicare when it was enacted in 1968, apart from income tax.

What needs to happen is that Social Security needs to either become means tested or change from a defined benefit plan to a defined contribution plan.

Americano,
Excess Social Security Funds are already placed into non marketable US Government bonds and put into the General treasury fund by the US Dept of Treasury. The Social Security is a tax, no more, no less. However, the benefit is set apart from the taxes, although they do have something to calculate how much "benefit" one does receive. The problems with social security is that it is totally dependent upon today's workers to fund the program. Even if the funds were not raided by the general fund, you would only add maybe two decades of insolvency, given the current rate of cost of living adjustment with an older population. With a deminishing rate of return on how many workers are needed to support the current retirees, there are two things that you can be assured of: increased taxes and/or decreased benefits.

What needs to happen is to change the system from a defined benefit plan to a defined contributions plan, otherwise, maybe one should means test the program where the wealthy do not exactly need the social security returiement.

Correct. They're actually replaced with non-marketable bonds at a nominal interest rate. There's still a trust, but for accounting purposes trust assets consist of those bonds. It's basically an IOU from the government to the public used to conceal spending deficits and becomes a portion of internal debt. Just another piece of federal capital injection based on debt used to drive the economy.

Other than making it public knowledge that it's being used to create an illusion of lower spending deficits and higher GDP, I personally don't really care what's done to it. Making it an entitlement program or reducing benefits is something no politician will touch at this point in time until the health care issue is resolved, the obvious immediate solution being higher contribution rates based on current actuary calculations and operating costs. I'm aware of age demographics for supporting any social program and it comes down to which pocket the general public wants retirement taken out of, if they want retirement. As Volcker said in the '80s, Americans are going to have to eventually learn to live with a lot less. Getting Americans to that point of reality is going to take hitting some bad patches.

Social Security was on a pay as you go basis until the Reagan Administration.
To offset the huge tax cuts for upper income brackets, Social Security taxes were raised and the surplus went into a trust fund consisting of US government securities. The law was changed to allow the Social Security surplus to be used to offset the deficit, these figures used to kept separate, this BTW was the largest middle class tax increase in history,
When the Social Security system stops producing a surplus and starts running a deficit, these bonds will be redeemed by higher income taxes, starting in 2016, and that is the Reagan Legacy.

But here's the good news, everyone is going to get their social security checks, because congress can always vote to add funding, and since seniors vote in large numbers, and the baby boomers will all be getting checks, no party will be in the majority that does not support the Social Security system.

__________________
“ The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.”

Adam Smith , The Wealth of Nations 1776

"We have always known that heedless self-interest was bad morals; we know now that it is bad economics"
FDR's second Inaugural Address

Essentially double taxation.

Most people are unaware of smoke and mirrors federal accounting and will never know the difference. Combine the debt service we're incurring by current unlimited use of the federal credit card, inevitable general tax increases, a bloated bureaucracy and military, taxation for internal bond redemption and declining US prosperity on the lower tier and those poor suckers working for a living in a decade or so are in for a world of hurt.

Such a strange mix of completely true and lies about Reagan - I'm not sure where to start!

- SS has been pay as you go since day one, and still is.
- The 'trust fund' has been raided since day one, largely to pay for unconstitutional Deomcratic programs.
- Yes, Reagan did raise the tax, and yes, this did tend to level out the overall tax burden compared with the income tax alone.
- Yes, Reagan did ratchet up the accounting smoke and mirrors the Dems had used to help hide their tax-n-spend policies.
- Reagan lied to the public about SS and its 'trust fund', like many politicians before and since.

This situation is one of the reasons I don't hold Reagan in quite the high esteem I used to.


No essentially about it, it Is double taxation. If you make $100, you pay income tax on $100, despite the fact that you only get $92 because of SS taxes. (Ignoring the SS taxes that are effectively taken out before you even see your gross amount...)

__________________
Today's forecast: Government corruption.

Tomorrow's forecast: 100% chance of more 'politics as usual'

Maybe it's finally time to vote Libertarian

The first real step in looting the SS trust fund (and others) was in 1985, when Reagan was in a battle with congress over raising the National Debt limit. The increase was needed to avoid going into default on treasury securities interest payments. Treasury announced it would sell non-marketable treasury securities in the SS trust fund to raise the cash until congress raised the debt limit. Surplus SS funds then became easy pickins' to cover deficit spending.

I was referring to bailing out the trust IOUs with increased taxes.

Pay as you go means that social security taxes were set at a level to meet obligations, there was no surplus. The people paying SS tax paid enough to meet the current obligations of the system, and no more.

Under the current system, put into effect in the 80's Social Security collects far more than it needs for current obligations, the surplus goes into a Trust Fund that will be redeemed in the future, so that future workers will pay higher income tax, and lower social security tax.

Reagan slashed taxes, mainly for the wealthy, but the huge deficits kept growing, so Social Security taxes were raised, and the Social Security surplus was used to partly offset the operating deficit. Since Social Security taxes are capped, this tax fell heaviest on the Middle Class, but did not effect the wealthy.

__________________
“ The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.”

Adam Smith , The Wealth of Nations 1776

"We have always known that heedless self-interest was bad morals; we know now that it is bad economics"
FDR's second Inaugural Address

Social Security is still a pay as you go system. The greatness of the 1986 tax reform act was not a middle tax increase or a wealthy tax decrease, but a complete overhaul of the taxation system where more than 9 million lower income tax people were taken off the rolls, extended depreciation recovery periods, repealed many of the personal tax deductions, indexed for inflation standard deduction, personal exemptions, and so forth. It was negotiated between 1985 and 1986 with a Democratic Congress.

Additionally, Congress, at least, foresaw, the realities of the baby boomers when they retire. That was one of the reasons for the large surplus in Social Security taxes. Otherwise, the shortfall will be happening like now, Goober. So Congress postponed the inevitable hoping that it may go away. This is the problem of defined benefit plan. And you can see similar results with the General Motors Defined Benefit Plan which is now the largest single expense of the Corporation before salaries and employee compensation. But Congress also saw the $$$$$ for programs that Congress could fund with those funds. So, if the budget is Congress's budget, shouldn't you also be blaming Congress, including the Democrats who increased entitolement programs three fold in the 1980's?

By the time I retire, SS income will be anywhere from 10% to 15% of my total retirement income and less than 1% of my total assets.

How can one "loot" when it belongs to the Federal Government in the first freaking place. Ever since FICA in 1954, Congress has always used the unused SS taxes to help fund domestic spending programs. Want to explain this one Americano.


Congress can always forgive the internal debt, but even I would not recommend this.