Social Security town hall meeting with Jack Kingston

[pberq]

Can anybody give me some quick talking points?

I'm heading to a town hall meeting with the less than honorable Jack Kingston (my rep) in one hour.

So far I'm thinking about pointing out that if Congress had been saving SS taxes instead of spending them, we wouldn't be having this conversation.

[GR]

1. People Have Been Paying Excess SS Payments Since 1983

and are entitled to get the benefit of the investment in Social Security they have made. The trust fund bonds have been purchased with this excess social security tax payments and they are not worthless pieces of paper.

You could ask him: Will the U.S. default on those Social Security Trust fund bonds?

Remember too that Congress has not just SPENT the money...They have BORROWED IT FIRST AND THEN SPENT IT AND ARE REQUIRED TO REPAY WHAT THEY'VE BORROWED...

[bryant69]

5. It's possibly I'm misreading you

Focusing on how the money has been spent is exactly what the Repubilcans would ilke us to think. The Social Security Office and Congress pissed away the money and now there isn't any. But that's not the truth.

What has happeend is that hte Social Security Trust fund has been invested in United States Treasury Securities. The United States Government will pay them back, unless the entire government has defaulted and gone into bankruptcy. If that happens because of Bush's Bullshit tax cuts, well, than we are all screwed. But we aren't there yet, and may not be for many years. Frankly my guess is that once we get a Democratic congress and / or president, we will go back to a more reasonable economic policy and the United States will grow out of this problem.

Bryant
Check it out --> http://politicalcomment.blogspot.com

[GR]

9. You Are Misreading...

I said emphasize BORROWED not SPENT, which republican do. But I think you're wrong if you think they don't want to default on the trust fund. They are doing everything they can to delegitimize the trust fund. I'm trying to give the questioner issues to LEGITIMIZE it...

[tanyev]

2. This was a good thread.

Retirement Accounts Questioned
Paper Challenges Expected Benefits

By Jonathan Weisman
Washington Post Staff Writer
Saturday, March 19, 2005; Page E01

Nearly three-quarters of workers who opt for Social Security personal accounts under President Bush's "default" investment option are likely to earn less in benefits than those who stay with the traditional Social Security system, a prominent finance economist has concluded.

A new paper by Yale University economist Robert J. Shiller found that under Bush's default "life-cycle accounts," which shift assets from stocks to bonds over a worker's lifetime, nearly a third of workers would bring in less in benefits than if they remained in the traditional system. That analysis is based on historical rates of return in the United States. Using global rates of return, which Shiller says more closely track future conditions, life-cycle portfolios could be expected to fall short of the traditional system's returns 71 percent of the time.
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=1324713

[MousePlayingDaffodil]

3. How exactly . . .

. . . would Congress "save" surplus Social Security revenues?

[pberq]

4. by not "borrowing" it

http://www.dailykos.com/story/2005/2/5/95636/36544

Q How is Social Security currently financed?

About 96 percent of workers must pay a certain amount of their paycheck, generally 6.2 percent, to the system, an amount that is matched by their employers. (Some state and local workers do not participate in Social Security.) Social Security is a pay-as-you-go system, which means that payments collected are immediately used to pay benefits. Currently, more payments are being collected than are needed for benefits. So, the system is lending the money to the U.S. government, which is using it to fund other government programs, such as the war in Iraq. In exchange, Social Security receives interest-bearing Treasury securities. The value of those bonds is now about $1.5 trillion.

[MousePlayingDaffodil]

8. You didn't answer my question.

The Social Security program receives billions of dollars (i.e., real money) each year through payroll tax payments. What would you propose the government do with that money, if not spend it? Save it? Save it how? Distribute it throughout the private banking system? Invest it in the stock market?

[pberq]

12. O.K., I see your point

I'm trying to understand how this works.

The question I have now is, given that the Republicans have lied about most things, do you belive what they are saying about there being a major crisis in Social Security?

