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  1. #11
    Uniqueorn William K's Avatar
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    Has there been any studies or surveys on what the average retired, ex-taxpayers do with their SS cheques? Do they save the money or spend it? If they spend it, I would guess that given their lesser mobility, they would spend it in the local economy.

    Retirees and even those that take unemployment benefits are still consumers. If they are removed from the equation, who will step in?
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  2. #12
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    Doesn't a significant increase in social security and medical spending over the next 10 years make sense given that so many baby boomers are retiring? Further from that, isn't social security funded separately from general taxes and, somewhat indirectly, by the people who receive the benefits? While I know there are some issues surrounding whether the system can fund itself in the long term (the same is happening in my country), I can't really see how this is some kind of sinister AARP conspiracy.

  3. #13
    Senior Member Survive & Stay Free's Avatar
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    Quote Originally Posted by William K View Post
    Retirees and even those that take unemployment benefits are still consumers. If they are removed from the equation, who will step in?
    Good point.

    The focus on control of the economy and welfare is way off, its not welfare that caused the current crisis or any of the others before that, its people who are already obscenely rich, I mean at least three generations into the future remaining rich if they all live lives of squanderous perfidy, wanting to be even richer and taking chances with everyone else's wealth or livelihood.

    I can understand people getting vexed by the abuse of welfare or social security more often than disparities of wealth because they probably are likely to meet more dead beats in their daily lives than millionaire wasterels but objectively the overclass will destroy it for everyone quicker than the underclass.

  4. #14
    Junior Member oxyjen's Avatar
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    Social Security is an easy scapegoat. It will be a problem if left unattended in the future, but isn't to blame for our current situation. I'm not sure what else they spent the Social Security money on, I wish this article would get a little clearer on that.

    From the Associated Press:

    WASHINGTON – Social Security will post nearly $600 billion in deficits over the next decade as the economy struggles to recover and millions of baby boomers stand at the brink of retirement, according to new congressional projections.

    This year alone, Social Security is projected to collect $45 billion less in payroll taxes than it pays out in retirement, disability and survivor benefits, the nonpartisan Congressional Budget Office said Wednesday. That figure swells to $130 billion when a new one-year cut in payroll taxes is included, though Congress has promised to repay any lost revenue from the tax cut.

    Last year, Social Security posted its first deficit since the program was last overhauled in the 1980s. The CBO said at the time that Social Security would post surpluses for a few more years before permanently slipping into deficits in 2016.

    But the new projections show nothing but red ink until the Social Security trust funds are exhausted in 2037.

    The outlook has grown bleaker as the nation struggles to recover from its worst economic crisis since Social Security was enacted during the Great Depression. In the short term, Social Security is suffering from a weak economy that has payroll taxes lagging and applications for benefits rising. In the long term, Social Security will be strained by the growing number of baby boomers retiring and applying for benefits.

    More than 54 million people receive retirement, disability or survivor benefits from Social Security. Monthly payments average $1,076.

    The deficits add a sense of urgency to efforts to improve Social Security's finances. For much of the past 30 years, Social Security has run big surpluses, which the government has borrowed to spend on other programs. Now that the program is running deficits, the federal government will have to find money elsewhere to pay back Social Security, so it continue to issue benefits.

    "I've received the lash from those who say, 'Well, you shouldn't have to cut Social Security because there are trillions of dollars of assets,'" said Sen. Kent Conrad, D-N.D., chairman of the Senate Budget Committee. "It is true there are trillions of dollars of assets. It is true that they're backed by the full faith and credit of the United States. It is also true that the only way those bonds get redeemed is out of the current income of the United States."

    Other lawmakers said Social Security's financial problems are not that urgent.

    "In the last 75 years, in good times and in bad times, Social Security has paid out every nickel owed to every eligible beneficiary at a relatively modest administrative cost," said Sen. Bernie Sanders, who organized the first meeting of the Senate Social Security caucus Thursday.

    "We are getting very tired about hearing our Republican and right wing friends telling us about how Social Security is collapsing when the reality is, Social Security today has a surplus of $2.6 trillion," Sanders said. "Social Security can pay out every benefit owed to every eligible American, for the next 27 years."

