| Author | Message | ||
     dave23 Citizen Username: Dave23 Post Number: 189 Registered: 5-2001 |
I caught a bit of Meet the Press yesterday and Russert had an interesting question to Mitch McConnell: What do private personal accounts do to fix the solvency problem? McConnell couldn't answer it. | ||
| cjc Citizen Username: Cjc Post Number: 3228 Registered: 8-2003 |
If someone is paying more in FICA taxes, that isn't a tax hike? Please explain, Debby. dave23 -- neither can the Democrats. Strike that -- they're unwilling to answer it. How do you fund the presently unsustainable? Hike taxes and/or cut benefits. You need something in that system that can capture growth to offset the Ponzi-like crash that is approaching. That something is personal accounts. | ||
| Debby Citizen Username: Debby Post Number: 1705 Registered: 5-2001 |
cjc - it depends on your perspective. Any time a democrat votes against a proposed program that includes a tax cut, it is counted as "voting for a tax hike". That's how they come up with those numbers at election time..."JOHN KERRY VOTED TO RAISE TAXES 843 TIMES!!!" But the fact of the matter is that all income is subject to income tax and all wages are subject to FICA withholding, unless specifically excluded by the Internal Revenue Code. The Code can limit taxation in order to minimize hardship (if your medical expenses exceed a certain percentage of your AGI, for instance) or to encourage certain social welfare goals (deductions for mortgage interest to encourage home ownership, or charitable donation deductions, for example). Likewise, all wages are subject to FICA unless specifically exempted. Perhaps high-earners should bear the same burden, relative to their earnings, that lower and middle earners do. | ||
| Strawman Supporter Username: Strawberry Post Number: 4619 Registered: 10-2001 |
"Perhaps high-earners should bear the same burden, relative to their earnings, that lower and middle earners do." spoken like a true lower or middle earner.  | ||
| Debby Citizen Username: Debby Post Number: 1706 Registered: 5-2001 |
You're so pathetic when you have nothing to contribute. | ||
| cjc Citizen Username: Cjc Post Number: 3229 Registered: 8-2003 |
Well, if you want high income earners to subject all their income to FICA taxation as was clearly not the plan laid out by FDR at Social Security's inception, perhaps then higher earners should receive more income from Social Security commeasurate to the level they were taxed compared to those who don't contribute as much. Unless this is a welfare program. From what I've read, FDR didn't want this to be a welfare system due to the stigma that entailed. But it's not the 'insurance program' people say it is as far as I can tell where the higher the risk a person presents is reflected in the premiums they pay or the benefits they receive. That's not the system we have today, which is more a wealth transfer system for retirees -- and an unsustainable one at that. It was all lots of fun when 40+ people funded the retirement of 1 person. We're getting close to 2 to 1, and people are calling for those 2 to pay higher and higher taxes for their retirement. OK -- maybe not both of them, but 1 of them to pay more and more and more and in the process receive less and less and less. From the NY Times: "Social Security has not been a simple retirement savings plan but an instrument of social policy, using part of the taxes paid by some groups to shore up the benefits of others. Any changes made to the system will inevitably shift this distributional mix, and that troubles some members of Congress. "Social Security is a central strand in our social safety net," said Senator Gordon H. Smith, Republican of Oregon, the chairman of the Senate Special Committee on Aging. "I believe its progressive nature has to be preserved," he said, adding that he would hold his vote "in abeyance" until "we address these progressive issues." Social Security uses taxes from the rich to bolster the retirement income of the poor through a benefit scale that now replaces about 60 percent of preretirement earnings for low-income workers but only 30 percent for the workers in the highest earning band. But the program has a multitude of other objectives, moving money every which way. An essential reason for the decline in old-age poverty, for example, is that older generations - which paid lower payroll taxes - have received transfers from younger generations, who have paid higher taxes to get the same or even lower levels of benefits." | ||
| dave23 Citizen Username: Dave23 Post Number: 190 Registered: 5-2001 |
