There's plenty of blame to go around for the mess in which Social Security finds itself. Early on, politicians moved the money from a dedicated fund to the general fund so they'd have more money to spend on pet projects. Had they left the money in a dedicated fund, it's entirely possible that Social Security would be solvent today. That "lockbox" was not entirely an Al Gore fiction.

And the investment idea DeVries suggests? That was proposed by George W. Bush and faced immediate blanket opposition by leading Democrats.

There were some legitimate questions about paying for the administration of such a program as well as the temporary hole such a plan would put in Social Security as young people's incoming money was diverted to private accounts while people kept retiring, but those issues could have been worked out in committee. Bush proposed staggering the privatization to ensure the current fund had enough incoming money for near-term retirements.

To alleviate concerns that such a program would unduly benefit the wealthy and burden the poor, Bush even put forth the idea that the government could give people below a certain income threshold enough to start their investment accounts.

Hillary declared the stock market, the chief investment vehicle for such a program, to be too dangerous for people's retirement money. Can't have anything that could tie you to Wall Street when you run for president, eh? And, Hill, where do you think people's 401Ks are invested now? Where is your money invested? Cattle futures? Land development?

Before Bush had a chance to put a formal proposal to Congress, Nancy Pelosi and Chuck Schumer declared any change to Social Security from a general fund to personal savings and investment accounts dead on arrival and the proposal went nowhere.

When Pelosi was asked when the Democrats would put forth a counter-proposal to "fix" Social Security, she replied, "Never. Is never good enough for you?" Her intransigence and public concern about the effect of a switch on benefits for near-retirees left the proposal in limbo where it died.

By the way, DeVries gets the overall number correct at 12.4%, but it's 6.2% out of your paycheck and an additional 6.2% from your employer.

"That 'lockbox' was not entirely an Al Gore fiction."

Yeah, it kinda was. It was always structured as a pyramid scheme. The government "borrowing" the early surpluses didn't help, but in the long run, it really didn't matter. There were people who started receiving benefits on day 1, and it became clear early on in the program that a lot of people in the future were going to be receiving far more in benefits than they paid in, to the extent that if there were actually a fund that was invested, it would have required an ROI of around 20% in order to pay the promised benefits. (It's the same problem a lot of public-sector pension funds are facing now... they did their math assuming year-over-year return rates exceeding 15% consistently, which was never realistic.)

"Had they left the money in a dedicated fund, it's entirely possible that Social Security would be solvent today." ~Conan

That is correct but also irrelevant. Does it really matter if SS went insolvent in 2020 or 2030? SS as currently designed is inherently unstable. It always will go insolvent. The only question is when.

Amy, the people who implemented SS weren't stupid. They knew this is what eventually would happen. They also knew it wasn't going to happen within their lifetimes, so they didn't care. If you care to look you can find news paper editorials and even articles from before SS was passed that cover all of the issues we see today. Which is why I don't have much patience with people who complain about 'My MONEY!' when talking about SS. It isn't their money and the only reason they don't know that is because they don't want to know it.

So, where do we go from here? The simple answer is we don't. No Republican is willing to touch SS anymore. If they even talk about it the Democrats will run adds with them pushing granny off a cliff. Bada bing bada boom they don't get reelected. Evolution before your eyes. No current Republican is willing to touch SS or even talk harshly about it. So will the Democrats fix things? Not a chance. Maybe some day, but not today. The most likely solution is the federal government eventually fails a bond sale and is unable to make the payments. How things break from there will depend on the people in office at that time. Do they finally decide to cut spending to match revenues? Do they decide inflation is the best solution? Until it happens we won't know what they choose to do.

Had they left the money in a dedicated fund, it's entirely possible that Social Security would be solvent today.

I am skeptical of this. Keep in mind when they raided the mythical lockbox, they filled it with treasury bills, which earn a nominal amount of interest.

Were else would they have earned income on that pile of money? at a minimum, it has to keep pace with inflation.

Given the opportunity for graft, self and double dealing, I could have seen them putting that money into Fanny Mae and Freddie Mac some years ago. Would have looked genius in the housing bubble run up, and the goobers running those government sponsored entities would have made even larger bonuses than they did.

*pop*

Then it would have looked totally idiotic, and they would have run, hair on fire, in a completely different direction.

Do they decide inflation is the best solution?

That's always the go-to solution.

Conan, DeVries uses the example of a 25-year-old self-employed individual. When you're self-employed, you have to pay BOTH the 6.2% figures into Social Security, because you don't have an employer to pay half for you.

I know IRA. We've already got those MMT nutters pushing that way. But hope springs eternal and all that.

