The Al Gore lockbox on Social Security is looking good these days.

[Eric J in MN]

Al Gore said he wanted to keep Social Security money separate from the rest of the budget, to not allow money raised for Social Security to be spent on other things. Gore called this putting Social Security into a "lockbox."

While his "lockbox" remark was ridiculed on Saturday Night Live, it's looking good now that Greenspan is saying that we should use Social Security to pay for Bush's tax-cuts for the rich.

On Friday, on Bill Maher's tv show, Ralph Nader indicated that Social Security is fine as long as it is kept separate. We are raising enough in Social Security to pay for the Baby Boomers to retire.

We just can't let Bush take that money.

[The Zanti Regent]

1. Nader is the Chimp's #1 enabler!

Nader is in lock step to steal another election for Bush.

[drewb]

2. "Lockbox" or not, SS is an unworkable program...

It's a ponzi scheme set up by the government and it looks like it's time is almost up...

There will be so many people retiring in the next ten years with so few people supporting them in the workforce that "lockbox" or not, we would be headed for a crisis.

Not sure where Nader got his info, usually he is pretty accurate, but there is no way we will be able to afford to pay benefits to people that are living to be 90+ years old...

:loveya:

[wuushew]

5. Another poster told me not to worry about insolvency

apparently immigration and perpetual growth is the pancea for all our problems. Frankly I don't believe it.


http://releases.usnewswire.com/GetRelease.asp?id=145-02252004

[papau]

25. Social Security is solid forever - ask an actuary or the Society of

Actuaries, the Academy of Actuaries, or the Actuaries at the SSA whose projected solvency numbers are what EVERYONE - including Bush and Greenspan - work their analysis and what ifs from.

It is rather amazing and sad that posters at DU would buy the crap that the GOP is selling about Social Security. A Poster named Rog has a beef with the Gore "lockbox" - but is obvious that he does not understand what the lockbox meant - albeit the term "lockbox" was not clear. All Gore was saying was that he would not finance general expenses like defense with the payroll tax - and indeed Clinton-Gore in calendar year 2000 did not - and because there was no deficit even with the payroll tax surplus removed, that year the National Debt decreased (check the numbers for 12/31/99 and 12/31/00 at BEA.DOC.GOV). A better way of saying the lockbox concept may well have been to say that portion of the National Debt - that which was not owned by the Social Security system as part of the "Assets" of the Social Security Trust Fund - would decrease under GORE. Thereby providing room to borrow - without hurting the economy - a few dollars in the future to fund any Social Security payroll tax shortfalls.

Bush is on the exact opposite path. Those Trust Fund assets are promises to raise the Federal Income Tax in the future so as to raise real cash that can be sent out by Social Security as benefit checks, and getting bonds sold to the public on 2017 (if we try that route rather than raise FIT taxes) is more difficult with a huge National Debt.

Again - raising FIT is what upsets BUSH

WHAT THIS IS ALL ABOUT IS NEVER PAYING BACK THE SS PAYROLL TAX SURPLUS THAT WAS STOLEN SO AS TO PAY FOR TAX CUTS FOR THE RICH.

Here at DU we sometimes hear that SS is an unworkable program, a ponzi scheme - with so many people retiring in the next ten years with so few people supporting them we would be headed for a crisis - but you never see any reference in such a post to the FACT that the Trustee's Report Social Security Actuaries projection - where the talk of many more old folk originates - shows the payroll tax in surplus through 2017 - so what is the next 10 year problem? And after 2014, cashing in a few bonds each year keeps the system running positive through 2042 under the NOT-OPTIMISTIC economic assumption projection. There is no forgotten item in these projections - the lifespan used by the actuary max's out at 120.

We do not need immigration and excessive perpetual growth to make the system work quite well.

When on Friday on Bill Maher's TV show, Ralph Nader said that Social Security is fine as long as it is kept separate, that is what he meant - the payroll tax should not be used to build roads and bombs.

