<p>It’s true. LBJ did put SS revenues into the general fund. </p>
<p>That did not help SS.
“dstark, the argument for considering it welfare is the fact that future generations will not receive what they put in, even nominally”</p>
<p>How is that welfare? That is not welfare. It is a poor return on your money. It is not welfare.</p>
<p>The word welfare has a negative connontation. The word welfare is used to demonize the program, so that people won’t support SS.</p>
<p>People should just tell the truth. The rate of return is low for SS going forward unless there are changes.</p>
<p>The issue that people won’t get back what they put in SS is a big issue. That can be changed. Depends on priorities. </p>
<p>I don’t know why people think they won’t get SS. If you vote for people that support SS, you will get SS. You might not want SS, but that is a different issue.</p>
<p>I buy bonds and when I get paid back that is an entitlement, right?</p>
<p>Our generation did pay into SS, Bay. We aren’t getting something for nothing, like you imply with the word entitlement. Entitlement is another word with a negative connontation that is used to change people’s opinions. </p>
<p>Somebody was arguing with me that SS was an entitlement. Somebody that paid over 300,000 in SS taxes over the last 40 years. I said, "
Really? You don’t want to collect SS? You don’t want any return on that money? You don’t want a return of that money? You paid 300,000 into the SS system and you are entitled? You think you are getting something for
nothing?"</p>
<p>“Oh. I guess I do want SS”.</p>
<p>The argument against SS should be the poor returns many people receive. Not this welfare, entitlement bs arguments.</p>
<p>I happen to think SS is worth the poor returns anyway, because people don’t save in this country. And because there has been a huge shift with labor a big loser and those with capital the big winners in the way income is distributed in this country.</p>
<p>It is hard to save for retirement when the paychecks are so crummy now.
But, I don’t want to give people a pass. Society doesn’t save enough.
SS has worked to cut poverty in this country. If SS is cut, poverty among the elderly is going to increase. There is no doubt in my mind. I watch the elderly. Even with SS, the elderly are having tough times.</p>
<p>Yes, the elderly have assets. But the elderly are using those assets to live. You better have assets when you are 75 years old, because the odds are you aren’t going to have a great paying job when you are 75.</p>
<p>dstark, if it was a choice on our part to do so, it would be a poor return on our money. Since it is mandated, it is welfare. And the return isn’t just low, it is negative for us.</p>
<p>Your delusion on SS’s survival is precisely the nonsense that got us into this fiscal mess, and why unions continue to struggle in this country. You can’t just vote for people to give you more, more, more. There is a limit to how much the country can support. SS, Medicare, and Medicaid comprise 40% of the budget (and increasing). Defense is another 20%. 40% is discretionary - federal payrolls, projects, security, etc. That 40% is very difficult to slash in large percentages because you’d have to go program by program. Even if you removed Defense entirely it doesn’t close our budget. So you do the math. The other 60% of SS, Medicare, Medicaid, and Defense will HAVE to take hits. Taxes will HAVE to increase. These are the facts.</p>
<p>You mortgaged the future to have a good life. We’ll be the ones dealing with it. I’m not angry, but don’t for a minute pretend that everything’s fine and dandy. That social security will simply have “low” returns, that we’ll have all the benefits you did if we just vote for them.</p>
<p>No, it is an executed contract. You chose to buy the bond in exchange for their promise to pay you back upon certain terms. You own the bond and can sell it if you want.</p>
<p>You don’t choose to buy SS, the government doesn’t promise to pay you back, you don’t own rights to your SS that you can sell to others. They are not the same. Get over it.</p>
<p>At least a portion of SS is welfare. Undeniable. Part of social security pays benefits to those that have never paid in, or only paid in a trivial amount, into the system. Disability payments come to mind.</p>
<p>dstark,
You are caught up in your own definition of welfare. If I am rich and pay $3mill in taxes, and then I lose it all and lose my job, and am eligible to collect unemployment et al., I am collecting welfare, even though I paid way more into the system than I will get from it.</p>
<p>Welfare is typically a means-tested program to support those who don’t have money. Social Security is one of many transfer programs that we have as a government, but it is not means tested.</p>
<p>We have lots of other non-means-tested transfer programs that we don’t call welfare. For example, the folks who buy Federal flood insurance in areas that have already had floods (and are likely to get them again) always get back more than they pay in. The rest of us fund that. [Hard from an economic/statistical sense to understand why we would issue insurance to a house that is in a flood plain and likely to be reflooded, but that’s politics and not economics]. Ethanol subsidies take from non-corn states and give to corn states for no obvious environmental benefit. (See agreement from the left and right on this – [Ethanol</a> Subsidies: Not Gone, Just Hidden a Little Better | Mother Jones](<a href=“http://www.motherjones.com/kevin-drum/2012/01/ethanol-subsidies-not-gone-just-hidden-little-better]Ethanol”>Ethanol Subsidies: Not Gone, Just Hidden a Little Better – Mother Jones) and [Children</a> of the Corn: The Renewable Fuels Disaster — The American Magazine](<a href=“http://www.american.com/archive/2012/january/children-of-the-corn-the-renewable-fuels-disaster]Children”>http://www.american.com/archive/2012/january/children-of-the-corn-the-renewable-fuels-disaster)). I’m not concerned about ethanol here (though as the articles point out, what we are doing as a government is dumb and costly) but to point out that there are many transfer programs with non-means-tested beneficiaries that we do not typically classify as welfare. CollectivSynergy is correct that SS is a massive transfer scheme, but incorrect in that it does not qualify as what we think of as welfare. Bay is correct in that we pay a tax to fund it and Congress decides how much we get out. There is no promised return. Of course, as dstark points out, we can always vote to get a better amount out – which we did for years, but the bond markets now won’t let us without other budget cuts and taxation.</p>
