Bernie Sanders’ blind spot
This is a headline at Huffington Post today;
While Social Security may be the “most successful” government program, I don’t think Sanders should be bragging about it since the news last month that the program pays out more than it takes in.
To keep Social Security’s finances sound in the future I have introduced legislation — identical to a proposal that Obama advocated in 2008 — to apply the payroll tax on incomes above $250,000 a year. Under current law, only earnings up to $110,100 are taxed. The Center for Economic Policy and Research has estimated that applying the Social Security payroll tax on income above $250,000 would only impact the wealthiest 1.4 percent of wage earners.
That makes complete sense, Bernie, you old commie, tax the people who will never collect a penny of Social Security. That’s not a transfer of wealth or class warfare at all, is it?
I’ve been haunted by Sanders since I taught ROTC at UVM in Burlington, VT when Sanders was just the funny little carpetbagger communist mayor of Burlington. Who would have guessed that Vermonters would have inflicted him on the rest of us?
There’s a guy back home who was fired from his job for smoking pot in the parking lot. Now no one will hire him, so he went on welfare, went through the dry out program, still can’t find a job, so he’s on SSI and started before he turned 50. I can’t imagine that he’s the only one like that, but it’s easier to keep people like that on the program and raise taxes on the rich than to make him get a job filling the ketchup baskets at McDs.
While I’ll admit that, yeah, there’s a need for Social Security, there doesn’t need to be one that takes my money to pay a living wage to people who made bad choices.
Category: Congress sucks, Liberals suck, Taxes
If by “successful” you mean a redistribution of wealth on a scale unimagined outside academia with the ultimate goal of collapsing the current American economy and government, then yeah, the senile old coot might have a point.
Wait the federal government had a “successful” program? It’s only successful if the federal government isn’t involved.
Have to disagree in part, Jonn. One can make a legitimate case for some form of a legally-mandatory individual retirement savings program along the lines of the one Chile has had since the early 1980s. But I can’t see any legitimate case to be made for Social Security as it’s currently designed. It’s nothing but an income transfer (welfare) program financed using cockamamie scheme of taxation that would make Charles Ponzi himself smile broadly.
As a historical note: Chile’s social security program predates ours by roughly 15 years. Their original one, like our current Social Security setup, was a PAYGO system (current contributions pay current benefits). In 1955, the ratio of contributors to recipients in Chile was approx 12.2:1. By 1980, that had dropped to 2.5:1 – and the system had become financially untenable.
http://www.oecd.org/dataoecd/21/38/2429310.pdf
We’re fast approaching that point. The 2011 Social Security annual report indicates that in 2011 56 million were anticipated received Social Security benefits, while 158 million were anticipated to be paying into the system. (These figures include both disability recipients and those qualified due to age.) For the math-challenged, that’s a ratio of contributors to recipients of approximately 2.82:1. And the ratio continues to drop as the US population continues to age.
The only successful governmental program is still the National Parks not Social Security.
The only way I would consider Social Security a success is if what I paid into it all these years paid with interest.
That ain’t NEVAH gonna happen.
Dunno about that, Anonymous. The Eisenhower Interstate Highway System – and it’s predecessor, the numbered US Highway System – were both IMO pretty effective and successful.
You’re correct, PintoNag. From here on out, only those who worked their entire careers at low-paying jobs will. If you actually had economically valuable skills and made much above minimum wage, you’re gonna get the shaft from Social Security.
Of course, according to our very own insipid Social Security is merely a type of insurance. So I guess we could all just quit paying those “premiums” and let our “policies” lapse . . . .
Yes, I’m being facetious. Do that and you’ll wind up in jail for tax evasion.
Sanders.
Ugh.
Americas very own commie/socialist.
Can’t stand watching him skretch.
The government redirecting SS money to other projects sure as heck doesn’t help the situation. I’ve been on SS for a few years now and while I receive a fairly nice sum it would be difficult to live on here in Northern VA on SS alone.
What I wonder about though, is during my visits to the SS office in Manassas, out of perhaps 60(adults) in the waiting room, roughly 80% were hispanic and appeared to be between 30 to 45 years old. Some mothers had 4 or 5 kids in tow. Another 10% were other nationalities and spoke something other than english. A couple of people even brought an interpreter with them. No wonder the system is going broke.
@#8, and, we all know that insurance companies never become insolvent, so there’s nothing to worry about.
I’m still waiting for the explanation of how insurance companies can levy taxes to get their payments.
@anonymous I would rate the National Parks performance at somewhere in the neighborhood of epic fail. Their ham fisted attempts at maintaining stable ecosystems have been appalling. Not to mention their obstinance in protection of entirely too many old growth forests. Nature (much like armies) is not very successful when it’s stagnent.