So what does keeping money separate mean - if lockbox "separate" means reduce the National Debt not held by Social Security with payroll surplus, totally separate as Nader suggests is going back to to the 1936-42 idea that SS, once it was running smoothly would buy equity and real estate assets. Of course as Meyers Book SOCIAL SECURITY notes, the GOP SCREAMED"SOCIALISM BY THE BACK DOOR" and since then SS has kept a minimum size Trust fund which was invested in US Bonds - which are no more than promises to raise monies in the future to pay off said bonds.

Those that say what sits inside the GORE the lockbox is a bunch of IOU's from the federal government are correct - but the lockbox was about a process - no deficits- and had the payroll tax surplus reducing the National Debt. The pledge by the federal government to make good their social security obligations is easier meet if the increase in the FIT needed after 2017 is small and the size of the deficit permits borrowing that does not affect the capital markets.

While Clinton/Gore were opposed to social security surplus being physically removed from the federal government and set aside and invested in bank Cd's or insurance separate accounts - because the Socialism by the back door scream of the GOP - they were in favor of automatic asset buying savings accounts run by the Federal Gov - on a voluntary basis you could put up up to 5% of your income - get IRA treatment - and one would direct the assets be put into real world assets rather than government bonds.

But the media made fun of the idea - and indeed Gore was busy defending the lockbox terminology in 2000.

Why reporters are so stupid that they believe that Social Security is bankrupt, or will be any day now, when a simple lookup will reveal that Social Security paid out $383 billion in checks, and received $436 billion in taxes and an additional $49 billion in interest making for a $102 billion in profit?..., well that is for folks that defend the lies the media is now feeding us

When Reagan in 1983 raised the retirement age to 67 over 30 years, with higher payroll taxes, the idea was not to use the extra funds coming into the Social Security system to buy bombs - we were going to pay down the National Debt that was not owned by Social Security - making room for Social Security borrowings after 2020. And Reagan lied - and the media hid the lie.

I've posted at DU the Bob Weiner (former chief of staff of the House Aging Committee)paper that asserts that "Federal Reserve Chairman Alan Greenspan's testimony today calling for reduced social security benefits is rash and wrong and based on an incorrect myth of a Social Security deficit." But I had not posted Dean Baker's "Greenspan's Social Security Scam
http://hnn.us/articles/3642.html -Mr. Baker, an economist, is co-director of the Center for Economic and Policy Research."It is worth noting that Social Security is currently running a large surplus and is projected to continue to run annual surpluses for more than two decades into the future. The Social Security trustees projections show that the fund's trust will be able to support all scheduled benefit payments for nearly forty years into the future. If Social Security benefits are cut, without any corresponding reduction in the tax rate (which is exactly Mr. Greenspan's recommendation), then this would mean that Social Security taxes are being used to finance the general budget, not Social Security.<snip>

An excellent paper.

Indeed as others have said, The Heritage Foundation is working overtime on this issue, and to a lesser extent so has a few folk at CATO (the difference is that CATO may slant but it rarely lies). The Derailing of Social Security -How Cato and Heritage paved the way for privatization http://www.fair.org/extra/9905/ss-ttm.html is worth a read.

[rog]

28. Papau ... PLEASE ... I'm on your side!

Jeez ...

"A Poster named Rog has a beef with the Gore "lockbox" ..."

If you would PLEASE read my post, I began with a quote from a previous post and followed with an article that rebutted said post.

Man ... I hear you ... but please read my post a little more carefully. I even started w/ "re: ... etc" and separated it from my reply.

Thanks ...

:hi:

ON EDIT: I just noticed that you included the two articles *I* posted in your excellent post which slammed me. You're one of my favorite DU denizens ... .I always read your posts ... but in this case I'm sort of disappointed that I was misrepresented.

.rog.

yikes

[The Zanti Regent]

7. If the Nazi Republicans had not run deficits, Social Security would be OK

Part of the 1983 Amendments included an "Understanding" that Reagan would balance the budget and run surpluses. Of course, the Nazi Republicans lied about that, just like they lie about everything else and thanks to them, we'll soon be reinstating poor farms and poor houses for those who committed the crime of falling through the cracks. Meanwhile, the asshole Nazi Republican Press will keep bullshitting about how Americans should have the "freedom to fail"...

