Posted by Shapley Hunter on Fri, Oct 19, 2012, at 9:21 AM:
I keep hearing that this candidate or that candidate will cut funding for Medicare and Social Security. However, Mr. Obama and the Democrats have already done that with they Payroll Tax Cut which was included in the Stimulus Bill. They cut the funding, but not the spending (the same thing they accuse Mr. Bush of doing with his tax cuts).
The Payroll Taxes which support Medicare and Social Security have been reduced since 2009. As a result, the 'trust funds' which support these programmes have seen significant reductions in contributions, despite predictions that the programmes will run out of money in the near future.
When President Bush proposed allowing younger citizens to take a portion of the Social Security taxes and invest them in private pension plans, the Democrats decried it as as 'risky scheme' that threatened to underfund the programme while providing little security with the monies that were redirected. The idea was rejected. The Democrats said the best thing to do was to do nothing.
If only they had done nothing. Instead, they allowed all workers to take a portion of their Social Security taxes and spend them as they see fit - not on pension plans or retirement savings but on anything. This, however, they do not see as a 'risky scheme'.
As a result, nearly all borrowing the government has done - more than a trillion a year since Mr. Obama took office - has been public debt, since the Social Security trust fund has not grown in the interim. Five trillion in new debt strikes me as riskier than letting people invest a little of their own money in a retirement plan they own. I'll never understand the thinking of Democrats.
Replies (14)
The Democrats, when discussing the Payroll Tax cuts, seem to avoid any mention of the programmes they fund when talking about them. One would believe, if you listened to their rhetoric alone, that the Payroll Tax, which provided 'tax relief to the middle class', had nothing whatsoever to do with the Social Security or Medicare programmes. They do not discuss, for example, the fact that millions of Americans were trading the financial security of these beloved entitlement programmes for a few temporary dollars in their pockets.
Now, I would like to think that younger Americans were savvy enough to invest those few extra dollars in some sort of long-term investment so they can offset, at least somewhat, the fiscal damage done by these cuts. I suspect, rather, that they have invested those few extra dollars per week in soft drinks and iPhones, or to put an extra gallon of gasoline in their cars or ATVs.
IMHO, the best investment of an individual's money is on whatever he or she wishes to exchange that money for.
-- Posted by Rick Vandeven on Fri, Oct 19, 2012, at 10:13 AM
"There is no "trust fund"..."
I've been saying that for years. That's why I set the words 'trust fund' as I do.
The 'trust fund' exists, on paper at least, in that the monies collected by the Payroll Tax are counted and recorded separately. They are then 'loaned' to the general fund, with interest, annually. In this regard they are compliant with the Supreme Court's ruling that they not be earmarked or set aside in any way. They government may spend them as they see fit. Unlike traditional retirement accounts, Social Security recipients do not own the monies in the fund, and they have no legal claim upon them. If the government decided tomorrow to quit paying Social Security payments and spend the monies on other governmental functions, they are fully within their legal authority to do so.
But, because the monies raised by the Payroll Tax is so counted and recorded, it creates the impression of monies 'socked away' somewhere for the citizenry to draw upon in their old age. The truth, as you and I know, is that it is a Ponzi Scheme and the money is there only so long as there are tax monies coming in to replenish what is spent. But, the term lives on, and Social Security and Medicare are supported by the payroll tax. Cut the payroll tax, and you cut thier funding, as Mr. Obama and the Democrats have done.
______
I do not propose to tell people how to spend their monies. However, if they want to depend upon the taxpayers for retirement income in their future years, current law demands that they ante up their fair share to support those retirees drawing upon them today.
President Bush's plan would have shifted a share of those funds to private retirement plans, independent of the taxpayers, for their future needs. Mr. Obama's shift of funding ensures nothing more than a few dollars more in their pockets today, with an empty promise that Social Security and Medicare will somehow magically remain solvent in the years to come.
Mr. Bush's plan made fiscal sense to me. Mr. Obama's, not so much...
-- Posted by Shapley Hunter on Fri, Oct 19, 2012, at 10:39 AM
By the way, Nestor did not establish that there is no 'trust fund', it merely established that one does not have entitlement to any of those funds merely by virtue of having paid taxes thereto.
Helvering vs. Davis is the case that ruled that the taxes were consitutional because they are collected like taxes in general, paid into the general fund, and are not earmarked in any way.
-- Posted by Shapley Hunter on Fri, Oct 19, 2012, at 10:47 AM
SH,
My generation has always worked under the assumption that SS will not be available for us when we retire. I used to get angry about it. Now, not so much. I am actually hoping that the Boomers bleed it dry ASAP so that I can quit paying in.