On subject: I feel like a system of shoving cash into a giant federal mattress would be better than the current social security program.
OK, I’ll play devil’s advocate – as far as I know SS is not needs based so if you pay in, you collect – which invalidates the ‘pay into a system from which they will never collect’ argument. I know some folks collecting, or looking forward to collecting, far higher monthly payouts than I, based on years of earning far more than I ever did (no fast track starts with a decade working for Uncle Sugar that I know of.) And as far as taxing those making over $110,000- why was that limit ever put into place? Reasonably, a flat tax across the entire spectrum is the only equitable tax – you make $50,000, you pay 7.5% of it – you make $500,000 or $5,000,000, you should pay 7.5% of it. How is it equitable that if I make $100,000, I pay 7.5% – but (as an extreme example) Obama making $400,000 salary only pays about 2%? Sorry – regardless of party affiliation, eliminating the cap on SS income payments makes sense. If there is an upper limit on what you can collect from SS – that should be eliminated too. If you’re going to treat everyone equally, you need to treat EVERYONE equally.
Agreed Dave. One other minor(in the grand scheme of things) nit to pick with SS. Why, if someone is 62, working part time and drawing SS, does the system limit what one can earn in a year? Wouldn’t it be far more sensible to let that person earn whatever they could, as they would then be paying more into the system, not cutting their working hours, thereby paying less into the system?
13 Dave
It’s capped at about $110,000 because the benefit you can get is also capped. Either way, both capped or both uncapped would be neutral and do nothing to help SS solvancy. The only way to help is to remove the cap on income you pay on, and leave the cap in place on the benefit. That will screw over anyone making over the income cap…
The arguement that the rich would never collect is based on either a)SS becoming insolvent or b)at some point the government has to say “if you saved over a certain amount for retirement you won’t get any SS” presumably when SS is on the brink of collapsing which should be right around the time I retire…..
IMHO, SS is a Ponzi scheme. I’m figuring on NOT getting anything by the time I’m eligible for benefits. Dad never made more than $40,000 a year yet he was collecting $1,200+ a month. Mom didn’t start working until my youngest sister started school, mom was 37, and she got $900+ a month! If this is “successful” shave my head and call me baldy!?
Dave, UpNorth: the Social Security wage base exists because Social Security benefits are capped at a maximum value – regardless of how much you ever earned. For a worker retiring this year at age 66, that maximum possible benefit is $2,513. To receive this benefit, an individual would need to earn the maximum social security wage base each year starting at age 21 and each year thereafter for the next 45 years.
Social Security treats a low income earners much better than it treats high-income earners. It does this as follows: first, Social Security calculates something called an “Averaged Indexed Monthly Earnings”, which purports to be your average monthly income indexed to inflation over your entire working lifetime. It then calculates your social security benefits based on (1) 90% of the first $767, (2) 32% of the amount between $767 and $4,624, and (3) 15% of anything above $4,264 up to the maximum monthly benefit of $2,513 per month. Due to this nonlinear and skewed calculation, low income earners get proportionally much more back from Social Security than do middle or higher-income earners.
Without an upper limit on income taxable for Social Security purposes, it would literally be possible for someone to pay more in Social Security taxes monthly than their maximum possible monthly benefit. For someone retiring at age 66, that would occur next year at an annual income subject to Social Security taxes of $486,400 – or about $100k above the cutoff for the maximum Federal income tax bracket. At that point, if Social Security taxes were capped a person earning that amount would be paying more each month in Social Security taxes alone – ($486,400 * 6.2%) / 12 = $2,513.07 – than their maximum possible monthly benefit.
Yeah, that’s really fair.
UpNorth -hink the answer is that if someone is healthy and able enough to work enough to outstrip the limits, they shouldn’t be collecting – they aren’t retired.
Old Tanker- pretty sure if someone is making say $250K annually, they would probably not receive anywhere near 15% of that in income – payments are based on lifetime income, which is usually an upward curve. Whether the fund will still be solvent – last I read, worst case they could cut the outgoing payments 25% and even at the present rate of funding/disbursement, the system would balance – I don;t see it going away, especially as politically it’s a third rail.
Dave: regardless of how much a person earns, if they retire today at age 66 their maximum social security benefit is $2,513 per month. That is true even if they earned $1,000,000 a year for 45 years.
A person earning that much would pay well over $5k/month in social security taxes today. They cannot draw even half of that amount monthly in benefits.
Make social security benefits linear and uncap them, and your argument is logical. Otherwise, you’re arguing in favor of income redistribution. Or to put it another way, you’re endorsing the principle of “From each according to his ability, to each according to his need.”
