Comments on: Counterparties: The slow-burn jobs crisis http://blogs.reuters.com/felix-salmon/2012/06/01/counterparties-the-slow-burn-jobs-crisis/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: TFF http://blogs.reuters.com/felix-salmon/2012/06/01/counterparties-the-slow-burn-jobs-crisis/comment-page-1/#comment-39832 Mon, 04 Jun 2012 16:15:17 +0000 http://blogs.reuters.com/felix-salmon/?p=14574#comment-39832 @MrRFox, from CNN/Money: “Next year, barring congressional action, the exemption level falls to $1 million, and the top rate jumps to 55%. There will also be 5% surtax on a portion of very large taxable estates.”

Isn’t the 100% rate you are calling for, but it is a reasonably strict (hah!) exemption, and a top rate that would take a big bite out of the larger estates.

Best thing is that Congress doesn’t need to act — they merely need to refrain from cutting taxes. Since Congress is constitutionally incapable (albeit not Constitutionally incapable) of positive action, this is our best hope of getting a sensible system in place.

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By: TFF http://blogs.reuters.com/felix-salmon/2012/06/01/counterparties-the-slow-burn-jobs-crisis/comment-page-1/#comment-39824 Sun, 03 Jun 2012 15:19:38 +0000 http://blogs.reuters.com/felix-salmon/?p=14574#comment-39824 @PompousTurtle, in your first response to me you wrote, “It sounds like I am far too close for comfort and you are nothing more than a government shill trying to discredit me.”

If that is a “modicum of respect”, then I’m quite happy to have none at all from you. I prefer to deal with people who are a little less self-important. You don’t see anybody else here signing their professional qualifications, do you? Do you presume that means we have none?

The funny thing is that I agree your criticisms are spot-on. The system, as presently constituted, is bankrupt. Even that 1990 law that I cited — formally removing the Social Security surplus from the budget — is merely an accounting exercise. It is a promise to repay, but those promised benefits depend on the whim of Congress. I believe it has already been established that Congress has the legal right to redefine/redistribute/eliminate Social Security benefits.

Where we disagree is in the solution. You want to raise taxes so that the Trust Fund will be replenished. You believe you can construct a lockbox that Congress cannot raid. Short of “personal retirement accounts” (which would defeat the redistributive nature of Social Security), I don’t see how you can accomplish that.

Here is an alternative — redefine benefits LOWER for anybody presently under the age of 50. Turn it into a welfare program for those who are otherwise bankrupt. Set the FICA tax to whatever is necessary to balance the cash flow, automatically dropping as the program phases out.

Under that alternative, you’ll get everything you were promised. (Not that you need it, as a brilliant mind like yours has surely accumulated 10x the wealth you will ever require.) I’ll get nothing — but then I don’t expect anything to be left in 30 years anyways.

But raise taxes, in an attempt to generate a surplus? How well did that work the first time it was tried?

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By: PseudoTurtle http://blogs.reuters.com/felix-salmon/2012/06/01/counterparties-the-slow-burn-jobs-crisis/comment-page-1/#comment-39823 Sun, 03 Jun 2012 13:07:59 +0000 http://blogs.reuters.com/felix-salmon/?p=14574#comment-39823 @ TFF —

I apologize for attempting to treat you with a modicum of respect, since you deserve none.

Clearly, you are not interested in learning the truth, but only in attacking me personally.

I HAVE NO TIME FOR MORONS LIKE YOU!

PseudoTurtle
CPA/MBA

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By: TFF http://blogs.reuters.com/felix-salmon/2012/06/01/counterparties-the-slow-burn-jobs-crisis/comment-page-1/#comment-39815 Sun, 03 Jun 2012 01:14:43 +0000 http://blogs.reuters.com/felix-salmon/?p=14574#comment-39815 @PseudoTurtle, you really are a pompous ass, aren’t you?

My apologies for getting the dates wrong. It was in 1990 that Social Security was moved off-budget. The Trust Fund was still loaned to the Treasury after that, but they could no longer count a Social Security surplus against a budget deficit.

“ALL income above the present cap would be subject to the tax”

Including investment income? Not simply wage income? That would be a substantial change — but I’m still not sure it would suffice. Show me some numbers on that please?

Yes, the tax rate could be increased to cover the difference. Do you think there is popular support for that solution? Obama *cut* the tax rate by 2% — it is clear where he stands on that issue. The Republicans, of course, hate any and all taxes.

My apologies if you have already answered the questions I posed. You tend to ramble, and it is nearly impossible to read anything written entirely in capital letters. If you think that is helping to get your point across, you are sadly mistaken.

It is a shame you never learned to write in your prior career. And Wikipedia as your primary resource? Seriously?

