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elkid
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 Posted: 12/09/04 - 15:38 Post subject: bye bye, SS
Bush: No Payroll Tax Hike for Soc. Sec. (By SCOTT LINDLAW, Associated Press Writer)
WASHINGTON - President Bush on Thursday flatly ruled out raising payroll taxes to ensure the solvency of Social Security, as he opened a push for historic changes in the retirement program. Bush renewed his call for legislation that would let workers create private retirement accounts within the government-run program. He sidestepped questions about whether the nation can afford to borrow in order to confront a shortfall in the trillions of dollars, saying, "I will not prejudge any solution." But, he said, "We will not raise payroll taxes to solve this problem."
Bush spoke after meeting in the Oval Office with the Social Security trustees who submit an annual report on the state of the program's funding. His decision to rule out raising payroll taxes will hurt efforts to get support from moderate Democrats opposed to government borrowing at a time of record-breaking budget deficits.
Some Republicans have said they would consider raising or removing the limit on income subject to the 12.4 percent payroll tax split between workers and employers. The maximum level of earnings taxed is $87,900 now; it will rise to $90,000 next year. Sen. Lindsey Graham, R-S.C., has said he would consider lifting the cap if his plan would get bipartisan support. Sen. Charles Grassley, R-Iowa, chairman of the tax-writing Senate Finance Committee, also has said tax increases should be considered.
Social Security today collects more in taxes than it pays out in benefits. The extra money is used to buy Treasury bonds from the government. The government then spends the money as part of its general revenue. The system will start paying out more in taxes than it collects in benefits in 2018. Estimates of the money needed to keep the system solvent range from $1 trillion to $2 trillion or more over a decade. Bush said the total unfunded liability is $11 trillion.
"The question is, does this country have the will to address the problem? I think it must. I think we have a responsibility to solve problems before they become acute," Bush said, sitting next to Treasury Secretary John Snow and other trustees. "There is a recognition among the experts that we have a problem, and the problem is America is getting older and that there are fewer to pay into the system to support a baby boomer generation which is about to retire," Bush said.
The call for private accounts is the most controversial element of Bush's vision for a remodeled Social Security. A presidential commission in 2001 proposed allowing individuals to place up to 2 percent of their payroll into a private account to be invested for retirement. Any such plan depends on a large infusion of cash to replace the tax money that would otherwise fund the government benefits.
Bush and lawmakers of both parties generally agree on the need for eventual changes in Social Security to shore up its solvency. But they disagree sharply on the urgency of the task and the wisdom of letting workers channel a portion of their payroll taxes into private accounts. Workers generally pay a 6.2 percent payroll tax on income up to $87,900. Their employers match the payment, and the combined tax finances monthly Social Security retirement checks. Apart from borrowing, another option for covering costs is to increase the retirement age, which is gradually rising to 67 under legislation approved nearly two decades ago.
Bush wouldn't say how he would pay for the changes. "I have articulated principles in the course of my campaign that I think are important, and it's very important for those who have retired to recognize that nothing is going to change when it comes to Social Security," Bush said.
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sonnylax
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Posted: 12/09/04 - 15:39 Post subject:
Good riddance SS!
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Gogirlgo
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Posted: 12/09/04 - 15:41 Post subject:
And what about all the money you've paid into it so far?
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elkid
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Posted: 12/09/04 - 15:44 Post subject:
| Gogirlgo wrote: | | And what about all the money you've paid into it so far? |
I've assumed since 18 that I would never get any of it. I look forward to leading a mutiny against the government. I'm considering taking mahogany & teak furniture, artwork, and computers from various governmental buildings to sell on the black market to recoup my loss.
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sonnylax
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Posted: 12/09/04 - 15:45 Post subject:
| Gogirlgo wrote: | | And what about all the money you've paid into it so far? |
If I could abadon the SS ship right now and forfeit all future money that I'm owed, I make that trade in a heartbeat. But alas, I don't have that power. I owe, I owe, I owe... so it's off to work I go.
