What is Social Security?

[Horatio Parker]

The issue is the accounting that is used between the different taxes and programs out there. We overtax FICA at this point, and undertax the general fund. So the government decided to use the extra from SS to pay for the other programs and then write IOUs back to SS. Maybe slightly decrease the SS taxes and increase the general fund tax rates to make up the difference.

The trust fund served as a subsidy for higher incomes. Because the trust fund surplus was loaned to the general fund, taxes could be lower. Because FICA is regressive, high earners win.

You can make the general fund taxes more regressive to make just the change of which fund the money is coming into to be used. It's just an accounting purpose. But the government can do what what no other entity does when in it comes to it's IOU funds.

What does this mean?

make just the change of which fund the money is coming into to be used

I don't know what you're trying to say, but the point that the construction of the trust fund served as a subsidy to high earners remains.

 

[laughing dog]

This points out the basic lie that has been told about Social Security since it was passed, that the money that you pay into Social Security is put in a bank for your retirement.

That's not what I have always thought. I always thought it was about a pension program for workers but mandatory on the federal level. That young workers would be supporting retired workers with their holdings being paid to support retirees in a similar manner as it is designed with the private run pensions. Yes, at times there will be more or less retirees and more or less workers but that difference to be made up by a savings account.

And as FDR designed it, I think it worked and should still work.

But if you borrow money from the fund for other purposes that's not going to work. And if you actually pay money from FICA tax for other purposes, that's really not going to work.

We overtax FICA at this point, and undertax the general fund. So the government decided to use the extra from SS to pay for the other programs and then write IOUs back to SS.

That is a historical inaccuracy. When SS was created, everyone recognized that there would be years when it would run deficits and years when it would run surpluses. The issue was what to do with the surplus funds. At the time, using the funds to purchase private assets (either equity or debt) was considered socialism and risky. So surplus funds were mandated to purchase US debt.

 

[coloradoatheist]

You can make the general fund taxes more regressive to make just the change of which fund the money is coming into to be used. It's just an accounting purpose. But the government can do what what no other entity does when in it comes to it's IOU funds.

What does this mean?

make just the change of which fund the money is coming into to be used

I don't know what you're trying to say, but the point that the construction of the trust fund served as a subsidy to high earners remains.

The government wrote itself an IOU and called it an asset, where any other organization who did that would have to call it a liability. I can't make myself a millionaire by saying I owe myself a million dollars.

And for the second part, not necessarily. We just change the name of the tax, and we can make it revenue neutral and not change the progressivity or the regressivity of the tax scheme. It's just changing the name of the tax.

 

[coloradoatheist]

We overtax FICA at this point, and undertax the general fund. So the government decided to use the extra from SS to pay for the other programs and then write IOUs back to SS.

That is a historical inaccuracy. When SS was created, everyone recognized that there would be years when it would run deficits and years when it would run surpluses. The issue was what to do with the surplus funds. At the time, using the funds to purchase private assets (either equity or debt) was considered socialism and risky. So surplus funds were mandated to purchase US debt.

Writing yourself an IOU is not an asset, it's a liability. And that's the big lie of Social Security.

 

[Horatio Parker]

The government wrote itself an IOU and called it an asset, where any other organization who did that would have to call it a liability. I can't make myself a millionaire by saying I owe myself a million dollars.

Since the govt created and is also holding it; it's both an asset and a liability.

And for the second part, not necessarily. We just change the name of the tax, and we can make it revenue neutral and not change the progressivity or the regressivity of the tax scheme. It's just changing the name of the tax.

Yes, it could've been made more progressive, but it wasn't. I don't understand why you're harping on what could've happened.

Sure, we could fund SS out the general fund and not have a FICA tax at all. But that's not the choice that was made.

 

[coloradoatheist]

The government wrote itself an IOU and called it an asset, where any other organization who did that would have to call it a liability. I can't make myself a millionaire by saying I owe myself a million dollars.

Since the govt created and is also holding it; it's both an asset and a liability.

And for the second part, not necessarily. We just change the name of the tax, and we can make it revenue neutral and not change the progressivity or the regressivity of the tax scheme. It's just changing the name of the tax.

Yes, it could've been made more progressive, but it wasn't. I don't understand why you're harping on what could've happened.

Sure, we could fund SS out the general fund and not have a FICA tax at all. But that's not the choice that was made.

And that's why I said the government did what no other organization could do, write itself an IOU and call it an asset. On all other books it's nothing, an internal gimmick.

And I agree with you on the last part. Did labels on the taxes paid in and out.

 

[untermensche]

The government wrote itself an IOU and called it an asset, where any other organization who did that would have to call it a liability. I can't make myself a millionaire by saying I owe myself a million dollars.

Since the govt created and is also holding it; it's both an asset and a liability.

And for the second part, not necessarily. We just change the name of the tax, and we can make it revenue neutral and not change the progressivity or the regressivity of the tax scheme. It's just changing the name of the tax.

Yes, it could've been made more progressive, but it wasn't. I don't understand why you're harping on what could've happened.

