Bacon's Rebellion

Democracy Thrives in Sunlight

Budget Busters Thrown Again

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by

James A. Bacon
in ,

While the budget busters in Washington struggle to tame trillion-dollar deficits for years to come, they keep getting thrown. The Obama administration took a particularly nasty spill yesterday, announcing that the Community Living Assistance Services and Supports (CLASS) program, a long-term care initiative embedded in Obamacare, is beyond salvage. “Despite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time,” Kathleen Sebelius, secretary of health and human services, said in a letter to congressional leaders.

As AP reports, CLASS was supposed to function as a voluntary and self-sustaining long-term care health plan. But the program was fatally flawed: Unless large numbers of healthy people willingly sign up during their working years, soaring premiums driven by the needs of disabled beneficiaries would destabilize it, eventually requiring a taxpayer bailout.

Now the O Team has to write off $80 billion of the “deficit reduction” it expected from Obamacare over the next 10 years. During the early years, when far more people were paying into the program than taking benefits from it, CLASS would have run a positive cash flow. Those revenues were credited for purposes of calculating the fiscal impact of Obamacare. As enrollees aged and started availing themselves of the service, the program would have cost the government money. But the impact wouldn’t felt until after the 10-year budget scoring, so no one but anal-compulsive CPAs and Republicans cared.

Now that the O Team has abandoned the fiction that the CLASS program is financially sustainable, it will have to delete the $80 billion net revenue from its 10-year budget forecasts.  That may not seem like much in comparison to the $7.2 billion in projected deficits, but it will make the job of closing the gap that much harder. Boomergeddon looms a little bit closer.

— JAB

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31 responses to “Budget Busters Thrown Again”

  1. Groveton Avatar
    Groveton

    Translation: Even Obama won’t start another Social Security – like Ponzi Scheme.

  2. larryg Avatar
    larryg

    Folks need to ask themselves how people currently pay for their long term care since the vast majority of people do not have long term care insurance.

    The reality is that one of the biggest threats to both the Federal and State budgets is MedicAid.

    Do you know what happens to most people when they need to go into a nursing home?

    Do you know who actually pays?

    MedicAid is getting eaten alive by people who are transferring their assets to their kids so they can qualify for MedicAid for the nursing home.

    that’s right.

    More than 70% of people getting medicaid for nursing homes own heir own homes.

    The Obama Administration attempted to deal with this issue – because of the huge threat to the budget from MedicAid.. by far one of the fastest growing budget areas – in Va’s budget.

    So what have the folks who rejoice over the demise of CLASS advocate?

    how about nothing? there is no “replace” after ‘repeal’.

    re: SS

    here’s a nice little charge for you Groveton from your friends at Heritage:

    2011 Index of Economic Freedom
    Ranking the Countries
    http://www.heritage.org/Index/ranking

    of all the countries that are ranked as being economically free – ALL of them have :

    1. mandatory payroll taxes
    2. social security
    3. Universal Health Care

    how would you explain the fact that every industrialized country in the world and all of those who are economically “free” have social security?

  3. larryg Avatar
    larryg

    oops.. not ALL…… most ALL – a notable exception being the USA.

    and if you look at the countries that rank low in economic freedom… no payroll taxes, no SS and no UHC.

  4. Darrell Avatar
    Darrell

    Obviously the solution is for the family to care for grandma. That’s what we did.

    But since most families barely know each others names, maybe it’s more profitable to make the frail and invalid an export commodity. Grandpa won’t realize the nursing home wall he is staring at is in Sierra Leone rather than Virginia. The harder to please we can check in to the Hotel California in Bangkok for their short time care of endless Eagles tunes and Motley Crue’s dream of Girls, Girls, Girls.

    http://www.youtube.com/watch?v=9j2yCyhboUw&feature=related
    http://www.youtube.com/watch?v=_F7diasiZmQ
    http://www.youtube.com/watch?v=wfz2vuLEv1o&feature=related

    What? Dirty mind.

  5. Groveton Avatar
    Groveton

    “how would you explain the fact that every industrialized country in the world and all of those who are economically “free” have social security?”.

    Herman Cain explained this quite nicely when he described the social security program in “free” Chile.