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By: PseudoTurtle http://blogs.reuters.com/felix-salmon/2012/06/01/counterparties-the-slow-burn-jobs-crisis/comment-page-1/#comment-39810 Sat, 02 Jun 2012 22:27:32 +0000 http://blogs.reuters.com/felix-salmon/?p=14574#comment-39810 For others who are “Social Security Challenged”, here is a link to the history of Social Security, which makes for interesting light reading.

It’s harder to find than it used to be, probably since most of it isn’t very complimentary to what the US government has done to it since 1935.

If reading this doesn’t make you distrust government promises regarding Social Security as I do, then you are indeed hopeless.

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The link to Wikipedia: http://en.wikipedia.org/wiki/History_of_ Social_Security_in_the_United_States

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Specifically to support what I said about Social Security being commingled (i.e. mixed with) the General Fund during the Johnson administration, I have included part of that passage below.

This is an important fact because it illustrates how Congress has manipulated the Social Security Trust Fund for many decades.

Remember, this is but one example among many instances of government mismanagement of the fund.

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“Medicare and Medicaid were added in 1965 by the Social Security Act of 1965, part of President Lyndon B. Johnson’s “Great Society” program.

The government adopted a unified budget in the Johnson administration in 1968.

This change resulted in a single measure of the fiscal status of the government, based on the sum of all government activity.[53]

The surplus in Social Security trust funds offsets the total debt, making it appear much smaller than it otherwise would.

This allowed Congress to increase spending without having to risk the political consequences of raising taxes.”

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Any questions?

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By: PseudoTurtle http://blogs.reuters.com/felix-salmon/2012/06/01/counterparties-the-slow-burn-jobs-crisis/comment-page-1/#comment-39809 Sat, 02 Jun 2012 21:49:39 +0000 http://blogs.reuters.com/felix-salmon/?p=14574#comment-39809 @ TFF —

Sorry, I guess I hadn’t realized Reagan was president when Social Security was inaugurated — in 1935.

I think a lot of history books will need to be changed.

Social Security is NOT dead, but it certainly is in intensive care right now, mainly because of government manipulation.

Apparently, even with my “shouting” — I tend to use capitals to emphasize things I consider important, whereas those used to texting probably take it as shouting, but if you read what I write, it is your problem to deal with it — you clearly do not understand what I said.

My proposal to remove the cap on earnings subject to Social Security would more than compensate for its present state, since ALL income above the present cap would be subject to the tax (yes, even Bill Gates).

IF, however, the tax rate was not sufficient, it is easy to make a simple adjustment based on actuarial projections (provide the government can get them right, which I doubt, since it is not interested in telling the truth, but in creating issues for its own purposes).

Let me ask you, do you believe the unemployment rate is only slightly above 8%? If you do, then you can’t possibly understand what I am trying to tell you.

To do that, you have to stop listening to the government propaganda.

I don’t think you are ready to do that yet, because I have already answered the questions you just posed.

Unless you open your mind and think about what I am saying, you will probably not be able to understand what I have already laid out for you.

For your info, I am presently retired, but in my “other life” I worked for several international high-tech firms, mainly as a Plant Controller and Finance Manager, usually reporting to the CEO/CFO and provided support for them in conference calls/BOD meetings.

I think I may have a bit of a better handle on the situation than you appear to have.

I suggest you go back and read what I said again.

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By: TFF http://blogs.reuters.com/felix-salmon/2012/06/01/counterparties-the-slow-burn-jobs-crisis/comment-page-1/#comment-39808 Sat, 02 Jun 2012 21:32:56 +0000 http://blogs.reuters.com/felix-salmon/?p=14574#comment-39808 “Yes, the trust fund is “invested”, but only in special revenue bonds of the US government, backed by the “full faith and trust of the US government”, for whatever that is worth these days.”

By the way, this is an excellent point. And this would be true regardless of how the Trust Fund were set up. Social Security depends on the “full faith and trust of the US government”. And these days that is worth very little — especially on promises reaching forward 30-40 years.

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By: TFF http://blogs.reuters.com/felix-salmon/2012/06/01/counterparties-the-slow-burn-jobs-crisis/comment-page-1/#comment-39807 Sat, 02 Jun 2012 21:25:13 +0000 http://blogs.reuters.com/felix-salmon/?p=14574#comment-39807 PseudoTurtle, the present system was established under Reagan. It hasn’t changed since. Have you been unaware of it all that time? Or have you truly been shouting IN ALL CAPS WRITING FOR THE LAST TWENTY FIVE YEARS?

Social Security, in its present form, is already dead. My Social Security statement promises us an eventual $40k/year (present-value dollars). My anticipated benefit? Zero.