One of the problems is overly generous pension plans such that people retire at 57 or 62. I've know people from major corporations, schools, and the local railroad who retired early due to a gold-plated retirement plan (plus social security). This means that they are no longer working and paying taxes. Lucky for them but an unintended consequence.

This means that they are no longer working and paying taxes. Lucky for them but an unintended consequence. ~ cc at February 26, 2020 11:26 AM

People receiving Social Security pay taxes on their benefits. This has always puzzled me. The government gives you money (your own money, which they've had for years to invest and earn interest) and then insists you give a portion of it back?

From the BBC News:

"Why Some Japanese Pensioners Want to Go to Jail"

https://getpocket.com/explore/item/why-some-japanese-pensioners-want-to-go-to-jail?utm_source=pocket-newtab

And there is that old lie yet again. It isn't your money Conan. Social security is welfare. Your money got spent. It is gone. There are zero savings. There never were any savings. You never had an account.

But yes it is odd to hand out welfare and then tax people on it. Why not just hand out less? Seems more efficient. The sad answer is advertising. Politicians want to talk about the pretax number and only give the post tax one. Still can't afford that post tax one, but the pretax one is bigger and a better selling point.

People receiving Social Security pay taxes on their benefits

Only if they have other income besides SS. There's a complicated formula and a whole IRS worksheet to implement it, but the bottom line is that if SS is your only income, you pay no tax on it.

(I collect Social Security, plus IRA distributions and a small pension from one of the companies I worked for. This year it worked out that about 10% of my SS counted as taxable income.)

And there is that old lie yet again. It isn't your money Conan. Social security is welfare. Your money got spent. It is gone. There are zero savings. There never were any savings. You never had an account. ~ Ben at February 27, 2020 9:30 AM

Well, Ben, you can accept that the government stole your money promising it to you as retirement income. You can accept that it's "gone."

I won't. I was promised a certain benefit for that taxation and I won't let the government, or you, dismiss it as "Oops, we spent it. Get over it."

If they'd left it with me, I'd have invested it and would have a very nice nest egg from it. That fact that I don't trust the government enough to let that be my only retirement income is not a pass for the government to pretend the money it took from me was a "tax" with no performance obligation on the government.

I want citizens to hold their government accountable. And "Your money got spent. It is gone. There are zero savings. There never were any savings. You never had an account." is not how to do that.

You may accept government malfeasance with a shrug. I won't, even if it means I'm that crazy old man screaming at the stars.

And that is why Social Security is going to bankrupt the US federal government. Read the law Conan. Read the court rulings on it as well. Stop believing old lies told to you by politicians.

How are you holding your government accountable?

The truth is you aren't. You are actually part of the problem. You keep insisting on a fiction. Stop being that crazy man yelling at the stars. Join us in reality.

By law, you never had an account with Social Security. You never had 'your money'. Read the damn law! There are taxes and there are benefits. Period. End of story. No different than the EITC or any other welfare program offered by the federal government.

That you want to be fooled and believe things that just aren't true is on you, Conan. You aren't stopping government malfeasance. Instead you are perpetuating it by pushing old lies from politicians that have been out of office for decades.

And this is why no one cares about spending and deficits in congress anymore. Welfare spending plus interest is roughly 100% of revenues, and the welfare spending is growing faster than revenues. No Democrat is interested in reducing spending while any Republican that suggests cutting welfare spending will lose their next election. Guys like Conan will vote them out. Until enough voters choose to stop being crazy people yelling at the stars there is no hope.

You are actually part of the problem. You keep insisting on a fiction. Stop being that crazy man yelling at the stars. Join us in reality.

So, you're okay with the government imposing a tax for a specific purpose and not putting the money to that purpose?

You're okay with the government imposing a gasoline tax to use for road maintenance, not spending the money on road maintenance, and then trying to impose a mileage tax to "pay for road maintenance?" BTW, if you're okay with that, California is the place you oughta be. The government in Sacramento is doing exactly that.

How about lotteries? They always seem to be promoted as a new way to fund education with earmarked funds. Yet, whatever amount the lottery sales provide is the same amount that seems to get cut from the education budget and put into a pet project, thus keeping education funding flat. You're okay with that?

If the government imposes a tax specifically to fund something, I want that thing funded and when it's no longer in need of funding, I want the tax eliminated.

How many years is the government going to collect money to pay off the Golden Gate Bridge? The toll is up to $8.

And, yes, I know, there's nothing more permanent than a temporary tax.

But we, the voters, allow that - like giving a big bundle of heroin to a junkie and trusting him when he says he'll ration it and only use a little a day.

We, the American voters, are collectively dumber than a box of rocks.

