Sorry, but if you are paying general income taxes now to pay for my Social Security payments that ought to be coming out of a now non-existent trust account…

…It was and is a terrible failure of a trustee’s fiduciary responsibility.

It appears that what I said earlier has some truth to it, but those words were erroneous.

First, I somehow failed to consider consider current payroll taxes. Apparently current payroll taxes currently cover benefits payments month by month. So benefits do not currently depend either on payouts from the the general fund most of the time.

I was also under the apparently erroneous impression that the rules for the Social Security Trust fund had changed somewhere along the way. In fact the Social Security Trust fund does exist. Amounts collected in a given month in excess of benefits payouts go to purchase a special series of Treasury bonds (“IOUs”) which are placed in the Social Security Trust fund. The Treasury can then spend the extra money from Social Security payroll tax collections for aircraft carriers or whatever. Apparently this is not a change, but rather the way Social Security was originally designed.

As things are now, the problem is that before we reach the point where the trust fund is exhausted, we are going to reach the point, especially given increasing unemployment, where monthly payroll taxes no longer cover benefits payouts, so that the Social Security Trust fund has to start calling in the IOUs from the Treasury. Those IOUs will have to be covered from increasing national debt or from the then-current general fund or a combination of both. There is argument over whether that might start to happen in 2018, 2016, or much sooner than that depending on the unemployment situation. That is where I was somewhat correct. That is different from the Social Security Trust fund running out of IOU’s, which has been predicted to occur around 2041 or 2037 unless adjustments are made. However, even after the taxpayers have paid those IOU’s or the money has been re-borrowed from somewhere else than from the Social Security Trust fund, presumably payroll taxes will continue to be collected each month sufficient to pay out some portion of the benefit amounts now being paid.
http://en.wikipedia.org/wiki/Social_Security_debate_%28United_States%29
http://en.wikipedia.org/wiki/Social_Security_%28United_States%29#Trust_fund
http://jimbeddow.com/tax_news/2009/borrowing-from-social-security-will-end/
http://www.heritage.org/research/socialsecurity/em940.cfm
http://www.prospect.org/cs/articles?article=there_is_no_social_security_crisis

The rising cost of health insurance is much more of a crisis.

I apologize for my error.

Larry

It is a commonplace that many employer pensions have (a) been converted to or replaced with defined contribution (e.g., 401) plans as opposed to defined benefit plans, and/or (b) reduced in scope or even just cut off over the past generation or more. And personal savings, while certainly key to one’s future after working, became problematic when, beginning in the late 1970′s, the average real wage of a large majority of Americans stagnated or declined.

An old professor of mine advising students who wanted to know how a household could make ends meet and still accumuate savings, said, “Go find someone who earns 10% less than you, and live like they do.” While this may sound easier said than done, it is advice that I took to heart from that point on, eschewing the temptation to spend money on what I didn’t absolutely need. But I was lucky, not having to face any number of unexpected calamities such as chronic health diagnoses, major layoff, etc.

If one looks up the “Self-Sufficiency Calculator” for one’s state (or any comparable state), it is shocking how much it costs to pay monthly costs for a truly modest living. Increasingly, wages have simply not kept up with these costs.

Long-winded response to the idea that somehow Social Security has grown out of proportion to the economy. It hasn’t. Further, the Social Security Trust Fund, unlike the general fund of the federal government, is in a massive surplus position (about $2.5 trilion these days). I found this handy website that gives some basics on SS:

http://www.ssa.gov/pubs/10024.html

And here is a recent summary analysis of the program by CBPP:

http://www.cbpp.org/cms/index.cfm?fa=view&id=3104

And actually, less than 10 % of Obama’s cabinet has held a job in the private sector