[rog]

8. This is a myth.

re: ""Lockbox" or not, SS is an unworkable program..."

It's a ponzi scheme set up by the government and it looks like it's time is almost up...

-----

MIAMI, Feb. 25 /U.S. Newswire/ -- Bob Weiner, former chief of staff of the House Aging Committee under Claude Pepper (D-Miami), asserts that "Federal Reserve Chairman Alan Greenspan's testimony today calling for reduced social security benefits is rash and wrong and based on an incorrect myth of a Social Security deficit." Weiner points out that "the Trust Fund is solvent for 39 years -- the trustees even added a year to the projected solvency last year -- and that baby boomers aren't booming with babies themselves, having record low births. In addition, people are working longer, paying into the system. The fund will actually be even more solvent with fewer withdrawals down the road."

-----snip-----

Article: http://releases.usnewswire.com/GetRelease.asp?id=145-02252004

.rog.

[rog]

12. Greenspan's Social Security Scam

Greenspan's Social Security Scam
http://hnn.us/articles/3642.html
by Dean Baker

Mr. Baker, an economist, is co-director of the Center for Economic and Policy Research.

-----excerpt-----

"It is worth noting that Social Security is currently running a large surplus and is projected to continue to run annual surpluses for more than two decades into the future. The Social Security trustees projections show that the fund's trust will be able to support all scheduled benefit payments for nearly forty years into the future. If Social Security benefits are cut, without any corresponding reduction in the tax rate (which is exactly Mr. Greenspan's recommendation), then this would mean that Social Security taxes are being used to finance the general budget, not Social Security.

"This point is especially important in this context since Mr. Greenspan had chaired the 1982 Commission that proposed a set of Social Security tax increases that were designed to build up a large surplus to help defray the costs of the baby boomers' retirement in later years. In other words, Mr. Greenspan's argument was that it was desirable to raise Social Security taxes above the levels needed to support the program in the eighties, nineties, and zeros, so that the tax rate would be somewhat lower than would otherwise be necessary in the twenties and thirties. If benefits are now cut below the levels that had been scheduled, then it breaks the link between Social Security taxes and Social Security benefits. Social Security taxes were simply used to finance the general budget."

.rog.

[wryter2000]

15. There is plenty of money for SS

Unfortunately, it's being spent on other things.

[rog]

18. Yes ...

... that's basically what the two articles above confirm.

:hi:

.rb.

[wryter2000]

24. Welcome to DU

:hi:

[Yupster]

19. Well "duh"

"then this would mean that Social Security taxes are being used to finance the general budget, not Social Security."

That's the entire problem isn't it?

If we don't spend the surplus on general revenues the system will be fine, but since we do spend the surplus on general revenues then the system is not fine.



Important Statement:

If I only made $ 2 million per year, I'd have lots of money, but since I don't make $ 2 million per year and have no plan to ever do so, it kind of makes my important statement kind of meaningless.

[rog]

23. I'm not sure what you're trying to say.

Could you please be a little more clear?

Are you suggesting that SS is NOT making money? If so, please see MadFloridian's post below.

"Last year, Social Security paid out $383 billion in checks, and received $436 billion in taxes and an additional $49 billion in interest. Instead of red ink, Social Security made almost $102 billion in profit, to add to the more than $652 billion it had in profits from previous years."

Social Security is doing fine, but the surplus is being siphoned off to benefit the wealthiest people.

Thanks in advance for your clarification.

.rog.

[Yupster]

30. Yes Social security is making 100 billion, and

the money is being immediately spent. It is gone. Spent on missiles, medicaid payments, and salaries for government workers and a million other things. Therefore there is no money to put in any lockbox.

If you buy a real cool safe to hold your extra money that would be cool. But if your drunk brother-in-law spends the money before it gets into the lockbox then it really doesn't do you any good having the safe does it?