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AlaninTX
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Posted: 12/09/04 - 17:25 Post subject:
This from the Congressional Budget Office, dated June 2004...first, the "trust fund" isn't really a trust fund. It is a way to account for SS outlays.
"Social Security is currently running an annual surplus. In 2003, dedicated revenues exceeded outlays by $68 billion. Viewed as a component of the overall budget, that surplus helped reduce the government's total deficit in 2003. However, Social Security also has a distinct, specific accounting structure. Revenues from payroll taxes and the taxation of benefits are credited to the budget's OASI and DI trust funds. Any revenues not needed to pay for benefits or administrative expenses are invested in government bonds. The interest that the bonds earn (a total of $85 billion in 2003) is credited to the trust funds. But because that interest represents the government paying itself, it provides no net revenues to the government and has no effect on the total budget.(7)"
"The trust funds serve mainly as an accounting mechanism to track revenues and outlays for Social Security. The funds' balance represents the total amount that the government is legally authorized to spend on Social Security. That balance provides only a limited perspective on the program's finances, however, because it does not consider the interaction with other federal tax and spending programs. Although the Social Security system is authorized to spend certain amounts, the resources to finance those outlays derive from the budget as a whole--and ultimately from the economy."
So how do you fix the problem when outlays exceed income? Again, from the CBO "The 100-year summarized deficit can be interpreted as indicating that if annual Social Security revenues were permanently increased, or annual outlays decreased, by 0.5 percent of GDP beginning immediately, trust fund balances would be sufficient to provide spending authority for all of the benefits scheduled to be paid over the next 100 years."
Here is what seems a fair way to "fix" the SS problem; an equal increase in payroll taxes and a decrease in benefits. CBO estimates the needed amount to fix the SS and Medicare problem is around $4.32 per $100 of income.
I would refer you to the CBO website.
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runaroundsue
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Posted: 12/09/04 - 18:03 Post subject:
Thank you very much FDR 
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jrjo
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Posted: 12/09/04 - 18:28 Post subject:
The CBO site says the current system will pay full benefits until 2053. I'll have gotten a good 20-yrs out of it by then. Plenty more than zero, so that's not so bad.
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prohemp
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Posted: 12/09/04 - 19:07 Post subject:
Lockbox!!
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AlaninTX
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Posted: 12/10/04 - 10:36 Post subject:
| jrjo wrote: | | The CBO site says the current system will pay full benefits until 2053. I'll have gotten a good 20-yrs out of it by then. Plenty more than zero, so that's not so bad. |
That sort of shoots down the "crisis" about SS, doesn't it?
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jrjo
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Posted: 12/10/04 - 10:51 Post subject:
| AlaninTX wrote: | | That sort of shoots down the "crisis" about SS, doesn't it? |
Unless something is described as a 'crisis' these days, nothing gets done about it. 
I still like the idea of bumping the earnings' ceiling and using those monies for self-directed accounts. Maybe that way, by 2053, there would be enough money to stop cash flowing it from current taxes.
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copteacher
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Posted: 12/10/04 - 11:06 Post subject:
how about bumping the earnings ceiling to inflation of the CPI that way it increases (theoretically) every year. It is not a solution but it is a start
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kristin31
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Posted: 12/10/04 - 23:25 Post subject:
I don't know why we have been paying into it forever in the first place. Let me manage my own money, and I will take care of my own retirement. I'll do a better job, certainly, than our jackass government.
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runaroundsue
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Posted: 12/13/04 - 10:18 Post subject:
| kristin31 wrote: | | I don't know why we have been paying into it forever in the first place. Let me manage my own money, and I will take care of my own retirement. I'll do a better job, certainly, than our jackass government. |
it all started out when people in this country were poorer than dirt, and FDR needed a quick fix. The good thing that came about was that the "elderly" didn't have to depend on their families to take them in at retirement they could be independent. Does anybody think that the "baby boom" situation should not have been an total surprise? Which is why I have to agree with your last comment Kristin. Plus, I'm not happy that my MIL does get her benefits and still threatens to move in with me!!!! 