Sure, we could fund SS out the general fund and not have a FICA tax at all. But that's not the choice that was made.

It can be changed in any way today.

It was not nearly as regressive when it was enacted as it is today.

The super-wealthy less than 1% should be contributing to the fund massively. They are the people most benefiting from having a society.

 

[Horatio Parker]

And that's why I said the government did what no other organization could do, write itself an IOU and call it an asset. On all other books it's nothing, an internal gimmick.

So where's the lie?

 

[coloradoatheist]

And that's why I said the government did what no other organization could do, write itself an IOU and call it an asset. On all other books it's nothing, an internal gimmick.

So where's the lie?

That there is an asset fund called the Trust fund. All it is a promise that the government will pay for what needs to be paid.

- - - Updated - - -

Since the govt created and is also holding it; it's both an asset and a liability.


Yes, it could've been made more progressive, but it wasn't. I don't understand why you're harping on what could've happened.

Sure, we could fund SS out the general fund and not have a FICA tax at all. But that's not the choice that was made.

It can be changed in any way today.

It was not nearly as regressive when it was enacted as it is today.

The super-wealthy less than 1% should be contributing to the fund massively. They are the people most benefiting from having a society.

Of course it can be changed. But when it was started the worker to retire ratio was 16 to 1, now's it's getting to like 3 to 1 and the rich don't have that much wealth to pay for everyone who needs it. And the last sentence is very debatable.

 

[untermensche]

And that's why I said the government did what no other organization could do, write itself an IOU and call it an asset. On all other books it's nothing, an internal gimmick.

So where's the lie?

That there is an asset fund called the Trust fund. All it is a promise that the government will pay for what needs to be paid.

This is not a problem with the program. It is a problem with what politicians have done to it.

But obviously a fund just sitting somewhere is not productive.

You need wealth to be distributed for there to be an economic effect.

The more distribution the greater the effect.

Of course it can be changed. But when it was started the worker to retire ratio was 16 to 1, now's it's getting to like 3 to 1 and the rich don't have that much wealth to pay for everyone who needs it. And the last sentence is very debatable.

The rich do have the wealth to make the program much better.

Adding nothing from their astronomical earnings to the major societal insurance program is insanity.

 

[coloradoatheist]

That there is an asset fund called the Trust fund. All it is a promise that the government will pay for what needs to be paid.

This is not a problem with the program. It is a problem with what politicians have done to it.

But obviously a fund just sitting somewhere is not productive.

You need wealth to be distributed for there to be an economic effect.

The more distribution the greater the effect.

Of course it can be changed. But when it was started the worker to retire ratio was 16 to 1, now's it's getting to like 3 to 1 and the rich don't have that much wealth to pay for everyone who needs it. And the last sentence is very debatable.

The rich do have the wealth to make the program much better.

Adding nothing from their astronomical earnings to the major societal insurance program is insanity.

It's not really a problem with the program per se. One tax makes more than it's earmark spending so they use that money to pay for the other earmarks and then say we'll pay you back later. They have a couple of options. Just keep the cash they receive, but then they have to borrow more for the programs for that don't have money, or they give it back to the people who put it in.

The last sentence is I guess what we are trying to do with social security. And at the heart of it. All it is a ponzi scheme and you want people to pay more into that scheme.

 

[untermensche]

This is not a problem with the program. It is a problem with what politicians have done to it.

But obviously a fund just sitting somewhere is not productive.

You need wealth to be distributed for there to be an economic effect.

The more distribution the greater the effect.



The rich do have the wealth to make the program much better.

Adding nothing from their astronomical earnings to the major societal insurance program is insanity.

It's not really a problem with the program per se. One tax makes more than it's earmark spending so they use that money to pay for the other earmarks and then say we'll pay you back later. They have a couple of options. Just keep the cash they receive, but then they have to borrow more for the programs for that don't have money, or they give it back to the people who put it in.

The last sentence is I guess what we are trying to do with social security. And at the heart of it. All it is a ponzi scheme and you want people to pay more into that scheme.

If it is an inter-generational insurance program. The working generation pays into the fund and many people are eligible to draw out. But the people benefiting from the fund are not the people who started it or are running it. To call it a ponzi scheme is just to not know what the words mean.

Earnings from dividends should be taxed without limit and added to the program.

Wealth should be taxed over a certain level and added to the program.

Just having workers fund the program will not work since their wages have been stagnant for over 50 years.

 

[coloradoatheist]

This is not a problem with the program. It is a problem with what politicians have done to it.

But obviously a fund just sitting somewhere is not productive.

You need wealth to be distributed for there to be an economic effect.

The more distribution the greater the effect.



The rich do have the wealth to make the program much better.

Adding nothing from their astronomical earnings to the major societal insurance program is insanity.

It's not really a problem with the program per se. One tax makes more than it's earmark spending so they use that money to pay for the other earmarks and then say we'll pay you back later. They have a couple of options. Just keep the cash they receive, but then they have to borrow more for the programs for that don't have money, or they give it back to the people who put it in.