Instead of hundreds of billions of dollars in the lockbox, we have hundreds of billions of dollars of government bonds. IOU's you might call them.

Staying with my analogy, if your drunk brother-in-law puts IOU's in the safe that's fine, but there's no money there and your brother-in-law doesn't have any either. If it makes you feel any better having his IOU's that's swell though.

Will you ever see any of the money again? Maybe? Maybe not, but the answer won't have anything to do with whether there are IOU's in the lockbox or not.

If your brother-in-law ever has the money and feels like paying you, you'll see the money again. If he doesn't, you won't. Same with the government.

If they feel like paying and can afford to they will. If they don't, they won't. It won't have anything to do with whether there are government bonds in the lockbox or not.

However, if the government took the social security surplus and put it in a bank CD each month, then there would actually be money somewhere that could be gotten to.

The current way we have done it for the last 30 years, there is no money anywhere waiting to be used. Whether you say that with an empty lockbox or without one doesn't change the fact that there is no money. It's already been spent. The lockbox is just semantics. It is a talking point designed to fool people who don't understand that the money is gone.

[madfloridian]

10. As a certain ex-candidate pointed out.....

the huge deficit is planned so there will be no money for social programs. This has been their plan.

I think America loses part of its character and soul if provisions are made for the elderly.

[Media_Lies_Daily]

16. I see you've fallen for the NeoCon line of bull...

...there are three primary reasons that Social Security is starting to take some hits:

1. Social Security is already being raided to pay for the NeoCons' adventurism in the Middle East;

2. If America was back at the level of 3.9% unemployment as it was under Clinton, the program would operate as it was originally planned because would be paying into the program at the proper rates;

3. Thanks to the tax cuts for the rich, tax revenues can no longer pay for Defense and social programs. Guess which programs are being cut and which program is being stuffed with tax revenues.

[distortionmarshall]

21. lol - hi bob novak!

rofl - SS can totally be paid for - just gotta

(a) stop excessive spending across the board, but especially on defense n other trough-like stuff...

(b) raise taxes on rich,

(c) lengthen the eligibility age, application to people who are currently 45/50 years old or so.... probably lengthen by something like 2-4 years, depending on the numbers...

that'll be enuff to make up the worker/retiree disparity.....

Novak and trolls saying it don't make it true - Social Security is nothing like a Ponzi game - SS can totally be sustained, and it's not even all that hard... Krugman had an excellent NYT op-ed on the issue a week or so ago.....

[Ksec]

26. You seemed to ignore the fact that it was abused and thats why its short

Not because of worker -reciever comparison

[drewb]

32. REPLY TO ALL THAT DISAGREE WITH ME...

I'm going to save and scrimp, invest in gold and other hard commodities, and make sure that I can provide for my own retirement.

I don't think that SS will be viable in 2040 when it's time for me to start collecting. Personally I don't think it was ever a good idea in the first place, I'd prefer if people made intelligent decisions in their lives so that they don't have to count on the government re-distributing wealth to them when leave the workforce...

Your mileage may vary, as for me... Gold's a good buy now, under $400.00 an ounce...

:loveya:

[patricia92243]

3. We need some really good bumber stickers about the Pubs reducing SS ??????

[WhoCountsTheVotes]

4. That's why he won the election

Greenspan wants to steal Social Security money for tax cuts for rich people, just like Gore said would happen.

[Ravy]

27. With all the Greenspan interest raises to help slow the "overheated"...

... economy in 2000, it looks more like your scenario is accurate.

I can't understand why all Democratic candidates aren't as vocal about getting rid of him as they are about Ashcroft.

Maybe now that Greenspan has touched the third-rail with his SS comment, and Bush reiterating that his promise not to change SS was only for those at or near retirement age, people will connect the dots.

[madfloridian]

6. The Heritage Foundation is working overtime on this issue.

Has been for many years.