The time to worry about Social Security surpluses was when it was still running a surplus. It isn’t now, and will never run a substantial surplus again. Your shouting is too little, way too late.

So given your premise, and mine, that Social Security in its present form is dead — its promises worthless — how would you reinvent it? Raising the cap on contributions isn’t a sufficient fix, even with your other proposals. My guess is that it will turn into a welfare program with strict income/wealth limits.

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By: PseudoTurtle http://blogs.reuters.com/felix-salmon/2012/06/01/counterparties-the-slow-burn-jobs-crisis/comment-page-1/#comment-39806 Sat, 02 Jun 2012 21:14:59 +0000 http://blogs.reuters.com/felix-salmon/?p=14574#comment-39806 @ TFF —

There is on other point I want to make absolutely clear.

You state, “To a certain extent this is an accounting exercise, moving money from one pocket to another. This is why people talk about Congress “raiding” the trust fund. But this “raiding” is a legal requirement of the 1980s legislation, not some underhanded dealing.”

That makes it sound like everything is just fine and dandy, with Congress doing what it is supposed to be doing, but nothing could be further from the truth.

SINCE THE SOCIAL SECURITY ACT WAS FIRST PASSED, IT IS CONGRESS THAT SET UP THE RULES INITIALLY AND HAS BEEN MANIPULATING THEM FOR ITS BENEFIT — NOT OURS — SINCE THEN.

SO TO SAY NOTHING UNDERHANDED IS GOING ON IS A LIE. IT IS THE UNDERHANDED ACTIONS BY CONGRESS FOR MANY DECADES THAT HAS TOTALLY RUINED WHAT WAS ORIGINALLY ONE OF THE BEST IDEAS THIS COUNTRY EVER HAD.

AND IF THEY ARE NOT STOPPED, THEY WILL DESTROY SOCIAL SECURITY.

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By: PseudoTurtle http://blogs.reuters.com/felix-salmon/2012/06/01/counterparties-the-slow-burn-jobs-crisis/comment-page-1/#comment-39805 Sat, 02 Jun 2012 20:48:11 +0000 http://blogs.reuters.com/felix-salmon/?p=14574#comment-39805 @ TFF —

I don’t know where you get your information, but it is totally wrong.

Yes, I understand that the Social Security Trust Fund *already* exists as a separate fund, but it has been commingled with the General Fund since the Johnson Administration, mainly to provide extras funds for both his Great Society program AND to continue waging the Vietnam War without having to raise taxes which would have been extremely unpopular with the American people.

The fund has remained commingled with the General Fund since then, even though attempts were made to remove it, because Social Security is a “slush fund” for government spending, mostly going to the Military/Industrial Complex.

They want to get rid of Social Security because it no longer functions as a slush fund, but now represents a drain on military spending — in other words, one or the other MUST go in order to continue overspending as we have been.

Thus the problem is NOT entitlements, but out-of-control government spending on the military.

Yes, the trust fund is “invested”, but only in special revenue bonds of the US government, backed by the “full faith and trust of the US government”, for whatever that is worth these days.

Which brings up the point of being “broke”. I guess if you believe the government will make good on its legal debt owed to seniors, then it “technically” isn’t broke.

But if you don’t believe that the government will make good on its internal legal debts, which are far easier to renege on than those owed to China, for instance, then it is broke.

The real question that decides whether it is broke or not is to look at the “cash flow”, (i.e. where do the funds come from to pay current recipients?) and the answer to that is they come directly from the General Fund, because there is no real cash in the Trust Fund as there should have been if it had not been commingled.

For example, why couldn’t the Treasury pay Social Security last year when Congress had blocked further payments of ordinary debt?

They should have been able to IF Social Security was the stand-alone fund it was designed to be, because then it wouldn’t be considered part of our total debt.

But that was the problem, they couldn’t pay Social Security without raising the debt ceiling, which means it is considered to be part of the General Fund and total debt.

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Your comment that “To a certain extent this is an accounting exercise, moving money from one pocket to another. This is why people talk about Congress “raiding” the trust fund. But this “raiding” is a legal requirement of the 1980s legislation, not some underhanded dealing. It is carefully tracked and accounted for.” is more than a little disingenuous, since if the Social Security Trust Fund was being handled by an outside firm instead of the government, the investment firm would be liable for both civil and criminal charges for its gross mishandling of the fund.

It’s the first time I have heard of “raiding” (i.e. embezzling from a trust fund) being a legal requirement.

Let me put it more simply for you.

If you had a private retirement fund, and it was commingled with the investment firm’s accounts such that they were using it directly to pay their salaries and operating expenses, would you think something was wrong?

From what you said, apparently not.

It sounds like I am far too close for comfort and you are nothing more than a government shill trying to discredit me.

PseudoTurtle
CPA/MBA

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