    The internet is Saul Alinsky’s worst nightmare. No longer is it possible for liberals to make up unverifiable lies about things and then practice demagoguery in a left monopolized main stream media.

    Kind of like the absurd race baiting contention that right minded Americans oppose Barack Obama because he is an African-American. Twenty years ago, Herman Cain would be marginalized as a “gimmick” in rags like The Washington Post. Today, that’s not so easy with the internet and widespread reporting of popularity polls. Today, what gets marginalized is the liberal contention that those who oppose Obama do so because of racism.

    Ditto for the intentional deception that all “free” countries have a mismanaged, bankrupt Ponzi scheme as their “social security system”.

  6. larryg Avatar
    larryg

    re: family care of granny

    but the reality is that granny did not save for her ultimately needed care but now wants to give her assets to her kids and have taxpayers pay for her care.

    What is the choice of the kids? to take grandmas assets and have other taxpayers pay for granny?

  7. larryg Avatar
    larryg

    re: ” Herman Cain explained this quite nicely when he described the social security program in “free” Chile.”

    well no – he did not.

    when a pay-as-you-go insurance plan like Social Security is converted to a pre-funded pension plan as with Chile (and Singapore and Galveston, Tx) the cost is far higher.

    In both Singapore and Chile they have to continue to pay the social security benefits for those that paid into the system (and deserve to receive their benefits) PLUS you have to collect ADDITIONAL payroll taxes that go into a pre-funded pension plan.

    Social Security was never promoted as a pre-funded pension plan.

    SS would pay you lifetime benefits if you became disabled and no longer able to work. SS would pay your survivors / spouse benefits if you died.

    and SS would guarantee you a minimum monthly benefit if you worked your whole life but were one of the working poor.

    the purpose of SS was to relieve the dollar cost to the rest of society to care for the indigent by making every pay – the individual mandate – something the forefathers of this country supported with their mandatory payroll tax also.

    The current narrative against social security is based on ignorance – and propaganda.

    SS is a pay-as-you-go system that functions exactly like the health care that you buy.

    when you pay your health insurance premiums – they turn around and spend that money on benefits and you get none of it back – unless of course you need health care …. there is no “fund”.

    your auto, fire and homeowners insurance.. and virtually all other industrialized countries social security and health care work exactly the same way.

    The “trust fund” is NOT a pre-funded fund to pay social security benefits.

    it’s a temporary place to keep FICA taxes until they are used to pay benefits.

    There are 140 govt “trust funds” including trust funds for Medicare, Govt employees pensions and Military Pensions and TRICARE health insurance for military families and ALL of them are not only pay-as-you-go plans but they all have trust funds that work EXACTLY THE SAME WAY as the Social Security Trust Funds do

    The problem is that folks (including MR. Groveton here) know more about football teams than they know about how Social Security was designed to work and so they blithely accept the right wing echo chamber propaganda rather than take the time themselves to really understand.

    the problem is not so much the “clown show” – the problem is that we have “clowns” in the SS debate who do not understand the simple facts.

  8. Groveton Avatar
    Groveton

    The simple facts are as follow:

    1. Social security was initiated with a 1% tax on payroll for employer and employee – up to a cap.

    2. The Social security tax has risen to well over 6% for both employer and employee. Yet Larry decries private plans as being “more expensive”. What do you call a plan that has risen 600+% in real terms? Less expensive?

    3. The present stream of benefits being paid to Social Security recipients will exhaust the trust fund and then result in payment of no more than 75% of the promised benefit stream once the trust fund is depleted.

    4. Social Security has been “fixed once and for all” on numerous occasions – the latest being in 1983 as Ronald Reagan and Tip O’Neil worked together. It is now completely broken again.

    Today’s elderly (aka the “greedy grays”) want to draw out far more money from Social Security than they put in. They are only too happy to leave the plan incapable of paying out the promised benefits to future generations (who will have paid a much higher percentage of their wages into the plan than the “greedy grays”).

    The Baby Boomers are truly America’s worst generation. First, they elected a series of idiots to national office. These idiots have driven the country to the brink of bankruptcy. Now they are retiring and happily draining a retirement plan into which they paid too little and took too much.

  9. Darrell Avatar
    Darrell

    Today’s elderly (aka the “greedy grays”) want to draw out far more money from Social Security than they put in.