    Social Security has built up a $2.5 trillion surplus since the retirement program was last overhauled in the 1980s. Benefits will be safe until that money runs out. That is projected to happen in 2037 — unless Congress acts in the meantime. At that point, Social Security would collect enough in payroll taxes to pay out about 78 percent of benefits, according to the Social Security Administration.

    The $2.5 trillion surplus, however, has been borrowed over the years by the federal government and spent on other programs
    . In return, the Treasury Department has issued bonds to Social Security, guaranteeing repayment with interest.

    It's a bad time for the nation to be hit with more financial obligations. The federal budget deficit will surge to a record $1.5 trillion flood of red ink this year, congressional budget experts estimated Wednesday, blaming the slow economic recovery and a tax cut law enacted in December.

    Lawmakers from both parties have vowed to address the nation's financial problems, including such contentious issues as Social Security and Medicare. The political climate, however, has made it difficult. Some Democrats have criticized plans to cut Social Security benefits as secret plots to destroy the program. Many Republicans have refused to consider tax increases.

    "We need to get past the politics of the past and deal with this issue, making the hard decisions that have to be made," Sen. Mike Crapo, R-Idaho, said Thursday at a Senate hearing on the budget deficit. "As we move forward in that context, I personally believe strongly that all aspects of the spending and revenue side of the equation must be on the table."

    Sen. Chuck Schumer, D-N.Y., accused congressional Republicans of wanting to end Social Security by privatizing it.

    "Privatize means end," Schumer said Thursday after the meeting of the Senate Social Security Caucus.

    Schumer was referring to a widely distributed plan by Rep. Paul Ryan, R-Wis., chairman of the House Budget Committee. Ryan's plan would offer workers under 55 the option of investing over a third of their current Social Security taxes into personal retirement accounts.

    Social Security has been supported by a 6.2 percent payroll tax paid by both workers and employers. In December, Congress passed a one-year tax cut for workers, to 4.2 percent.
    The lost revenue is to be repaid to Social Security from general revenue funds, meaning it will add to the growing national debt.

  5. #15
    Senior Member Lateralus's Avatar
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    From what I understand, Social Security doesn't contribute much to the deficit. Many years, Social Security actually had a surplus (it is funded through a separate tax) where it loaned that surplus to the federal government (purchasing treasury notes).

    This says nothing about Social Security's long term stability, as more and more baby boomers retire, but not die.
    "We grow up thinking that beliefs are something to be proud of, but they're really nothing but opinions one refuses to reconsider. Beliefs are easy. The stronger your beliefs are, the less open you are to growth and wisdom, because "strength of belief" is only the intensity with which you resist questioning yourself. As soon as you are proud of a belief, as soon as you think it adds something to who you are, then you've made it a part of your ego."

  6. #16
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    You guys can keep doing your best ostrich impersonation if you want...



    Facing up to bringing down entitlement spending - from the Washington Post

    Facing up to bringing down entitlement spending

    By Michael Gerson

    Gerson is a senior fellow at the Council on Foreign Relations. He served as a policy adviser and chief speechwriter to President George W. Bush from 2000 to 2006. Before he joined Bush's presidential campaign in 1999, he was a senior editor covering politics at U.S. News & World Report.
    http://www.washingtonpost.com/wp-dyn...072904899.html

    On the federal debt crisis, inertia has all the momentum. A compelling political logic favors inaction.

    America's debt problem is mainly an entitlement spending problem. Serious entitlement reform would involve concentrating limited resources on the poor, eliminating subsidies for the rich and moving support for the middle class from a system of defined benefits to defined contributions. However skillfully this transition is designed, it will mean a middle-class benefit cut. That's why, in 2005, Republicans and Democrats both fled from Social Security reform like startled grouse. Even worse, this year President Obama and the Democratic Congress created a new health entitlement funded mainly by taking money from Medicare, making that program more difficult to stabilize in the future. The Obama administration has not only avoided reform; it has also complicated the job for future administrations.

    The need for entitlement reform is almost universally conceded. The politics of entitlement reform, however, seem hopeless. The only consistent advocates of responsibility are congressional deficit hawks -- generally a finger-wagging, dyspeptic bunch. Being right does not make them attractive, and there will never be enough of them to carry a political task this heavy. If the debt debate is defined in Congress as pitiless austerity against business as usual, business as usual will regularly prevail.