Thanks for the correction. I could'nt remember what SCOTUS case that was. It's funny that the best arguments against SS are on the SSA website.
Have a good one.
-- Posted by Rick Vandeven on Fri, Oct 19, 2012, at 1:04 PM
Nil,
The Treasury keeps a running account of the debt both as 'intragovernmental holdings' and 'public debt'. I addressed that in my original post.
On the day Mr. Obama took office, Intragovernmental debt stood at $4.32 trillion, or about 40.6% of the debt. As of yesterday, intragovernmental debt stood at $4.85 trillion, a little less than 30% of the total debt of $16.19 trillion. Public debt, at the same time has grown from $6.31 trillion to $11.35 trillion, an increase of 80%.
I'm not sure what you mean by 'isn't so bad', but that sounds pretty ominous to me.
When Mr. Bush took office, Intragovernmental holdings stood at about 40% of the total debt, and rose to about 43% of the debt early in his first term. They remained fairly constistent at that percentage throughout his term, until the economy turned sour.
-- Posted by Shapley Hunter on Fri, Oct 19, 2012, at 3:40 PM
"Is Bush running against Obama?"
No. Obama is running against Obama. You have the Obama Rhetoric vs. the Obama Record.
The Obama Rhetoric, however, seems to think it is running against the Bush Record, since that is where it points in order to deflect blame from the Obama Record.
-- Posted by Shapley Hunter on Fri, Oct 19, 2012, at 3:43 PM
Spaniard,
Obama is Bush.
-- Posted by Rick Vandeven on Fri, Oct 19, 2012, at 8:39 PM
Nil,
Ron Paul argued that we could save a couple trillion by not paying the Fed any interest.
A couple of Ivy League economists estimated that we have $200 trillion in unfunded liabilities recently.
Romney wants to cut the CPB. Obama won't entertain such a radical suggestion.
I just bought a fiddle.
-- Posted by Rick Vandeven on Fri, Oct 19, 2012, at 8:53 PM
If the fiddle is in reference to Rome burning, I would point out that the fiddle (violin) had not actually been invented when Nero was Emperor, and would not for about another 800 years.
Nero played the Lyre, which is plucked rather than bowed.
-- Posted by Shapley Hunter on Fri, Oct 19, 2012, at 9:17 PM
A question of a good bower or a good lyre?
-- Posted by Old John on Fri, Oct 19, 2012, at 11:22 PM
I've seen Mr. Obama both bow and lie, so I reckon it's a combination of both. He's good at it, which is bad for the nation.
-- Posted by Shapley Hunter on Sat, Oct 20, 2012, at 7:32 AM
SH,
I figured that I better buy a fiddle in case Romney gets elected and starts a trade war with China and I can't afford one.
-- Posted by Rick Vandeven on Sat, Oct 20, 2012, at 12:49 PM
Me'Lange, Obama would have handled that subject much better, 'Ah..when it comes to China and America..uhh..if were talkin' trade.. uhh, well sometimes you get more done by...let's go get a beer!'
I notice you never miss a chance to jump on Romney. Why is that? I thought you were a fair minded equal opportunity basher of all with differnent ideas. Oh, maybe I just answered my own question. :)
-- Posted by Old John on Sun, Oct 21, 2012, at 12:15 AM
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I keep hearing that this candidate or that candidate will cut funding for Medicare and Social Security. However, Mr. Obama and the Democrats have already done that with they Payroll Tax Cut which was included in the Stimulus Bill. They cut the funding, but not the spending (the same thing they accuse Mr. Bush of doing with his tax cuts).
The Payroll Taxes which support Medicare and Social Security have been reduced since 2009. As a result, the 'trust funds' which support these programmes have seen significant reductions in contributions, despite predictions that the programmes will run out of money in the near future.
When President Bush proposed allowing younger citizens to take a portion of the Social Security taxes and invest them in private pension plans, the Democrats decried it as as 'risky scheme' that threatened to underfund the programme while providing little security with the monies that were redirected. The idea was rejected. The Democrats said the best thing to do was to do nothing.
If only they had done nothing. Instead, they allowed all workers to take a portion of their Social Security taxes and spend them as they see fit - not on pension plans or retirement savings but on anything. This, however, they do not see as a 'risky scheme'.
As a result, nearly all borrowing the government has done - more than a trillion a year since Mr. Obama took office - has been public debt, since the Social Security trust fund has not grown in the interim. Five trillion in new debt strikes me as riskier than letting people invest a little of their own money in a retirement plan they own. I'll never understand the thinking of Democrats.
Replies (14)