    Now wait a minute. Isn’t that what’s supposed to happen? I put money in a savings account, or 401k, or SS. What good is any of that if the dollar I put in is now worth 5 cents? You want to blame the elderly for inflation?

    That’s why there is this thing called interest. Something the government has managed to get rid of.

  10. larryg Avatar
    larryg

    the simple facts are this:

    Social Security was designed and created as a pay-as-you-go program.

    It was also DESIGNED to CHANGE as time, circumstances, and demographics changed.

    that’s why an annual Trustees Report is required.

    the 75% is what happens if no changes are made.

    over the 65 year history of SS – more than a dozen changes have been made in response to changing circumstances and demographics.

    The Trust Fund was NEVER designed to be a pre-funded FUND. It’s ONLY PURPOSE was to TEMPORARILY HOLD excess FICA Taxes.

    this goes back to understanding, recognizing, and admitting what SS is . and what is is not and was never intended to be,

    We could have a debate on the MERITS once people admit to the FACTS but putting blame based on ignorance with no real recommendations for change is just plain DUMB.

    If you REALLY want to WORRY and PLACE BLAME on the elderly – you should focus on the program that as 5 times the bigger problem than SS and that would be Medicare Part B.

    You fix Medicare Part B and fixing SS is child’s play.

    Medicare is the biggest elderly wealth preservation scan in the history of the country.

    We charge the elderly (who did not save for their health care needs) about 25% of what it costs to provide them with health care -while many of them own two homes and 3 cars and have significant assets ….

    and unlike SS which will continue to generate a trillion dollars a year to pay 75% of scheduled benefits – Medicare will not and will require higher and higher levels of taxpayer subsidy in the out years that will total to 7 times more than what would be required for SS.

    that’s the problem here.

    We have abject ignorance of what SS is and is not and at the same time we say that SS is a big problem – we ignore the REALLY BIG PROBLEMS – Medicare Part B and MedicAid

    Our sense of priorities is all screwed up and rather than wanting to deal with the issues – all we want to do is blame.

    we know and care more about football teams than we are willing to do the same amount of due diligence of the real threats to the budget – which is NOT SS by any stretch of the imagination unless of course you are sucking on the right wing echo chamber kool aid.

    wise up Groveton. Get some facts and then blather.

  11. larryg Avatar
    larryg

    re: today’s greedy grays and inflation.

    two points:

    1. inflation relative to what people pay is not the over arching problem with Medicare Part B – it’s simpler than that – we charge most (not all) seniors about $100 a month for coverage that has to be $400 a month for the program to not be in deficit and require massive taxpayers subsidies.

    2. the inflation adjustment in SS is considered overly generous and if scaled back to a more realistic number would reduce the predicted 75 year unfunded liabilities substantially.

    the unfunded liabilities of Medicare Part B make the unfunded liabilities of Social Security look like chump change yet the right wing echo chamber would have those unwilling to verify the facts thinking that Social Security will bankrupt the country when the reality is that it will not take one penny from the general revenues because by law all it can spend is FICA money whereas Medicare Part B already spend 210billion dollars a year in general revenues and will double in a decade.

  12. larryg Avatar
    larryg

    to put this into even better prospective…

    by 2037 … it is said SS will be able to pay only 75% of scheduled benefits.

    by 2037 – Medicare Part B will cost 1.5 billion dollars in tax subsidies from the general revenue.

  13. Groveton Avatar
    Groveton

    Darrell and LarryG:

    Your comments, taken together, outline the problem. LarryG says SS was intended to be “pay as you go”. Darrell asks why there is no interest.

    Why would anybody expect interest on a “pay as you go” program? Interest on what?

    Because it’s not “pay as you go”. A pay as you go plan wouldn’t run a surplus. It would reduce the amount being paid “as you went” if a surplus was building. In a “pay as you go” system, surpluses are not accumulated and then “invested” in a single, non-liquid security of an entity with a debt problem and a falling credit rating.

    Social Security is an investment system no matter how much LarryG wishes it weren’t so. Unfortunately, it is a very bad investment system. One that would probably see the administrator taken out in handcuffs if the administrator was anybody other than Uncle Sam.