The Derailing of Social Security
How Cato and Heritage paved the way for privatization
http://www.fair.org/extra/9905/ss-ttm.html


The Social Security Information Page
http://userdata.acd.net/demarco.chris/sspriv.htm

Now I notice that their campaign against it has worked. Nearly all young people see only the one side, the Heritage Foundation side.

[Yupster]

9. Lockbox was ridiculous

Saturday Night Live or not, the lockbox idea was ridiculous.

Gore wanted to separate the money into a lockbox.

Then what do you do with the "separate" money? Why lend it to the federal budget in the form of purchasing government bonds of course.

Therefore, what sits in the lockbox is a bunch of IOU's from the federal government. In other words, there's no money there There's just a pledge by the federal government to make good their social security obligations .... which coincidentaly is ...

... the exact same thing that's backing social security without the lockbox.

It was just a ridiculous talking point.

The lockbox would make sense if the social security surplus would be actually physically removed from the federal government and set aside and invested in bank cd's or insurance separate accounts. That way there would actually be money sitting somewhere making interest. Gore was opposed to that of course.

[Media_Lies_Daily]

17. Gore would have met that obligation to pay SS, and he would never...

...have agreed to tax cuts for the wealthy.

Tell me what Junior has done so far.

[Yupster]

11. "As long as it is kept separate."

And my health will be good as long as I never get sick.

[madfloridian]

13. More on how the Heritage Foundation is doing the Privatization thing.

SNIP...."If Social Security as we know it is cast off like a rejected first wife by this Congress, it will be because of the slow but steady deterioration of public support over more than a decade. Dorcas Hardy, Reagan's Social Security commissioner, wanted to privatize Social Security, but the idea seemed so weird that it received little serious attention--especially from the public.

It became obvious that privatization would not receive substantial public support until the public's faith in the Social Security system had dramatically eroded--but to do that the public needed to be convinced that there was a crisis, not in some far future time, but now. And so, the "fact" that Social Security was going broke, or was already bankrupt, became a recurring theme trumpeted by the pro-privatization pundits of the Heritage Foundation and the Cato Institute.

The bankruptcy myth

Over the years, the statement has been made so many times and repeated by so many people that many Americans now believe that Social Security is bankrupt, or will be any day now. My personal experience is that most reporters assume that it is so. And yet nothing is further from the truth.

Last year, Social Security paid out $383 billion in checks, and received $436 billion in taxes and an additional $49 billion in interest. Instead of red ink, Social Security made almost $102 billion in profit, to add to the more than $652 billion it had in profits from previous years.

http://www.fair.org/extra/9905/ss-ttm.html

[wryter2000]

14. And...

When Gore said "lockbox" in the debates, Bush nodded like a bobble-head doll. "Oh yes," quoth he, "I'd do that, too." Liar!

[osaMABUSh]

20. As Jon Stewart might say : "Damm you Al Gore!"

[VOX]

22. Much of what Al Gore said is looking *very* good these days...

Social Security, the Kyoto Treaty, etc. It's a tragedy that he was not allowed to serve.

[Cleita]

39. It sounded really good to me when he said it.

Why didn't it to others or is everyone really led around that easily by the ring in their nose?

[JPZenger]

29. Cut Social Security to Pay for Tax Cuts?

I give Greenspan credit for raising the issue. Social Security is the "third rail" of American politics - like an electrified subway rail, you die if you dare to touch it.

However, I do not believe Greenspan should have definitely said the answer is to reduce benefits and increase the retirement age. For anyone born after 1960, the age to collect full social security benefits was already raised by Congress to 67 years old.

Greenspan should have laid out a series of alternatives - instead of saying that a benefits cut is needed in order to make George Bush's tax cuts permanent. I would much rather tax the inheritance of billionaires (like the family than owns Walmart, who are among the 10 richest people in the world) than cut old lady's social security checks.

George W. Bush believes any tax on inheritance is evil. Also, does anyone remember that George W. actually tried to get a tax cut last year that was TWICE as large as what was actually passed?