We may never reach the point at which we keep a record of that we've allowed the government to take from us and demand an accounting of the expenditures but, with Social Security, we don't have to - we know what we've given the government and what we were promised in return.

Pyramid scheme? Yes. Unsustainable? As structured now, yes. Fixable? Perhaps once. Not "my money" because I "didn't have an account?" No.

The government sends me a statement every quarter of what I've contributed and what it will pay me when I retire. That, Ben, is an account statement - pooled funds or no.

Your bank does not keep your money in a separate lockbox with your name on it. It pools it with other funds and invests those funds. Yet, somehow that is your money and the bank keeps track of how much it owes you. However, when the government pools funds, you say it's "not your money" and to get over it.

Had the government invested those funds, from the beginning, in something other than its own IOU's and maintained strict rules of eligibility, Social Security could be a solvent and financially sound program. Instead, it became yet another political giveaway program and vote-buying scheme, which it remains today.

You may accept government-backed robbery with a shrug. I choose not to, even if there's nothing I can do about it but stomp my feet and complain, which, in reality, is all I can do.

What's worse, I'm at a stage at which the government, in order to keep program solvent, will decide I have too much saved and am no longer eligible to get my own money back.

And no, Ben, the politicians promising benefits from Social Security are not all long dead. Mike Bloomberg is promising to defend Social Security from Donald Trump's vicious predation in his near-constant advertising blitz here in NC, a state he is desperate to win. Amy Klobuchar makes similar claims in her less well-funded advertising campaign (and, yes, she is boring); as does Tom Steyer. Bernie's late to the party, but he's coming on strong as Social Security's white knight.

GW Bush's attempt to salvage something out of the rubble of Social Security was defeated by politicians still very much alive, many of whom are still in office.

And that's all I'm going to say on the matter. You can go off and be happy with the government taking an additional 6.2% (or 12.4% if self-employed), of your income and giving you nothing for it. I choose not to be. And, even if I can't actually do anything about it, I won't go around telling people to get over it or that, by objecting to it, they're "part of the problem."

If the government is going to collect the money and not going to give it to me at retirement, the government can stop calling it Social Security and call it what it really is, an income tax.

Grow up Conan. Read the damn laws. Yes politicians lie to you. If you are older than 10 you should know that.

"But we, the voters, allow that"

No. Not we. You.

"The government sends me a statement every quarter of what I've contributed and what it will pay me when I retire. That, Ben, is an account statement - pooled funds or no."

No. Read the law. Read the court decisions. That is advertisement. This is long settled law. You have zero property rights. You have zero funds in any account. Stop falling for shady pieces of paper. Grow up Conan.

"You can go off and be happy with the government taking ..."

Never said I was happy Conan. But you are willfully delusional on this topic. It is not your money. It never was. Until you are willing to face reality you are the problem. You can chose to believe you can breath under water. Lots of people are happy to tell you that too. But when you go for a stroll on the bottom of the ocean you will drown. Grow up and face reality Conan.

"If the government is going to collect the money and not going to give it to me at retirement, the government can stop calling it Social Security ..."

What do you think the words 'Social Security' mean? Even a simple reading of those words isn't 'retirement fund'. Beyond even that it isn't called social security when they tax you. Does 'OASDI' ring a bell? How about 'FICA'?
You should have a line item on your pay stub for one of those, not social security. And yes, it is an income tax.

Look Conan, you can chose to keep being delusional and refuse to face reality. It doesn't turn out very well, but hey, dare to be stupid and all that. Or you can face reality and then work towards a sane solution.

Here is the reality:
1. Social Security is a welfare program, just like medicare and medicaid. There is zero rational debate on that.
2. Using GAAP accounting rules the 'trust fund' is meaningless. Loan yourself a million dollars. Make it two for all I care. You aren't any richer. The 'trust fund' is the same thing. It means nothing. Using standard accounting the federal government used to borrow less overall due to taxes being greater than benefits for this program. Sometimes that hasn't been true and the federal government borrowed more to pay those benefits. It means nothing when the 'trust fund' runs out. Using GAAP rules the fund had zero assets since it's inception. It isn't real.
3. Welfare spending (SS, medis, etc) is essentially 100% of current revenues and rising faster than revenues. These are 80% of the federal budget. If you want a balanced budget and aren't willing to cut those programs you aren't sane. Period. End of debate. Cut the military to zero. Empty out all of the discretionary spending. Too bad, you still haven't balanced the budget.

Join us in finding a way to move forward Conan. Stop screaming about how you want to believe fictions and lies. Stop acting like a BernieBro and demanding magic money come from somewhere and pay for all your dreams.