    Now, interest is paid on the so-called social security trust fund. Interest was also paid on Enron’s bonds – right up to the moment that it wasn’t. You see, Ponzi schemes always need the illusion of reasonable investments behind them.

    Yet, we can suspend our disbelief and assume that this investment oriented, non-personalized, single asset holding, quasi-retirement plan is somehow a reasonable construct for our futures. The next question which arises is whether it is run effectively. The answer is a hard “no”. Even if we assume that the fund’s one investment will pay back with interest, the amount being taken in (along with repayment, with interest, of the so-called trust fund) is insufficient to pay the promised benefit stream. Period.

    Any reasonably managed plan would either immediately raise premiums or cut benefits to get the plan back into balance.

    So, why doesn’t the government do this?

    Because America’s political elite are not reasonable managers of anything other than their own arrogance and corruption. Raising the “pay in” to balance the plan would result in cries of “higher taxes” which would cost them votes. Reducing the pay out (which I would argue is the better approach) would cost them the votes of the “greedy grays” who, frankly, could care less about the future of young people in America.

    So, the problem festers. Until, one day, it’s a full blown crisis. Then, some new half-assed “fixed for all time” solution will be put into place until it fails again.

    And you wonder why the kids on Wall St have no faith in us?

  14. Groveton Avatar
    Groveton

    “by 2037 – Medicare Part B will cost 1.5 billion dollars in tax subsidies from the general revenue.”.

    Really?

    $1.5B per year?

    Didn’t Obama just suggest a $485B jobs plan?

    Over 323 years of Medicare Part B shortfall?

    Maybe he can lower his request by $150B and buy us another century of Medicare Part B?

    You sure you have your facts straight there, LarryG?

  15. larryg Avatar
    larryg

    the problem with the “greedy grays” is not Social Security – a FICA-only financed benefit (does not require subsidies from the general fund/income taxes).

    the problem is health care – including long-term care for all of us who live longer but like a cranky older car – need more repairs and maintenance to keep it running.

    No one wants to pay those costs. Seniors don’t want to pay for it – they think that since they paid into FICA that it covered Medicare –

    … and that’s a huge problem…. in terms of understanding.

    Seniors DID pay FICA taxes for Medicare …. but Part A only.

    Part A pays ONLY for hospitalization.

    No senior has paid FICA taxes for Medicare Part B.

    Medicare Part B which pays for health care providers and their services and therapies if not financed from FICA taxes at all but rather from premiums and govt subsidies.

    About 3/4 of Medicare Part B is paid for with subsidies from income taxes.

    as the costs of health care in general go up – the costs of Medicare Part B go up – (as well as MedicAid).

    if health care costs double in a decade – guess what happens to the subsidy to Medicare Part B? should not be a surprise that it too will double. (and this does not even count long-term care (which is NOT covered by Medicare ).

    so the REAL monstrous lie/Ponzi Scheme is not Social Security – but Medicare.

    what frustrates the hell out of me is the misplaced anger which is based on a combination of right wing propaganda – and ignorance of the basic facts.

    If enough people would take the time to do some simple due diligence on the issue they would realize that the actual 600 lb gorilla in the closet is Medicare and, in fact, health care costs overall.

    It is the rationale behind ObamaCare – an attempt … to blunt the looming threat to the budget from health care costs that are already twice per capita what the rest of the industrialized world pays – and continuing to go up.

    If there were a real – competitive alternative on the table to replace ObamaCare – we could have a real debate on how to go forward.

    but what we have is opposition to ObamaCare and little more than “ideas” from the Conservatives – no real plan – other than – let the free market “work”. nevermind that the ‘free market” does not work in the rest of the world for health care – we are bound a determined to believe that it can work here.. even if we are not willing to say how much less provide a framework for it.

    The failure of CLASS is the poster child for this. The Obama Administration had the guts and the principle to admit that what they had – is not going to work.

    Where are the Conservatives on this? Well they are jumping for glee that a key part of ObamaCare has ‘failed’.

    that’s what is passing for “leadership” in this country on an issue that is a direct threat to the economic health of the country.

    this is why we should vote folks like Cantor back into office again?

  16. Groveton Avatar
    Groveton

    LarryG:

    First, you wrote …

    “by 2037 – Medicare Part B will cost 1.5 billion dollars in tax subsidies from the general revenue.”.