There’s a discredited political philosophy associated with that principle. Starts with the letter “c”, as I recall.
Actually I think it started with an M after the author?
While noting that ‘linear’ does not have to mean 1:1, I’m old enough that I will never collect everything I have paid in, but after all, it IS a tax so I didn’t expect to. Using the same numbers you cited- if you uncapped the monthly benefit payment to make it more proportional to the total paid in, but removed the salary cap so that the same percentage is paid in by all – that to me just levels the playing field. EVERYONE pays the same percentage – as of now, the high earners do not pay in the same percentage as I – so being the vengeful selfish prick I am, I feel it’s only right that we adjust the system so EVERYONE pays the same percentage; and collects the sme percentage back.(I’m not getting into the ‘what about the useless deadbeats who collect at 35’ schtick at this point)
Hondo, would you quit being so damn smart?! Trying to keep up with you is making my head hurt!? If you have a meln the size of mine, you’re talking about some real pain!!!:)
* melon the size…mein??? I’m Hispanic not Oriental!
Dave: the author’s name indeed begins with an M. However, the philosophy about which he wrote does not – and I referenced the philosophy, not the author.
Everyone paying the same percentage in and getting the same percentage of AIME back is OK with me – that’s indeed a fair system. But I’ll let you try selling that cut in benefits for many Social Security recipients.
Today, a guy/gal whose AIME works out to $1250/mo (roughly the equivalent of minimum wage for a career) gets back (.9 x 747 + .32 x (1250-747) ) / 1250 = 66.7% of his/her AIME from Social Security if they work a full career and retire at age 66. In contrast, a guy/gal whose lifetime AIME maxes the Social Security wage base (this year, $110,100) gets back $2,513 – or somewhat over 20% of their AIME. Obviously you’re not going to raise everyone’s payback to 2/3 of AIME or the system will collapse. So that means a major cut in Social Security benefits for a lot of people would be requied so that everyone got the same percentage back.
Ain’t gonna happen, amigo – so you can forget fairness. The only other way to make the system even reasonably close to fair is to limit the “hit” taken by higher-income taxpayers through limiting the taxable base. Even that’s not truly “fair”; it merely limits the amount the higher-income guy or gal get screwed. Ergo, that’s why we have a Social Security wage base in the first place.
It’s not just the old that draw on Social Security anymore, either. There are many catagories for payout. It’s one of the reasons children are given SS numbers now, instead of waiting until they are old enough to be employed.
Having suffered through the Bronx Carpet Bagger as a life-long resident of Vermont about the only good thing I will say about Bernie is that he is an out in front Communist and makes no bones about it. Does not hide, does not lie about his position. What you see is what you get.
First off, Senator Sanders is NOT a Communist he is a Socialist. There is a difference. The most annoying of all right-wing tropes is the merging of every ideology but your own as being the same. There is a difference between Communism, Socialism and liberalism. Calling Senator Sanders a “Communist” is no more accurate than me calling you a fascist. Of course another standard meme of the Right Wing is to state that fascism is also of the left. Everyone benefits from Social Security. Ron Paul who regularly calls for SS’s destruction dutifully collects his check every month. Social Security along with Medicare has done what it has set out to do: it has ended the blight of poverty amongst the elderly. It has done this while operating at a surplus throughout most of its existence. In fact, what you left out in your article is that it is STILL operating at a surplus when you count interest. Even if you personally are wealthy enough to not collect or need SS you still benefit from the fact that you’re not stepping over elderly in order to get into your office. SS has been operating at a surplus for almost its entire 77 years, supplementing the military along with a host of other programs, mostly proposed by Republicans. Now you want to do it in because SOMEDAY it won’t be operating at a surplus. Imagine if the same attitude prevailed towards the military? It’s mostly the poor and middle class that join the military to pay for their college and take military benefits, so why should the rich have to pay for it? In fact, why should we fund the military at this rate at all? Since 1935 the military has won WWII, stalemated in Korea, lost in Vietnam, won the first gulf war, certainly didn’t “win” the second gulf war, and it sure looks to me like we’re going to be running from Afghanistan without anything resembling victory. Of the wars that we won, we accomplished without actually needing this vast military industrial complex. We did not have it at… Read more »
@26.
I like respect you being candid but your facts about surplus are incorrect.
Consult publicly available information from the OMB.
Then break them down. Numbers, unlike people (politicians), do not lie.
@8- Once again. We decide on government policy as a nation through the vote. It does not work on individual contracts but as a collective benefit. We do not have a contract for the police to provide us protection, the fire department to put out fires either.
That has to be one of the stupidest fucking things you’ve ever uttered, insipid. And that’s saying something.
