A special message of thanks for our President

[Mc2guy]

Well, if you look at projected payroll taxes and the ballooning SS payments to baby boomers entering eligibility, and compare that with actuary tables projecting the lifespan of benefit recipients, yes, the program is going to be insolvent soon.  

Since the 50s, the amount of payroll taxes collected has exceeded the benefits paid out, and therefore has been building a so-called trust fund.  This fund, however, is only a shell game, as the actual money has been long spent on other programs.  For deficit purposes, you must ignore the trust fund because it doesn't really exist other than on paper.  When you look objectively at SS on a cash-flow basis, the benefits paid will exceed tax revenue collected to fund the program sometime around 2017, give or take.  

I am not trying "scare" anyone, and I am neither a politician nor affiliated with a specific political party.  I can do math, however, and it doesn't take a mathematician to see the problem that this program will have very, very soon.  Simply put, benefits MUST decrease, or tax revenues MUST increase in order to keep the program solvent on a year-to-year basis.  If we fail to make a choice (as is usually the case with American politicians and tough decisions), then we will have to resort to the old standby we love known as deficit spending.

Yes, the senior lobby is extremely strong, and no politician wants to upset seniors.  That said, if we don't address this problem soon, it will only get worse.  

The second problem that no one seems to want to talk about, is that the number of legal workers in this country is going down.  This is a natural result of an aging population and a slowing birth rate (we have fewer kids on average now that we did 50 years ago).  The only reason U.S. population levels are increasing is immigration.  Without an increase in the birth rate of U.S. Citizens, the future obligations under this program will be spread across fewer and fewer workers who will have to pay more on a per person basis to keep things solvent.  The only alternative is to "naturalize" more of the illegal workers so they actually pay taxes to fund the program (not that I am advocating that position).

Again, I am not trying to play the role of chicken little, but we are going to have to come to terms with this issue rationally, and quickly.  If we fail to do so, it will ultimately become a crisis requiring more drastic and draconian changes.  I would be happy to offer my ideas for a solution, but I think I am skirting the politics of this issue as it is.

 

[Tom]

Without an increase in the birth rate of U.S. Citizens, the future obligations under this program will be spread across fewer and fewer workers who will have to pay more on a per person basis to keep things solvent.  The only alternative is to "naturalize" more of the immigrants so they actually pay taxes to fund the program (not that I am advocating that position).

Hm, looks like you might be misinformed Christian. A legal immigrant allowed to work here (legally), naturalized or otherwise, pays taxes. Heck, we paid taxes in two countries concurrently, until we got the other place to agree they shouldn't be taxing us. When they finally refunded the "double tax", we (voluntarily) paid Uncle Sam a nice check for taxes on this "additional income" (refunded UK taxes). All that was long before we were naturalized.

 

[seilerbird]

Well, if you look at projected payroll taxes and the ballooning SS payments to baby boomers entering eligibility, and compare that with actuary tables projecting the lifespan of benefit recipients, yes, the program is going to be insolvent soon. 

Same exact thing that has been said for 70 years and has been wrong for 70 years.

 

[Mc2guy]

Hm, looks like you might be a little confused Christian. A legal immigrant allowed to work here (legally), naturalized or otherwise, pays taxes. Heck, we paid taxes in two countries concurrently, until we got the other place to agree they shouldn't be taxing us. When they finally refunded the "double tax", we (voluntarily) paid Uncle Sam a nice check for taxes on this "additional income" (refunded UK taxes). All that was long before we were naturalized.

Sorry Tom,

I should have confined my statement to those working here illegally.  There are 20+ million in the U.S. working without a green card or visa, and the vast majority do not pay taxes because they are employed (illegally) on a cash basis.  I recognize the taxes paid by legal immigrants and naturalized citizens and didn't mean to imply those folks here under legal conditions didn't pay taxes.

Christian

 

[taoshum]

How is it that we can find the money to bail out Wall Street with trillions, pay trillions to conduct two wars that look to continue indefinitely, pay trillions for a defense department that continues to position itself to fight a nuclear war, send trillions out of the country for oil, etc, etc, etc.  But, we cannot find any money to fix health care, pay SS benefits or fix the highways????????  I don't get it, but that is normal.

 

[Mc2guy]

Same exact thing that has been said for 70 years and has been wrong for 70 years.