My hubby just says how much do you need to stay in FL.
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RexRacer
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Posted: 12/13/04 - 11:23 Post subject:
| AlaninTX wrote: |
That sort of shoots down the "crisis" about SS, doesn't it? |
Paul Krugman would seem to agree with you, Alan. His Op-ed in Friday's NYT is here (pasted below for the registration disinclined): http://www.nytimes.com/2004/12/07/opinion/07krugman.html?n=Top%2fOpinion%2fEditorials%20and%20Op%2dEd%2fOp%2dEd%2fColumnists%2fPaul%20Krugman
I'll have a lot to say about all this when I return to my regular schedule in January. But right now it seems important to take a break from my break, and debunk the hype about a Social Security crisis.
There's nothing strange or mysterious about how Social Security works: it's just a government program supported by a dedicated tax on payroll earnings, just as highway maintenance is supported by a dedicated tax on gasoline.
Right now the revenues from the payroll tax exceed the amount paid out in benefits. This is deliberate, the result of a payroll tax increase - recommended by none other than Alan Greenspan - two decades ago. His justification at the time for raising a tax that falls mainly on lower- and middle-income families, even though Ronald Reagan had just cut the taxes that fall mainly on the very well-off, was that the extra revenue was needed to build up a trust fund. This could be drawn on to pay benefits once the baby boomers began to retire.
The grain of truth in claims of a Social Security crisis is that this tax increase wasn't quite big enough. Projections in a recent report by the Congressional Budget Office (which are probably more realistic than the very cautious projections of the Social Security Administration) say that the trust fund will run out in 2052. The system won't become "bankrupt" at that point; even after the trust fund is gone, Social Security revenues will cover 81 percent of the promised benefits. Still, there is a long-run financing problem.
But it's a problem of modest size. The report finds that extending the life of the trust fund into the 22nd century, with no change in benefits, would require additional revenues equal to only 0.54 percent of G.D.P. That's less than 3 percent of federal spending - less than we're currently spending in Iraq. And it's only about one-quarter of the revenue lost each year because of President Bush's tax cuts - roughly equal to the fraction of those cuts that goes to people with incomes over $500,000 a year.
Given these numbers, it's not at all hard to come up with fiscal packages that would secure the retirement program, with no major changes, for generations to come.
It's true that the federal government as a whole faces a very large financial shortfall. That shortfall, however, has much more to do with tax cuts - cuts that Mr. Bush nonetheless insists on making permanent - than it does with Social Security.
But since the politics of privatization depend on convincing the public that there is a Social Security crisis, the privatizers have done their best to invent one.
My favorite example of their three-card-monte logic goes like this: first, they insist that the Social Security system's current surplus and the trust fund it has been accumulating with that surplus are meaningless. Social Security, they say, isn't really an independent entity - it's just part of the federal government.
If the trust fund is meaningless, by the way, that Greenspan-sponsored tax increase in the 1980's was nothing but an exercise in class warfare: taxes on working-class Americans went up, taxes on the affluent went down, and the workers have nothing to show for their sacrifice.
But never mind: the same people who claim that Social Security isn't an independent entity when it runs surpluses also insist that late next decade, when the benefit payments start to exceed the payroll tax receipts, this will represent a crisis - you see, Social Security has its own dedicated financing, and therefore must stand on its own.
There's no honest way anyone can hold both these positions, but very little about the privatizers' position is honest. They come to bury Social Security, not to save it. They aren't sincerely concerned about the possibility that the system will someday fail; they're disturbed by the system's historic success.
For Social Security is a government program that works, a demonstration that a modest amount of taxing and spending can make people's lives better and more secure. And that's why the right wants to destroy it.
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