    But the vast scale of the debt problem creates an unexpected political possibility. According to the Congressional Budget Office, spending on mandatory health programs and Social Security is expected to grow from about 10 percent of gross domestic product today to roughly 16 percent in 2035. By way of historical comparison, government spending on all of its programs and activities has averaged about 18.5 percent of GDP over the past four decades. Put another way: In 25 years, nearly the whole portion of the economy we spend on government will be spent on entitlement programs alone. Just about every other function and priority of the federal government will be swallowed up by increased spending on health care and retirement, or the percentage of the economy taken by taxes will need to dangerously increase. This is the other option.

    Members of Congress should take special notice. Are you an advocate of growth-oriented tax cuts like, say, Sen. Jon Kyl (R-Ariz.)? Without entitlement reform, future tax reductions are a budgetary impossibility. Support defense spending like Rep. Duncan Hunter (R-Calif.), or increased resources for child nutrition like Rep. George Miller (D-Calif.)? Want more emphasis on fighting poverty, low-income housing, foreign assistance, health research, national parks, environmental protection, border patrols or plain old congressional pork? All will be severely constrained by the current growth trend in entitlement spending.

    Every federal budget involves a debate between liberal and conservative priorities on discretionary spending and tax reductions, expressed in the production of 12 annual appropriations bills. But the trajectory of mandatory spending threatens all of those priorities. Properly understood, the budget battle is not between big spenders and budget hawks. It is between those who want to spend larger and larger portions of the budget on health care and transfers to the elderly, and those who want to use budget resources for anything else.

    The coming debt debate will be sensitive and uncomfortable because it has undercurrents of generational conflict. Since the New Deal, America has seen a massive transfer of wealth from young to old through entitlement programs such as Social Security and Medicare, with many dramatically positive results. But that transfer is quickly escalating. Baby boomers are beginning to retire in surging numbers. People are living longer and collecting benefits for more years -- a good thing, but expensive for federal programs. And health costs are increasing faster than are other forms of inflation. In an entitlement system, these public commitments expand automatically, requiring political intervention to change them. Devoting resources to the sick and elderly counts many achievements and benefits. But we are reaching a point where these important priorities threaten to overwhelm everything else.

    The political constituency for accelerated mandatory spending, including AARP and health providers, is powerful on both sides of the aisle. But the coalition for entitlement reform should be broad as well, including everyone from tax cutters to poverty warriors to pork spenders. When members of Congress find their legislative discretion severely narrowed by mandatory commitments, they may awaken to difficult, necessary responsibilities. For them, it is a choice between reform and irrelevance.

    Entitlement reform remains an uphill political cause -- but maybe not a hopeless one.
    Entitlements key to rein in debt - from the Wall Street Journal

    Geithner: Entitlements Key to Rein in Debt

    By JEFFREY SPARSHOTT And SIOBHAN HUGHES
    http://online.wsj.com/article/SB1000...546373802.html

    WASHINGTON—Treasury Secretary Timothy Geithner Tuesday said the U.S. must overhaul entitlement programs to rein in the national debt, but rejected measures such as cutting Social Security benefits or subjecting retirement savings "to the whims of the stock market."

    "Entitlement spending is projected to increase more quickly than revenues due to an aging population and growing health-care costs," Mr. Geithner said in testimony prepared for a House Ways and Means Committee hearing.

    U.S. President Barack Obama discusses the impact of his proposed federal pay-raise freeze.

    President Barack Obama Tuesday said he is prepared to work "in a serious way" with Republicans on making changes to Medicare, Medicaid and Social Security as he defended the $3.7 trillion budget submitted to Congress this week.

    Republicans complained that Mr. Obama failed to propose overhauling the costly entitlement programs in his fiscal 2012 budget proposal.

    "This budget is a missed opportunity," House Ways and Means Committee Chairman Dave Camp (R., Mich.) said at the Tuesday hearing. "There is nothing on entitlement reform, and there is little more than lip service about getting the deficit under control."

    The White House proposed more than $1 trillion in deficit reductions over a 10-year period—three-quarters coming from spending cuts and the balance from tax increases or the elimination of existing tax breaks.