In 2003, $79 billion more in Social Security and Medicare taxes were collected than were paid out in Social Security and Medicare benefits. Where did this money go to? It did NOT go into a trust fund to pay future benefits. The entire Social Security fund is empty - it is full of IOUs from the Federal government. Instead, the 7% tax on payroll and the 7% tax paid by employees was used to try to plug the $375 billion hole in Bush's overall budget. Those governmental expenses are supposed to be paid for with income, corporate and other taxes.

Al Gore's proposed "lock box" to protect social security tax receipts doesn't seem so silly anymore.

[Yupster]

31. Yes it does

It is just as silly today as when he proposed it.

But I'll bite. Let's suppose we had a lockbox today and FICA was making $ 100 billion surplus a year. Where would all this money be piling up today?

[drewb]

33. That's easy...

It would sit there and gain interest...

You don't think our honourable politicians would touch it and use it to make war on defenseless countries do you???

And that goes for Democrats as well as Republicans... If there is one thing a politician can't stand it's having money laying around and not being spent...

:loveya:

[Yupster]

35. Sits where and gains interest?

The government won't allow the social security surplus to be deposited in a bank. That would be against the law.

The only place it is allowed to be invested is in government bonds. It must be lent right back to the government where it then like magic disappears. Pffft. Gone. Spent on good things like Park Ranger salaries and bad things like cluster bombs. Gone. Not there.

[drewb]

36. You got a bad attitude boy...

Asking all these hard questions...

Just smile dumbly and nod happily when they tell you they are going to put your SS money in a "lockbox"...

As for me??? See post #32 -> http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=104x1178255#1179327

:loveya:

[Ksec]

34. Is this true?

a freeper says we pay 200 grand over a 40 yr worklife. Is that possible and maybe you could give me average payments versus average payouts? This just sounds high.

[Yupster]

37. Social Security has a formula for payouts.

This is just off my memory, so don't bug me if it's off a bit, but as a stockbroker, I often see people's social security estimates.

Each person pays in about 7 % of his pay up to about $ 85,000 per year as premium. Your employer matches the same 7 %. Therefore, a person making $ 85,000 per year would pay in just about $ 1,000 per month. Your paycheck would only show half that because it doesn't show your employer's half.

The benefit formula is extremely progressive.

You get a basic benefit once you have worked 10 years in a social security paying job.

I see lots of people's benefits. It seems most average workers get between $ 800 and $ 1,200 per month. The most I have seen is about $ 1,600 per month.

The person who made $ 85,000 does not get twice what the person who put in the same number of years at $ 40,000 gets. The 85k person gets a little more, but not nearly as much as he would if it was a linear formula.

The people who come out best in the formula are people who worked the fewest years on average and live the longest after retirement. The most advantaged group is currently white females.

The group that gets hurt the worst by the formula is the group that works the most years, often more than one job at a time, and lives the shortest lifespan after retirement. Currently that is African-American males. If you die before retirement, the money you put in over those many years is gone.

To be clear, your premiums are not saved somewhere for you. It is either sent out to a current recipient, probably a retired person, but small bits also go to disabled people or minors who lost a parent. There is also a chunk of it that is surplus to the needs of the system. That money is lent to the US government and immediately spent on general budget items.

Hope that helps.

[Ksec]

40. Yes it helps and Thank you.

Sounds like the 200 gr is correct. Damn. I just lost a bet

[Ksec]

43. also

if we take the benefit paid to the benefit paid out its still a good investment. 19200 paid a year times 20 years makes 384000 which is a good investment . Damn near 50% to take 200 grand and turn it into 385 grand.

[Cleita]

38. This is the Newt Gingrich plan. Spend all the social security

money so the program self-destructs. The problem is that it was supposed to be in a trust and yet someone figured out how to borrow from it but not pay it back. I think Ralphie doesn't know what he is talking about.

[Yupster]

41. The government has been spending the social security surplus

long before Gingrich ever got any power.

[Cleita]

42. Yes they have, but it was Newtie who actually stated why.

eom