<p>“Of course, as dstark points out, we can always vote to get a better amount out – which we did for years, but the bond markets now won’t let us without other budget cuts and taxation”</p>
<p>Shawbridge, I like your post. I think it is very good.</p>
<p>I do disagree with the above though.</p>
<p>Interest rates are so low. The 10 year note has been selling off lately. It is yielding 1.7 percent. Inflation protected notes have negative real yields.</p>
<p>For all the talk about budget issues…the yields in the bond market are near historic lows.</p>
<p>Dstark,
I never claimed that ss is welfare. I said it is an entitlement. (Do we even have any entitlements called welfare anymore?). Free public school is an entitlement. If an entitlement exists and you meet the eligibility requirements, you are entitled to receive it.</p>
<p>“You don’t choose to buy SS, the government doesn’t promise to pay you back, you don’t own rights to your SS that you can sell to others. They are not the same. Get over it.”</p>
<p>Some great entitlement. ;)</p>
<p>SS is an entitlement program, but it’s not an “entitlement” program. The vast majority of the population are going to get low to negative returns with their tax money. And there are people that support making the returns worse.</p>
<p>dstark, the bond-market vigilantes would act up if we doubled SS payments or moved the retirement age to 50, no? My point is that the bond market is the constraint upon our actions to vote better SS benefits, unless we do other things.</p>
<p>I think there is sufficient slack in the economy that interest rates are staying low for a while. I guess the Chinese are helping in this as well, but I’m less sure about the mechanism. It seems to me that Bernancke has realized that the political parties are not going to behave like adults and the only other way to deal with debt is inflation, for which he is laying the groundwork.</p>
<p>Bay, I think CollectivSynergy made the assertion that SS was welfare, not you. Arguably, public education is also a transfer, as it is funded (mostly locally) by property taxes. Those with more expensive properties pay more but we all get the same education. So, public education involves two transfers: from all of us and especially those without kids to those with school-age kids; and, within a town, from those who own more expensive properties to those who own less expensive properties. Again, as you point out, this is an entitlement but not welfare.</p>
<p>“dstark, the bond-market vigilantes would act up if we doubled SS payments or moved the retirement age to 50, no? My point is that the bond market is the constraint upon our actions to vote better SS benefits, unless we do other things.”</p>
<p>Well…I haven’t seen any suggestions to do the above and I will oppose them and wave my magic wand to make sure the above does not happen. :)</p>
<p>“It seems to me that Bernancke has realized that the political parties are not going to behave like adults and the only other way to deal with debt is inflation, for which He is laying the groundwork.”</p>
<p>I don’t like that, but inflation is a way to get out of a debt problem. Might cause other problems though.</p>
<p>dstark, so we agree that the bond market does serve as a constraint, but fortunately you will protect us from bumping up against that constraint.</p>
<p>Now, how did Bernancke go from he in my post to He in yours? Has Bernancke achieve the deity status that financial writers used to accord to Greenspan?</p>
<p>I had to type in the last several words. It wasn’t worth screwing around with the IPAD to recopy. i didn’t type in that capital H. The IPAD did. :)</p>
<p>“dstark, so we agree that the bond market does serve as a constraint, but fortunately you will protect us from bumping up against that constraint.”</p>
<p>My answer is sometimes the bond market acts as a constraint.</p>
<p>I am going to have to be careful with you…you are a little sharp. </p>
<p>I can’t capitalize letters. I guess I can’t change your words when I copy what you wrote. Lol</p>
<p>dstark,
Repeating once again, I said SS is a tax going in and an entitlement coming out.</p>
<p>When you pay into it, you are paying a tax.</p>
<p>If it exists when you meet the eligibility requirements, you will receive it and it is an entitlement. If it no longer exists, you don’t get it.</p>
<p>I like Bernanke, he’s been the most consistent and rational actor in the financial and political sphere for the last few years. If he were to earn “deity” status (which he won’t, because of politics), I wouldn’t begrudge him that. At least he’s done something to earn it.</p>
<p>dstark - I come from a quant/finance background. So yes, I understand numbers very well. You’re not going to shock and awe me with your “work in the financial markets.” Yes, we can tweak SS. But what you’re neglecting to mention is that it will need many tweaks over decades to adjust it sufficiently. By the time it’s my generation’s turn, I guarantee it will be far more paltry in real monetary terms.</p>
<p>Since SS is <em>not</em> a separate fund, any surplus is spent as part of the general budget. Thus, the only way to keep it balanced is to never fall negative. Which, of course, is akin to running a Martingale strategy - losing is a certainty. A far better idea would have been to keep them separate but purchase treasuries with the surplus. It’s too late now.</p>
</p>