[MousePlayingDaffodil]

13. This issue, as I understand it . . .

. . . is pretty straightforward. Assuming that the economic projections involved are more or less accurate, beginning at around 2018 or so, the amount of revenue being raised by Social Security payroll taxes (based on current law) will no longer be sufficient to pay all of the Social Security benefits that the program will then be required (under current law) to pay out.

Put simply, the "crisis" boils down to (i) whether, prior to that time, current law will be changed (as to either Social Security taxes or Social Security benefits or both) so as to avoid that situation, or (ii) if current law is not changed, how the federal government intends to raise the money necessary to pay the recipients of Social Security all of the benefits to which they would be entitled under current law.

[pberq]

14. According to a Newsweek article

from Feb. 14, the Social Security trust fund will have a balance of $5 trillion in 2018. The shortfall at that time will be $23 billion. So if the system is left unchanged, there won't be a problem until 2042.

The Republicans have wanted to dismantle SS for years, and they now have the power in Congress to try to do it.

[MousePlayingDaffodil]

17. I'm afraid you're missing the point.

The 2042 date is the date by which the Social Security Trust Fund will be completely "depleted," assuming that projections as to the number of future retirees are accurate, benefits continue to be paid out according to the formula established by current law, and the Social Security tax rate remains the same as under current law. The "$5 trillion balance" cited by Newsweek is beside the point I'm trying to make. What you're not getting is that that "$5 trillion" isn't actually money; rather, it represents the amount of money the federal government has committed itself to pay to the Social Security Administration at some point in the future.

The whole issue of "bonds backed by the full faith and credit of the U.S." v. "worthless IOUs" is a red herring. The fundamental point is, the recipients of Social Security benefits in the future will need to be paid in money. If the recipients of Social Security benefits could somehow be "paid" in fractions of the government-issued bonds that make up the Trust Fund, then, no, there wouldn't be a problem. But Social Security recipients in the future will need money to buy their groceries and pay their bills.

So, again, beginning in 2018, so the projections tell us, the Social Security program will be taking in less money through payroll taxes than it is paying out in benefits. At that point, the federal government will need to come up with money to make up the difference. Simply stating that, at that point, the government will start "redeeming the bonds" in the Trust Fund begs the question. The question is how will the government get the money to redeem the bonds? Where will that money come from? From whom will it come?

Don't you get it?

[pberq]

19. O.K., so the money that is being paid into

Social Security right now is greater than the amount being paid out in benefits.

Now here's the way I understand it based on what you're saying:

The surplus is being sold from one government agency to another in the form of bonds. So there is no actual money in the Social Security Trust fund, just IOUs from the Treasury department.

So when we get to 2018, we will be $23 billion short in terms of the amount needed to pay benefits that year versus the amount being collected at that time.

The $5 trillion is just an amount written in a report somewhere.

Therefore, in 2018, something will have to change in order to pay the benefits promised under the current system. Either the government will have to use money from the general fund, borrow money, reduce beneifts, raise taxes, raise the retirement age, . . . etc.

So how does this explain what somebody like John Barrow is saying?

http://www.savannahnow.com/stories/032105/2899860.shtml

<snip>
"Barrow, whose 12th Congressional District includes most of Savannah, said that, even if left alone, the system can pay all benefits at current levels until at least 2042. And it can meet 80 percent of its obligations after that, he added."

[MousePlayingDaffodil]

20. I can only assume that Representative Barrow . . .

. . . by referencing the 2042 date, means to be saying that the "balance" in the Social Security Trust Fund is adequate to "meet" the Social Security program's obligations as to benefits through that date. If that's what he's saying, than he is either begging the question or is being intentionally misleading. Any assertion that the Social Security Trust Fund somehow contains "money," in the way that the balance in a person's bank account represents real money, is wrong as a matter of simple fact.