Earlier when you referred to “Obama’s orbit,” I assumed you were referring to everyone who voted for him. Hence my response. Several of us here have had long careers in the private sector, and, for what it’s worth most every adult I know who is not retired is either working in the private sector or running his or her own business. Obviously I must be retired–I am–or I wouldn’t have time to be doing this. And I depend heavily on my Social Security retirement benefits, which I earned with the sweat of my brow! Well, a lot of it was white collar professional work, but it was work even so, trust me! The hours were long even. Those who want to pretend now that Social Security retirement benefits are suddenly some sort of welfare are wrong-headed. Perhaps you will say it was silly of me to have believed I was going to get what I thought I was paying for. The reason you may have to pay taxes now so that I get my money is that the government decided to steal my money to avoid raising taxes, which it would otherwise have had to do, to pay the military mainly. Sorry, but if you are paying general income taxes now to pay for my Social Security payments that ought to be coming out of a now non-existent trust account it is nothing to do with me. I have absolutely done what I was supposed to do and owe no one any apology. Furthermore, while I do not spend a lot of time complaining about it, I do, when I think about it, feel cheated that the amount is not what was promised. Unfortunately a huge number of people have worked hard at relatively low-paying jobs all their lives, jobs that left them no money for investing, and they also have a reasonable expectation of some retirement on Social Security. Now you seem to want to threaten that expectation rather than having the government cut back on military spending. Lucky for me I have the AARP on my side, I guess.

Having looked around the topic today, I see that there is a debate over whether small business lending is down because there is a credit crunch or because business is down and small business owners are wary of borrowing. I suspect both are true. This article is the source of my statement earlier in this thread about big financial institutions not wanting to bother with small business loans. I do not recall whether or not I have mentioned this article here before. Matt Taibbi is highly regarded by many as a brilliant analyst of the economic crisis. He recently appeared with Robert Kuttner on Bill Moyers Journal.

“Wall Street’s Bailout Hustle”
by Matt Taibbi, Posted Feb 17, 2010, Rolling Stone
http://www.rollingstone.com/politics/story/32255149/wall_streets_bailout_hustle/print

Larry

Charlie Cook’s a pretty smart guy, and considered totally non partisan; I think he’s feeling it too…

As the 2010 campaign begins to unfold, many smart and talented people are making varying predictions about the outcome of the midterm elections. Most analysts agree that Democrats will suffer losses, at least giving up the 16 House seats that the president’s party generally loses in first-term, midterm elections. That’s where the agreement tends to end.

In my view, Democrats have been in a free fall since summer, and unless something significant changes, they are headed toward the losses of the magnitude we saw in the midterm elections of 1958, 1966, 1974, 1994, and 2006. One difference between this year and 1994 and 2006 is that the party in power started developing serious problems more than a year ahead of the election.

Although no two cycles are exactly alike, history suggests that the indicators we’re now seeing mean that the Democratic majority in the House is in grave danger and that Senate Democrats could easily see their ranks shrink to 52 or 53 seats. Today’s signs are much like those that led me to predict in August 2006 that “unless something dramatic happens before Election Day, Democrats will take control of the House. And the chances that they’ll seize the Senate are rising toward 50-50.”

Source:

http://www.cookpolitical.com/node/5874

And that’s even before you factor in the coming taxpayers’ revolt.

Ain’t democracy grand…

The coming tea party tsunami

You talk “tsunami,” Welder, but when pressed on what you are predicting, you didn’t really venture much further than the conventional wisdom about these off-year elections. You said the Republicans would take over the house. That actually requires only a change of some 40 seats. The conventional wisdom is in the mid-to-high 30s. Are you really only saying “Hey, a handful more than what most people are expecting”? That’s your “tsunami?”

The smart money is sitting on theirs.

And actually, less than 10 % of Obama’s cabinet has held a job in the private sector:

http://www.washingtonexaminer.com/opinion/blogs/beltway-confidential/Less-than-10-percent-of-Obama-cabinet-has-private-sector-experience-73911212.html

I’d still be intrigued to know if there was a comparable number here. It would explain much.