cjc, Sorry, I should have been more clear. The Bush admin claims there is a solvecy problem, but their solution is no solution at all. On the other hand, many, if not most, Democrats say that the problem is small and far away. But this is Bush's show right now. Right now it appears he's on the stump trying to sell a solution that doesn't fix a problem that doesn't exist. So I ask again: How does his solution solve the alleged problem? | ||
| Bob K Supporter Username: Bobk Post Number: 7835 Registered: 5-2001 |
First off thanks to the 1983 reforms championed by Reagan there is actually money in the Trust Fund invested in federal bonds, which makes the "2 for 1" arguement somewhat incorrect. I don't like the idea, but almost certainly the salary limit will go to somewhere around $150,000 if private accounts become a reality. It is totally unrealistic to borrow the money to finance the private accounts. Wealth transfer, which is what Cjc is talking about, is actually a two way street. The poor and middle class contributions that are going into the trust fund and then invested in government bonds are financing the tax cuts implemented by Bush, with most of the cuts going to the truly wealthy who have the bulk of their income shielded from social security because of the $90,000 cap. In effect Joe Lunchpail, who makes $40,000 a year is paying for Chauncey Rich's tax cut. Interesting, huh? George the First was never trusted by the new conservatives. He is/was very much the product, as was his father Senator Preston Bush, of the old money northeastern branch of the GOP who, while certainly more fiscally conservative than the New Deal and Great Society Dems, were also realists. | ||
| cjc Citizen Username: Cjc Post Number: 3230 Registered: 8-2003 |
It's a stretch to say that Soc Sec contributions of Joe Lunchpail are financing tax cuts. SS is temporarily in a surplus until 2018, and even if you kept tax rates on the rich high, you wouldn't effect Soc Security funding levels as those taxes aren't applied to the 'trust fund .' The cash those IOUs replace are spent on the record increases in Education spending, the Medicare Drug Welfare Bill, farm subsidies....everything. Joe Lunchpail got a tax cut too. | ||
| Maple Man Citizen Username: Mapleman Post Number: 519 Registered: 6-2004  |
Even though I disagree with cjc's points, his is the sort of argument that needs to be raised. It's at the core of Republicans' antipathy toward Social Security, but none of them will directly address it. Many of them consider Social Security to be welfare for people who can't, won't, or don't care to plan for retirement. OTOH, many who who support a pension plan like Social Security don't want to admit that it does redistribute wealth to some degree. Personally, I don't think there's anything wrong with that. We're talking about redistributing money to people who worked all their lives, and made below average salaries. At at time in their lives when many people are unable to be employed even if they wanted to be, Social Security allows them to have the basics to get by. I'm sure no one is vacationing in Nice on just their SS check. Without a stable, basic pension benefit, we're going to revert to a time when a large segment of elderly people will be living in extreme poverty. Some people say that the elderly have had 40-50 years to save for retirement, and if they haven't, for whatever reason, tough luck. If as a society, that's the consensus that we come to - save for yourself, or else tough luck - we should be coming to that consensus honestly, not as the product of some phony "crisis." | ||
| Debby Citizen Username: Debby Post Number: 1709 Registered: 5-2001 |
Good points, all, Maple Man. I wonder, actually, how much wealth transfer is really going on. I mean in terms of SS programs that provide benefits for orphans, or for those unable to work - obviously they are getting more than they put in. But in terms of retirement income for workers, I would expect the income replacement ratio to be lower for those in the upper brackets - after all, their effective contribution rate is much lower. As a teacher, every $ I earn is taxed at 7.65%. If a person earns $450,000 a year, they only pay FICA on the first $90K, or on 20% of their salary. So their effective contribution rate is (7.65% * 20%)or about 1.5%. | ||
| cjc Citizen Username: Cjc Post Number: 3231 Registered: 8-2003 |