    But those proposed savings go nowhere near the short-term reductions that House Republicans are demanding. And Republicans said the budget didn't address entitlements.

    Republicans didn't address entitlements either in their own measure to cut spending in the final seven months of 2011. The spending measure is currently being debated in the House, where conservatives have a chance to offer amendments that would impose even deeper cuts.

    House Majority Leader Eric Cantor (R., Va.) Monday also said Mr. Obama's fiscal 2012 budget request "missed an opportunity to lead on the biggest fiscal challenges facing our country."

    Republicans would include specific overhaul proposals for the Medicare and Social Security entitlement programs in their fiscal 2012 budget proposal when it is published this spring, Mr. Cantor said.

    Mr. Geithner didn't lay out any specifics on Social Security in his prepared remarks, but did point to changes made in 1983 that extended the fund's solvency. At the time, President Ronald Reagan signed a law raising the retirement age to 67 from 65 over a phased-in period, a payroll-tax rise and requiring government employees to pay into Social Security taxes.

    "We will reject plans that slash benefits; that fail to protect current retirees, people with disabilities and the most vulnerable; or that subject Americans' retirement savings to the whims of the stock market," Mr. Geithner said.

    The Treasury secretary also cautioned against cutting the budget too quickly as the economic recovery slowly gains momentum with stronger consumer and business spending.

    House Republican leadership last week released details of a spending bill to fund the federal government through the rest of fiscal 2011. The GOP said the legislation would reduce federal outlays by more than $100 billion when compared with Mr. Obama's fiscal 2011 budgetary request.

    "We still face very substantial economic challenges," Mr. Geithner said.

    That includes long-term deficit reduction. Mr. Geithner said that left unaddressed, the national debt would grow to 85% of gross domestic product by 2021, the highest level since 1948, hurting economic growth and making the country weaker.

    Mr. Geithner also reiterated an administration call for corporate-tax changes that eliminates loopholes and reduces the overall rate companies pay.

  7. #17
    Senior Member Survive & Stay Free's Avatar
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  8. #18
    triple nerd score poppy's Avatar
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    Oh yeah, it's a huge amount of money. No doubt there.

    But ahhh it's kind of important. And, as someone else mentioned, these people are consumers. So this money goes from households, either into banks (where it becomes loans for firms) or into firms in exchange for goods. That's how we get economic growth. As long as old people aren't stuffing the checks in their mattresses it's okay.

    Defense spending is probably similar. It holds up a huge amount of firms that produce things we need for war (companies like Northrop Grumman, etc). That's big money, and it circulates around. I think it's debatable how sustainable our giganto defense budget is, but it does do some good things.

    Reform is probably necessary. But reform is not synonymous with "cuts". You can't just cut spending and go "there we go, now our economy is sustainable YAAAY".
    "There's no need to be embarrassed about it, Mr. Spock. It happens to the birds and the bees!"

  9. #19
    triple nerd score poppy's Avatar
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    However I am glad to see that you are not insisting we cut already minuscule programs like our conservation and science departments. Cause yeah...that's not gonna help.
    "There's no need to be embarrassed about it, Mr. Spock. It happens to the birds and the bees!"

  10. #20
    Senior Member Survive & Stay Free's Avatar
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    To be honest I think with the growing gulf between the top earners and fortune five hundred families and everyone else, which at this point is totally unassailable, those classes and people will find that their wealth and status is unthreatened and uneffected by shrinking the money circulating in the economy keynesian style. I think therefore that its inevitable.

    When the wealthiest had to count on the spending of the poorest to sustain their lifestyle we could all be sure that irrespective of political fortunes, public mood or prevailing culture that some spending would continue, with modern financial and investment scams it doesnt operate quite like that anymore. The wealthiest really are in a position they havent been in in a long time when they can tell everyone to f*ck off and pay whoever is willing to take the money to deal with anyone who resists them.

    They've also got the benefit, which past generations didnt, that the ideology which best serves their interests is unchallenged by any cultural change or pressure or any political tendency which matters too, most popular liberal or left wing causes in reality arent going to effect their fiscal interests and who cares about culture when you can buy and island and its population and retreat from whatever mess is being made.

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