I'm not sure who's been saying what for 70 years since I am only 32, but I can promise you that the cash in will be less than the cash out within the next 10 years.  Again, I have no incentive to lie to you or to scare you, I am just stating what at this point, is objective fact.  Ask the Social Security Administration if you don't believe me.  Here is direct quote from their website:


"In 2017, Social Security will begin paying out more than it takes in. For the first time, it will have to use the interest being paid on the securities it holds in order to meet its obligations."
"In 2027, Social Security would have to start redeeming the securities themselves."
"By 2041, Social Security would have cashed in the last security, and the system would have enough revenue to pay out only 75% of promised benefits. That percentage would drop over time if Congress failed to act."


Keep in mind that the "securities" discussed are IOU's in the form of treasury bonds.  Even the so called "interest" is not in cash, it is in more securities (bonds).  ALL of these IOUs (bonds) are not real assets, they are obligations (promises to pay).  If the Social Security Administration wants to cash in these bonds in order to pay out benefits, the federal reserve will have to print more money in order to fulfill the obligation.  In order to do that, the Treasury will have to sell more treasury bills to someone (like China, Japan, Russia, or any other institutional bond holder that uses the U.S. dollar as a currency reserve) which at that point converts the obligation from an IOU to U.S. citizens to an IOU to a foreign government.  This is effectively robbing Peter to pay Paul.  The money still gets spent without associated revenue resulting in adding deficit to the U.S.

 

[seilerbird]

I'm not sure who's been saying what for 70 years since I am only 32, but I can promise you that the cash in will be less than the cash out within the next 10 years.  Again, I have no incentive to lie to you or to scare you, I am just stating what at this point, is objective fact.  Ask the Social Security Administration if you don't believe me.  Here is direct quote from their website:


"In 2017, Social Security will begin paying out more than it takes in. For the first time, it will have to use the interest being paid on the securities it holds in order to meet its obligations."
"In 2027, Social Security would have to start redeeming the securities themselves."
"By 2041, Social Security would have cashed in the last security, and the system would have enough revenue to pay out only 75% of promised benefits. That percentage would drop over time if Congress failed to act."


Keep in mind that the "securities" discussed are IOU's in the form of treasury bonds.  Even the so called "interest" is not in cash, it is in more securities (bonds).  ALL of these IOUs (bonds) are not real assets, they are obligations (promises to pay).  If the Social Security Administration wants to cash in these bonds in order to pay out benefits, the federal reserve will have to print more money in order to fulfill the obligation.  In order to do that, the Treasury will have to sell more treasury bills to someone (like China, Japan, Russia, or any other institutional bond holder that uses the U.S. dollar as a currency reserve) which at that point is converts from an IOU to U.S. citizens to an IOU to a foreign government.  This is effectively robbing Peter to pay Paul.  The money still gets spent without associated revenue resulting in adding deficit to the U.S.

The sky is falling, the sky is falling, the sky is falling.

 

[Wendy]

A simple solution is to raise the maximum taxable earnings level. Of course, workers who make over $106,800 wouldn't be happy about that but it would be an easy way to add money to the SS fund.

Wendy

 

[Ned]

Here's what a real illegal alien looks like

 

[Mc2guy]

How is it that we can find the money to bail out Wall Street with trillions, pay trillions to conduct two wars that look to continue indefinitely, pay trillions for a defense department that continues to position itself to fight a nuclear war, send trillions out of the country for oil, etc, etc, etc.  But, we cannot find any money to fix health care, pay SS benefits or fix the highways????????  I don't get it, but that is normal.

To answer your question, we CAN'T find the money to do any of those things, which is why we are adding 1.4 Trillion to the deficit this year.  In other words, we just spent money, we didn't actually find any more.

 

[Tom]

[quote author=Mc2guy]There are 20+ million in the U.S. working without a green card or visa, and the vast majority do not pay taxes because they are employed (illegally) on a cash basis.[/quote]

They would be "illegal aliens", and the "vast majority" would actually be 100% of them; Without an appropriate visa or a green card, they're legally not allowed to work in the U.S.. If they paid a dime in tax, they'd get nailed, and they'd be loaded in a paddy wagon and hauled off to the border. In reality, they can't pay income taxes without a SS number, and they can't get a SS number without a (n appropriate) visa or green card.

So, they're legally not paying taxes on their illegal income

 

[Tom]

Saw that image on TV a few days ago, but CRS doesn't allow me to remember which station.

 

[Mc2guy]

The sky is falling, the sky is falling, the sky is falling.

Ignoring the problem and/or shooting the messenger won't make it go away.  Can you show me actual evidence that SS is solvent long-term?  