@28.
The revenue collection process to fund these services are are called “taxes”, usually property.
And we do vote on them. (most of the time)
@27- From the Social Security Trustee report:
http://www.nasi.org/research/2011/social-security-finances-findings-2011-trustees-report
The 2011 Trustees Report finds that Social Security had an annual surplus – revenue plus interest income in excess of program outgo – of $69 billion in 2010. Annual surpluses are projected to continue for the next 12 years (2011-2022) and reserves are projected to grow to $3.7 trillion by the end of 2022.
Also here, from NASI:
http://www.nasi.org/research/2012/quick-answers-common-questions-about-social-security
Unlike in the early 1980s, and despite the recent deep recession and slow recovery, Social Security is continuing to build reserves through interest earned on the money in its trust funds. The reserves are projected to increase from $2.7 trillion at the end of 2011 to $3.1 trillion at the end of 2020.
@29- Well, you are quite the authority on stupid, Sparky.
@30- And we vote on SS and Medicare. We’re going to have an opportunity to do just that in November in fact.
@31.
As I stated earlier, look at the OMB.
That, my friend, is the “tale of the tape” as it were.
It is PBB cross-analysis.
Once again, the numbers do not add up.
@23- Hondo: To paraphrase Joe Lewis, “Rich is better”. The few taxes that marginally favors the poor and middle class are just outrageous to you. You have no problem with investment income being taxed at a lower rate than income earned by sweat. You have no problem with the sons and daughters of billionaires being able to get 5 million dollars tax-free (and please spare me the “they were taxed already” bullshit). But those who work for that billionaire should pay tax on every dime. You’re not up in arms over Wal-Mart not having to pay sales-tax but the hardware store on the corner has to pay .08 cents on the dollar. The greatest indicator of how rich you are going to be is not how hard you work, but which womb you came out of. Do you really believe that a dolt like George W. Bush would be a millionaire had he not been born of Barbra Bush? Do you think that Mitt Romney would be worth what he’s worth if he weren’t the son of George Romney? Ever notice how truly self-made men have no problem with the progressive tax structure? Self-made Presidents like Barack Obama and Bill Clinton champion it as do self-made billionaires like Bill Gates and Warren Buffett. In fact both Bill Gates and Warren Buffett advocate estate taxes more far-reaching than any I would impose. Warren Buffett stated that children should be able to inherit “enough money so that they would feel they could do anything, but not so much that they could do nothing.” That would suggest that if he had his druthers no one would be a millionaire just from picking the right daddy. That’s even more extreme than what I would do. Bill Gates has also made it clear that his child will have to earn her own way and his father, Bill Gates Sr. is a champion of the estate tax and claims that his son feels the same way he does. Contrast that with folks like the Walton children, the Koch brothers, Donald Trump, George W. Bush and George… Read more »
@34- Green Thumb http://www.usatoday.com/news/opinion/editorials/2011-02-22-editorial22_ST1_N.htm
OMB director Jacob Lew:
“According to the most recent report of the independent Social Security Trustees, the trust fund is currently in surplus and growing. Even though Social Security began collecting less in taxes than it paid in benefits in 2010, the trust fund will continue to accrue interest and grow until 2025, and will have adequate resources to pay full benefits for the next 26 years.
For years, the surpluses in the Social Security trust fund have helped to mask our deficits elsewhere. Now that we are paying Social Security back, the problem is not with Social Security, but with the rest of the budget. In 2001 and 2003, Washington cut taxes for the wealthiest Americans and later expanded Medicare without paying for it.
Blaming Social Security for our fiscal woes is like blaming you for not saving enough in your checking account because the bank lost all depositors’ money.”
@36.
Look at the numbers; not a quote.
I looked at the numbers, in fact i linked to them. And not to be insulting, you seem like a pretty cordial fellow, but I do believe the director of OMB is more familiar with the OMB numbers than a commenter at TAH.
I do not have the zeal or partial sobriety on a Sunday evening to follow such a boring subject, though I appreciate your candor.
That being said, I will not need it in older age; others will. And they, my friend, will be screwed.
Wrote a paper on it actually, although at a much lower level. It also included the amount of federal expenditures that are levied against it on a yearly basis +/- 10 years.
Also, I was not appointed to any position and do not rely on that government pension.
Conflict of interest? Maybe, but probably not. I am to far down the totem pole to matter. Anyway, it is not worth the spat. However, make sure you have a chute and the shit works. I have seen the projections and I would cut them in half.
As I said, I am not an expert but I do understand numbers.
As I told you, numbers do not lie. I am no expert per se, but enough of a realist to see between the lines and educated and experienced enough to read between them as well.