Social Security

[pgrmdave]

So, I'm eighteen, and not really thinking too much about it, but it seems to be a big deal. Exactly what is social security, how does it work, what is wrong with it, and what are the proposed plans to fix it?

[Killean]

From what I found, social security is a "safety net" for the retired or disabled. The basic format of the system is: you pay the government for social security, when you retire or become disabled you are payed back that money and then some.

I found an article in the NY Times regarding the problems of social security and some detailed information of how it distributes the funds in the present date.
http://www.nytimes.com/2005/02/06/bu...ey/06view.html

[Buffy]

What a lot of people don't realize--and what the conservatives say is wrong with the system, even though its still the only way to run it--is that it is *not* taking your money now, investing it and then giving it back to you later. What really happens is that the money you put in today is just plain used to pay the social security payments today, plus--at the moment, while theres more SS taxes coming in than payments going out--some that goes to pay for defense, homeland security, welfare, teachers or whatever other government program you don't think you should be paying for.

Now this sounds wrong: the government should be investing the money so its worth more later right? Well, that would be nice, but actually 1) the flood of money on the market would compete with other investment dollars, and thus depress returns on investments in the capital markets, and 2) the US Government IS and investment in and of itself! The basic idea is that by pumping this money into the government it pays for investments in infrastructure (highways!), security (keeping Iraq's...err, I mean Iran's nukes at bay!), and people (training kids so they can have jobs, stay off welfare, and hopefully make the economy competitive with China and India), all of which will make us richer in the future, allowing us to pay more into the system to cover future SS payments and other programs. Its not really any different than buying government bonds (War Bonds, Savings Bonds, Treasury Bills, whatever).

Cheers,
Buffy

[lindagarrette]

A huge chunk of the money taken in by the US Government comes from foreign investors which means we are in debt up to our eyeballs. Eventually, the real (official) value of the dollar will decline (a lot) leaving us with a rate of inflation that will cause Social Security to be practically useless. That's my opinion.

[Buffy]

Originally Posted by lindagarrette

A huge chunk of the money taken in by the US Government comes from foreign investors which means we are in debt up to our eyeballs. Eventually, the real (official) value of the dollar will decline (a lot) leaving us with a rate of inflation that will cause Social Security to be practically useless.

The dollar already has dropped a *huge* amount compared to the Euro in the past year, thanks to our new Treasury Secretary John Snow who has been very verbal in talking down the dollar on world markets; the theory being that a cheaper dollar will increase exports from the US, which will improve our local economy. Of course as far as the trade imbalance is concerned, the increase in the number of goods being shipped doesn't increase their *value* since each one is cheaper, so the imbalance persists.

We've also got Dick Cheney on record saying "(budget) deficits don't matter" (that is I suppose unless there's a democrat in the White House, in which case they'd probably be "wrong"). There are only three ways to make up those deficits: 1) print more money which drives inflation through the roof, and even the radical conservatives won't even mention this, 2) get people to loan the government money via treasury bills, or 3) combination of raise taxes and lower expenditures (which ain't gonna happen with a Bush in the White House and a bunch of "drunken sailors" (as John McCain likes to call them) holding the purse strings in Congress). Fortunately because we're careful about 1) and our economy remains by far the biggest, there are lots of people to still go for 2).

The other two indirect issues that are keeping things going right now is that some very big economies peg their own currencies to the dollar--most importantly the Chinese--and many major commodities--most importantly oil--are traded in dollars. If the Chinese decide to float the Yuan or Opec decides to denominate oil in Euros, you could see a major depression occur in the US. It would be totally sucky!

Cheers,
Buffy

[fusion]

nice post

[Turtle]

I have SS disability & in the last 4 months my papaer check was late. Then when you call they try & make you go to E-payment. I don't have a bank (they took all my money & kicked me out because I got diabled & couldn't pay & didn't have insurance 11 years ago) I think they're doing it on purpose, making checks late I mean, to scare us into electronic. For years the check was never late & all of a sudden whole bags of mail "misdirected" they said. Whole bags mind you; I'm not the only one they're doing this too.

[lindagarrette]

Originally Posted by Buffy

There are only three ways to make up those deficits: 1) print more money which drives inflation through the roof, and even the radical conservatives won't even mention this, 2) get people to loan the government money via treasury bills, or 3) combination of raise taxes and lower expenditures...

Cheers,
Buffy

The other option is to impose a value added tax on goods and services. European countries collect an average of about 20% of the sales price.

[Buffy]

Originally Posted by lindagarrette

The other option is to impose a value added tax on goods and services. European countries collect an average of about 20% of the sales price.

I've personally always liked sales taxes, but with conservatives its still got the "T-word" in it so it can't be spoken ("user fees" are some times acceptable if they are only put on tree huggers going into national parks). On the liberal side, the complaint about them is that they are "regressive taxes"--to use the technical term--which means they are applied to all, rich and poor, at the same rate (where as income taxes are "progressive" with rich folks paying a higher tax rate than poor folks), so they are "easy on the rich who can afford to pay more." "Luxury Taxes" are designed to balance this out by adding an additional tax on things that are considered "extravagant" like cars that cost over $50,000, but in fact the poor who save for a long time to get these luxuries still have to pay them.

Sales Taxes are applied here in the US only at the stage where the consumer purchases a product, and they're almost never applied to services. VAT taxes in Europe are applied to both goods and services and are added whenever "value is added" by a vendor at any stage along the way to the customer, so it can generate income from every transaction even between vendors in the supply chain.

Cheers,
Buffy

[Buffy]

Oh and also, sales taxes here go to the states/municipalities, whereas VAT goes to the national government. One of the biggest problems with bringing VAT to the US is figuring out how to apply it within the maze of state laws about where it would apply and the states generally worry that it would significantly reduce state tax revenues if not done in a way that would incorporate their local idiocyncracies. It would be a major issue with upgrading all those point-of-sale systems at the very least!

Cheers,
Buffy