 

[Mc2guy]

The "vast majority" would actually be 100% of them;

Well, some of them in this area in particular (Washington, D.C. Metro) forge SS number or use duplicate id's to get jobs and therefore do pay at least payroll taxes if not state or federal income tax.  SSA has reported receiving payroll tax receipts from up to 15 different full time positions on a single SS number..usually the SSN of a child of illegals who is illegible to get a SSN since they were born in the U.S.

I can't recall where I saw the number, but I think I remember hearing around 20% of illegals in this area are employed using false documents.  Not sure how that would translate to tax dollars.

 

[Tom]

[quote author=Mc2guy]SSA has reported receiving payroll tax receipts from up to 15 different full time positions on a single SS number..[/quote]

I wonder if, when the time comes, they'll pay out SS for 15 people with the same SSN. Now there's a scary thought.

 

[Gary RV_Wizard]

We could require that SS tax be withheld whether the worker has an SS# or not. No "casual labor", I believe the tax code calls it, where you pay in cash and no withholding or SS deducted.  If the business wants to take a federal tax deduction for labor expense, you must have paid SS tax on it. Legal workers would have it credited to their SS account and the rest would go into an SS pool to help cover expenses. As I recall, something like this is already in effect for cash jobs like babysitters, domestic help, etc. - the employer makes the SS payments along with his tax return, even though the employee was paid in cash.

 

[maddog348]

1/15th ???

 

[Just Lou]

I wonder if, when the time comes, they'll pay out SS for 15 people with the same SSN. Now there's a scary thought.

I'm sure the ACLU will actively represent 14 of the 15 claimants.

In the mean time, the SSA is gladly accepting the taxes with the thought that they will never have to pay out for any of the 15.
(possibly maximum of 1)  The ACLU won't represent him because he would have to be the legitimate one.

 

[Mc2guy]

A simple solution is to raise the maximum taxable earnings level. Of course, workers who make over $106,800 wouldn't be happy about that but it would be an easy way to add money to the SS fund.

Wendy

Easy, but not very fair.  I "cap" out routinely on payroll taxes and I can assure you I am in no way rich, wealthy, affluent or any other term.  Since I am saving on my own for my wife and my retirement, any additional taxes I pay will come straight out of my personal savings, yet my SS benefits won't go up proportionally.

I know this isn't going to be a popular suggestion, but instead of increasing revenue, I believe we need to reduce benefits.  I am not talking about phasing down existing recipients, but rather phase down the payments for future recipients and increase the eligibility age over time.  With longer life expectancies, we have to expect people to work longer.  Also, I would push for a "need" based system, instead of a flat retirement supplement.  The program should be in place to help seniors in need avoid the humility of destitute poverty, not supplement affluent retirees (I am now running and ducking for cover, btw).  I think we need to make it clear to everyone under 45 that the program will not be there to supplement your retirement if you live above the poverty level, therefore you need to make smart saving choices now.

Example: My Father-in-Law, a good man, a combat veteran and retired Army Colonel.  At 63, he is now triple dipping in the Federal retirement system.  He collects disability for his combat injuries, he collects his full retirement benefits for 30 years in the Army, and he is now collecting SS benefits as well.  This is on top of his very well paying six figure civilian job at the Pentagon.  

I love my FIL very much, but I don't think the U.S. taxpayers need to supplement his "retirement" by paying him SS benefits.  He is very wealthy and doesn't "need" them.  If I am lucky enough to remain employed and able to save as I have for the last 10+ years, I won't need it either.

 

 

[herd]

QUOTE: "I wonder if, when the time comes, they'll pay out SS for 15 people with the same SSN. Now there's a scary thought."

Here's what is happening: an illegal gets a false SSN, there's a whole underground business in providing false ID's, and then the Illegal gets a job with the appearance of everything be above board. Payroll taxes and income taxes are withheld and paid into the Treasury.

The Illegal is set for a coupla years, doesn't file a tax return and sometimes late in the second year, close to the third year, the IRS sends an inquiry to the Employer for verficiation. The Personnel Manager calls the employee (Illegal)in and asks for verification, the employee states "it's at home, I'll bring it in tomorrow."  Poof, the employee (Illegal) disappears, skips town, and goes to another city/location and starts it all over again.

The unclaimed money from his withholdings is then forfeited and becomes a ''windfall'' for the gov;t and probably another reason  why the gov't doesn't crack down on Illegals.