If, alternatively, Representative Barrow is saying that, under current law, the revenues raised by Social Security payroll taxes will be sufficient to pay out full benefits through 2042, that is wrong based on every projection I've seen. There is some dispute, based on disparate projections, whether the "tipping" point is 2018, or some earlier date, but I've seen nothing that indicates that the Social Security will be able to "pay for itself" through 2042.

[pberq]

21. AARP article

http://www.aarpmagazine.org/money/Articles/myths_and_tr...

<snip>
Myth: Social Security is broke.

Those who argue that Social Security needs a dramatic reorganization begin with this premise: the system is failing; Social Security isn't sustainable in its present form. From there, the argument goes that what's best for the country is some form of privatization. With privatization, a portion of the Social Security taxes now paid would be diverted into an account that each taxpayer would control themselves. (Under the current system, all surplus Social Security revenue is invested in special U.S. Treasury bonds.)

So, is Social Security about to go bust? Not by a long shot. In fact, Social Security is in better shape today than at any other time since it was enacted in 1935. That's because of some judicious adjustments suggested in 1983 by a commission set up by Ronald Reagan and headed up by Alan Greenspan. Since then, trust fund reserves have gone from nearly zero to $1.6 trillion.

Social Security trustees acknowledge that by 2028 the system will need to start redeeming the bonds in its reserve, but they calculate that the fund will be able to meet 100 percent of its obligations until 2042. By that date, the principal will be exhausted, but the system will still bring in enough revenue from taxes to pay nearly 75 percent of benefit amounts. (An even rosier Congressional Budget Office report says the system will be able to pay full benefits until 2052, and 80 percent after that.)

(More. . .)

[MousePlayingDaffodil]

22. Once again . . .

. . . the AARP is either being intentionally misleading, or simply does not know what it is talking about, when it refers to the "principal" in the Social Security Trust Fund, if by "principal" it means to suggest that the Social Security Trust Fund contains actual money. It does not. When the Trust Fund begins to "redeem" the bonds that represent the Social Security surplus, that simply means that the federal government will need to raise the money somehow, either by raising taxes elsewhere, or by borrowing the money. You do understand that, don't you? The notion, therefore, that the fund will be able to "meet its obligations until 2042" is, in that context, something of a non sequiter. What it means is that the government has promised to come up with the money sufficient to pay full Social Security benefits (as those benefits are calculated under current law) through that date. Again, how the government will come up with that money is where the so-called "crisis" in Social Security lies. Indeed, it isn't even a question of the solvency of the Social Security program per se. At that point, it will be a question of the solvency of the U.S. government generally, vis-a-vis the promises it has made to the citizenry.

Let me make a suggestion to you, if you truly want to educate yourself as to how the Social Security program actually works. Do what I did. Forget the spin coming from all sides, be it Bush & Co., the AARP, the politicians in D.C., etc. I don't know about you, but I'm sick to death of being lied to (and lied to badly) by those with self-serving agendas. For that reason, "appeals to authority" don't cut any weight with me. Instead, you should go to the Social Security Act itself, and the Internal Revenue Code, and read the pertinent provisions that pertain to the program. There is a considerable discrepancy between what most people seem to think the Social Security program is, and what, as a matter of the law that established that program, it really is. Figure it out for yourself. It's what a responsible citizen would do.

[TahitiNut]

11. There are only three things that can be done with reserve funds.

(1) Loan them out.
(2) Invest them in equities.
(3) Bury them in mayonaisse jars.

Of the three, loaning the funds to the federal government is least risky. :shrug:

It makes little difference whether we're talking about the Social Security Trust Fund reserves, or the reserves of your local Homeowners Association, or the reserves of your insurance company.

[papau]

6. saving SS taxes instead of spending them means no deficits and using

payroll surplus to pay down privately owned National Debt.

Indeed that is the course Clinton had us on for the last 3 years of his term in office. (On a Calender year basis the National Debt in total actually decreased from 12/31/99 to 12/31/2000.