Why not empower people to save for themselves? You're already taking 12% of their income in most cases. Have that invested and grow for them and be able to pass it along to their heirs. Sure -- have government provide a minimum fall-back position. And provide for the disabled, orphans, destitute widows, etc. Maple Man is right. There's a lot of denial about what SS is and isn't. It is wealth redistribution, there isn't a trust fund with your name on it, it is unsustainable, and there isn't a serious attempt at a fix by the Democrats. That Democrat position won't carry the day. Bush is taking lumps now, but he's succeeded in winning the 'there is a problem' argument. | ||
| Michael Janay Citizen Username: Childprotect Post Number: 1665 Registered: 1-2003  |
Debby, But they only get back the same amount as everyone else. I'd be all for raising the $90k cap as long as you are assured to get back what you put in, and not some low number so someone else can have my money. | ||
| cjc Citizen Username: Cjc Post Number: 3232 Registered: 8-2003 |
You'll be increasing the wealth transfer if you raise the rates on income subject to FICA and add that to the idea of curtailing benefits to those who have put the most into the system. | ||
| Debby Citizen Username: Debby Post Number: 1710 Registered: 5-2001 |
Michael - that was my point, if I didn't take it all the way to the end...high-earners get the same ultimate benefit as anyone else..the reason that they get a lower % of income replacement is because their salaries are higher, not because they contribute more and receive less. | ||
| Tom Reingold Supporter Username: Noglider Post Number: 5747 Registered: 1-2003  |
If everyone got out what he put in, then no one would get out more than he put in (obviously). Then there would be no safety net, because a safety net, by definition, is getting back more than you put in, individually. Sorry you have trouble believing that people have a debt to society. I suppose it's an unpleasant for some to face. Not for me, though. | ||
| Michael Janay Citizen Username: Childprotect Post Number: 1666 Registered: 1-2003 |
I must be missing what you are saying. The reason the cap is there is so SS ISN'T a wealth transfer. Raising the cap and cutting benefits for the rich to shore up the system is a wealth transfer, and is inherently unfair. | ||
| Maple Man Citizen Username: Mapleman Post Number: 520 Registered: 6-2004 |
Another disagreement - there's no way workers would be "empowered" to invest 12% of their income. The total tax rate may be 12%, but there's no way a wage earner is going to get all that back. Employers are not going to hand over their payroll tax contribution to workers if SS is abolished. Not going to happen. Not now, not ever. Employers pay us what the market will bear, and not a penny more, regardless of their expenses. Anyone think if employers' health insurance premiums went down, they'd give us all raises? Of course not, and the same would go for any reductions in the payroll tax. It's pie in the sky for privatization proponents to suggest that money would be ours. (Unless of course the government mandated that businesses fork that money over to employees, but I'm not gonna hold my breath for that to happen). So we'd be getting back our own contributions only. At average income levels, that comes to about $2500 a year. I don't see how anyone can end up with a nest egg large enough to retire on at those levels. Even with earnings and compounding, what would be the total value of your investments if you put away only 100 to 125K of principal over your career? Could it possibly be enough to sustain a person for 10 to 15 years of retirement? No one has run those numbers and put them out there for people to react to. And without those projections, how can anyone make an informed decision? | ||
| dave23 Citizen Username: Dave23 Post Number: 191 Registered: 5-2001 |
Actually, Bush is losing the "there's a problem" argument. In January, a USA Today poll showed about a 50/50 split on whether major changes needed to be made in the next year or two. Now 59% are against such changes. | ||
| Bob K Supporter Username: Bobk Post Number: 7838 Registered: 5-2001 |
Its also unfair for the less wealthy to be forced to finance the deficiet with their excess above current benefits SS contributions to support the tax cuts which went overwhelmingly to the rich. The point I usually try to make here is that it isn't in the interests of the wealthy to have to large an under class. It raises Hell with the political and social stability of the country, not to mention it is hard to sell goods and services to people who are having trouble affording to eat on a regular basis. I usually call this the Argentina Syndrome. |