And no, I’m not in NJ although I have to pass through or over it occasionally on my way to NY.

I’m actually in the Shenandoah Valley, not very far from our NSB host.

It looks as though Obama is going to waterboard the rules of the Senate in order to pass “healthcare reform”.

The coming tea party tsunami should provide us all with hours of entertainment.

…I know that most of the folks in Obama’s orbit have never held a private sector job…

You might want to find a way of checking that impression, Welder. lol My observation and experience is completely otherwise, to the point where your saying that makes me darkly suspicious that your purpose in saying it might be to try to mislead people who have held and/or are holding private sector jobs to switch parties. lol

May I respectfully suggest that you take another look at William Meyer’s words about the tea partiers. I might not have said “brown-nosing,” as that suggests an insincerity which may not be applicable in the case of any particular individual. But whether or not consciously, it truly does appear that you and the others known as tea partiers are “the fools and tools” of the mega-corporations and their so-called “elite”–which is often another way of referring to the Right, i.e, those who have the accumulation of wealth as their highest personal value, whenever we don’t happen to be using the term to refer to anything about sex. For what it is worth, this is not theoretical at all to me. I am deeply and personally acquainted with the type.

By the way, I wonder whether you might happen to be from New Jersey by any chance. I understand the situation in New Jersey that William Meyer referred to, with a higher proportion of people on public support, it seems, than perhaps anywhere else in the country. I don’t reside there now myself, but knowing people who live there I know that the New Jersey situation can affect one’s perspective on people, for the worse.

Larry

As for small businessmen being concerned with Obama’s wealth redistribution proclivities, that’s merely a fact from my standpoint, since that’s the world in which I live. But perhaps the few dozen business owners with which I communicate on a regular basis are the exception and not the rule. I’d be intrigued to know how many of the worthies here actually own or run businesses as opposed to taking a paycheck from the government in some form. I suspect that factoid would speak volumes about the majority opinion here.

I know that most of the folks in Obama’s orbit have never held a private sector job; their outlook seems to be quite similar to the local perspective.

You may indeed be correct about my take on SS; you are my senior by some years and indeed that perception may have changed. I, personally, have never looked upon SS, or the government for that matter, as my primary caretaker.

Bill – Yes, taxation may be a complex issue to you but to me, not so much. Like I’ve said, I’m a simple guy, but I know that you can’t continue to take from the producers to fund an ever rising number of non producers. At some point the producers will have had enough. Happily, we’ve just about reached that point. I’m not nearly as certain that we are locked in Tytler’s cycle as I was a year ago.

As far as “brown nosing”, I find that amusing since I’m part of the tea party movement. The concept paints a mental picture that I usually attach to “progressives”, so you gave me a chuckle… I really don’t know why the tea party folks have you in such a tizzy, it’s just democracy in action after all…

Larry – Fear not, I’m feeling more bemused today than foolish and looking forward to absorbing those additional new facts as the Obama regime moves forward with reconciliation in order to pass their “healthcare reform”. Obama himself has said that it can’t be done with a simple majority, that it would make the country ungovernable. I think perhaps for once he’s right, but if I’m wrong, we should see these numbers improve shortly…

http://www.rasmussenreports.com/public_content/politics/obama_administration/daily_presidential_tracking_poll

…the vast byzantine legal system….

Now please don’t go messing with my legal system, William Meyer! From a New York perspective I think it still manages to reach a good outcome now and again, on the local level at least, perhaps because it is so byzantine.

I have to say also, especially since I don’t recall having seen you here before, thank you for that great post, William Meyer. I anticipate using some of your language, with link attribution here, in a private blind email broadcast series that I carry on sporadically.

Of course I might have to use some of Welder’s language also, as the lead-in. And no Welder, it’s not to make you look like a fool with your buddies, either. As Dr. Schmookler said, you’re obviously a smart guy. So I hold out hope for your understanding of the way things actually work to change as you absorb additional new facts.

Larry