[daa]

7. Ask why republicans use 4% growth

to justify tax cuts and then turn around and use 1.8% growth to destroy social security.

Also ask how much the market has gone up since Bush has been president? Answer it is lower.

[pberq]

10. I just came back

from the carefully scripted town hall meeting. Kingston, to his credit, did take questions for about 45 minutes.

He was very skillful at avoiding the main negatives with the Republican plan.

One of his big talking points was that if we don't borrow $950 billion right now to fund the White House plan, it's going to cost us $600 billion each year we wait.

I know that this is BS, but can somebody explain why?

Also, he tried to make it sound like the huge budget deficits are everybody's problem, not the fault of the reckless Bush tax cuts for the rich. What a slimeball!

[pberq]

15. John Barrow slams Bush SS plan

http://www.savannahnow.com/stories/032105/2899193.shtml

<snip>
President Bush's Social Security overhaul proposal is a "solution" for which there's no imminent problem, U.S. Rep. John Barrow said Monday.

"Social Security is in no immediate jeopardy," the Georgia Democrat told a sympathetic audience of 125 people at the Bull Street library. "... The president's proposal creates a crisis where none exists."

<snip>
Bush's plan eventually would reduce the benefits of people under 55 by 40 percent, Barrow said. Those cuts, he said, would apply not only to pensions, but also to disability and survivors benefits.

Diverting Social Security benefits to investment accounts, he said, would add trillions of dollars to the federal budget deficits, raise taxes and increase U.S. reliance on foreign lenders.

[pberq]

16. Talking Points on SS from NOW

http://www.now.org/issues/economic/social/030405points.html

Social Security Funding is Safe for Decades
—Talk of a crisis in the Social Security program is false. By the most cautious projections, there is enough money in the Social Security Trust Fund, secured by U.S. bonds, to continue paying full benefits for the next 40 to 50 years. If the U.S. economy keeps growing at the same rate as the past 50 years, Social Security will be able to pay full benefits—without any adjustments to the system—forever. A small adjustment in the payroll tax rate, plus lifting the cap (currently at $90,000) on the taxable wage base, would fund Social Security into the next century, even with slower economic growth.

Social Security Private Accounts Are Foolhardy—
A government-guaranteed insurance program is the most dependable means to provide an income floor for retirees. Converting this successful program to a system of private investments in a fluctuating, risky stock market is foolhardy, to say the least. People who retire when the market is "down" may find their investment earnings insufficient to finance their retirement years.

Social Security Benefits will be Cut Under the President's Proposal—The Bush administration favors a plan that would shift the calculation of retirement benefits currently tied to wage increases to one that would be tied to a price index. Because prices do not increase as fast as wages do, over time the effect on Social Security benefits would be dramatic. Monthly retirement benefits could be slashed by as much as 45%! This is the privatizers' plan—to undermine the value of Social Security benefits so that workers would be forced to move to private accounts—regardless of the risk.

Social Security Privatization Will Hurt Everyone, Especially Young Workers—
George W. Bush likes to say that his plan would allow younger workers to choose private investment accounts and that workers near retirement or retired currently would not be affected. But permitting millions of younger workers to leave Social Security or divert part of their payroll contributions to private accounts will rapidly reduce revenues to the Trust Fund and make Social Security's long term solvency much worse. Private accounts would saddle the next generation with trillions in debt. The Bush administration and their friends in Congress have depleted government coffers to pay for huge tax cuts to the rich, the build-up of the military and for a very costly war in Iraq. An estimated $2 trillion over the first ten years would need to be borrowed to pay for a transition to a retirement system based on private investment accounts. Younger workers—and their children—moving to private accounts would have to pay the costs of the transition, in addition to having their investments reduced 20 to 30% for brokers' and administrative fees. Over a 20-year period, with interest payments on the debt, the total cost would grow to a staggering $4.9 trillion!

[Wilms]

18. .