The last sentence is I guess what we are trying to do with social security. And at the heart of it. All it is a ponzi scheme and you want people to pay more into that scheme.

If it is an inter-generational insurance program. The working generation pays into the fund and many people are eligible to draw out. But the people benefiting from the fund are not the people who started it or are running it. To call it a ponzi scheme is just to not know what the words mean.

Earnings from dividends should be taxed without limit and added to the program.

Wealth should be taxed over a certain level and added to the program.

Just having workers fund the program will not work since their wages have been stagnant for over 50 years.

Except it's exactly how the Ponzi scheme worked. It required more and more people coming in to pay for the people initially who were getting money. The issue is that when it started it was 16 to 1, instead of 3 to 1. So now we have to ask the 3 to keep paying more and more and it's not productive. It should really be caused a stupidity tax.

 

[laughing dog]

.

The last sentence is I guess what we are trying to do with social security. And at the heart of it. All it is a ponzi scheme and you want people to pay more into that scheme.

It is not a ponzi scheme. Ponzi schemes are meant to defraud. SS was not meant to defraud, nor is there anything inherent in a pay as you go plan that necessitates it running deficits forever.

 

[laughing dog]

We overtax FICA at this point, and undertax the general fund. So the government decided to use the extra from SS to pay for the other programs and then write IOUs back to SS.

That is a historical inaccuracy. When SS was created, everyone recognized that there would be years when it would run deficits and years when it would run surpluses. The issue was what to do with the surplus funds. At the time, using the funds to purchase private assets (either equity or debt) was considered socialism and risky. So surplus funds were mandated to purchase US debt.

Writing yourself an IOU is not an asset, it's a liability.

n IOU is an asset to its owner and a liability to its generator. So, if you write yourself an IOU, you have an asset and a liability - there is no net change in your net worth.

And that's the big lie of Social Security.

Any gov't bonds held by SS are an implicit asset to the recipients of SS and a liability to future tax payers. So what are you talking about?



So, your characterization.

 

[coloradoatheist]

.

The last sentence is I guess what we are trying to do with social security. And at the heart of it. All it is a ponzi scheme and you want people to pay more into that scheme.

It is not a ponzi scheme. Ponzi schemes are meant to defraud. SS was not meant to defraud, nor is there anything inherent in a pay as you go plan that necessitates it running deficits forever.

You mean like how the late investors in the scheme only paid for the previous investors and wouldn't get their money back? Exactly like the current promise of the SS in 50 years or less.

 

[coloradoatheist]

Writing yourself an IOU is not an asset, it's a liability.

n IOU is an asset to its owner and a liability to its generator. So, if you write yourself an IOU, you have an asset and a liability - there is no net change in your net worth.

And that's the big lie of Social Security.

Any gov't bonds held by SS are an implicit asset to the recipients of SS and a liability to future tax payers. So what are you talking about?



So, your characterization.

Could IBM for example write itself an IOU and put both an asset and a liability on it's books or would it be considered fraudulent? The government can do something that would be considered fraud elsewhere.

So as person in the US can I go cash one of those bonds owed me? At any time the government could also cancel SS.

 

[dismal]

Could IBM for example write itself an IOU and put both an asset and a liability on it's books or would it be considered fraudulent?

Yeah, one division can lend money to another division. It's not fraud it's just meaningless for the solvency of the company as a whole. It would consolidate out in the parent's financial statements.

The error comes in when the existence of this Trust Fund full of magickal bonds is talked about as if it has some meaning with respect to the government's ability to pay. SS is no different than a pure pay-as-you-go scheme.

 

[Jimmy Higgins]

n IOU is an asset to its owner and a liability to its generator. So, if you write yourself an IOU, you have an asset and a liability - there is no net change in your net worth.
Any gov't bonds held by SS are an implicit asset to the recipients of SS and a liability to future tax payers. So what are you talking about?



So, your characterization.

Could IBM for example write itself an IOU and put both an asset and a liability on it's books or would it be considered fraudulent?

Wouldn't that be called an ESOP?

- - - Updated - - -

.

The last sentence is I guess what we are trying to do with social security. And at the heart of it. All it is a ponzi scheme and you want people to pay more into that scheme.

It is not a ponzi scheme. Ponzi schemes are meant to defraud. SS was not meant to defraud, nor is there anything inherent in a pay as you go plan that necessitates it running deficits forever.

You mean like how the late investors in the scheme only paid for the previous investors and wouldn't get their money back? Exactly like the current promise of the SS in 50 years or less.

You mean people like me? The key to helping social security was to raise the payments being made by baby boomers 16 years ago. Of course, you would have been against that then too.

 

[laughing dog]

Could IBM for example write itself an IOU and put both an asset and a liability on it's books or would it be considered fraudulent? The government can do something that would be considered fraud elsewhere.

It is not fraudulent for company to do it. You are misinformed.

So as person in the US can I go cash one of those bonds owed me?

You seemed to be badly misinformed.

At any time the government could also cancel SS.

And, any time, any debtor can declare bankruptcy. Do you have a point?