    Then, you wrote …

    “so the REAL monstrous lie/Ponzi Scheme is not Social Security – but Medicare.”.

    How is $1.5B per year a monstrous anything?

    The FA18 “hornet” program cost $4.85B per FY11.

    You’re telling me that one defense program for one weapon system would pay for 3 years of Medicare, Part B starting in 2037?

    I know, I know …. a billion here and a billion there. However, in the grand scheme of things, $1.5 billion per year starting in 2037 is hardly monstrous, now is it?

    Once again, I ask – do you have your facts straight?

  17. larryg Avatar
    larryg

    1.5 TRILLION – not billion.

    right now – today Medicare part B consumes 210 billion a year and MedicAid 500 billion.

    re: pay-as-you-go – this is not my idea. This is what SS is DEFINED TO BE by the LAW that created it

    re: interest

    consider that SS benefits are COLA-adjusted for inflation.

    re: surplus

    In the 1980’s Mr. Reagan agreed that FICA taxes should be increased to build up reserves for the impending baby-boom retirements.

    in the 1980’s they were looking at a 75-year horizon for finances. another requirement of the law – for the SS admin to issue an annual trustees report that would include the 75-year outlook.

    Groveton – you are being willfully ignorant..

    if you want to complain and blame – at least do it with facts and not the right-wing echo chamber narrative…;

    If you believe that SS should be a pre-funded retirement plan – then advocate for that – rather than blame… all you guys do is look backwards and complain and blame.

    that does not move us forward at all.

  18. Groveton Avatar
    Groveton

    “if you want to complain and blame – at least do it with facts and not the right-wing echo chamber narrative…;”.

    Dude … you spent the last two days confusing billions with trillions. I would be careful about asking others to get their facts straight.

    As for the 75 year outlook from the 80’s…

    If you were born in 1980, you are 31 years old today. A 75 year horizon seems pretty reasonable to me.

    As for “pay as you go”, it is obviously not “pay as you go”. “Pay as you go” plans don’t run surpluses or deficits. If it were “pay as you go” what funded the so-called Social Security Trust Fund? What will deplete the so-called Social Security Trust Fund?

    I will grant the government this …

    A “pay as you go” societal retirement plan is absolutely, horribly, incoherently incompetent. It implicitly assumes that demographics never go against you. I mean nobody is that stupid, right?

    Social Security is not “pay as you go”. For many years, people paid in more than was paid out – thereby building a surplus. Had it been “pay as you go” people would have paid in less since they would have been only paying as they were going.

    However, the investment of the surplus funds was inept. They were totally invested in a single, low yield debt instrument from an issuer having major problems with over-leverage. If a financial advisor had taken your personal retirement funds and invested them the same way, that advisor would be subject to a lawsuit for negligence.

    As far as inflation and interest … they are different. Yes, the payout is automatically adjusted for inflation. Why should the greedy grays ever have to worry about reduced purchasing power caused by an inflation that happened because they let their government sent vastly beyond its means their whole lives?

    The present interest rate on the so-called Social Security Trust Fund is 2.76%. This is money taken from people like me and invested presumably so that more money will be available when the inevitable demographic changes go against the fund.

    Now, if we’re going to run a surplus in order to account for the future – why isn’t that surplus built to the point that it accommodates all people paying into the plan? Why do those who are due benefits after 2037 going to get screwed? Why did someone born in 1972 who started working in 1994 pay excess social security taxes into a trust fund that will be gone before he or she retires? If it was really pay-as-you-go then that person is due a refund.

    Let’s review:

    1. SS is not pay as you go in any reasonable sense of the term. Pay as you go plans don’t run surpluses or deficits. The current payments are simply increased or decreased to meet the current needs.

    2. The intentional surplus was both insufficient to guarantee benefits to those who are presently paying into the plan and invested incompetently.

    3. Many who paid excess funds into the plan thereby building a surplus will never see a dime of those excess funds since they will retire after the surplus is exhausted.

    This is neither pay-as-you go nor a competent investment-based retirement plan.

    Typical government.

  19. larryg Avatar
    larryg

    re: confusing billions with trillions…. I’d say 95% of the time I get the b and t correct but every now and then the finger does not.

    there is no confusing the numbers if you know them – anyhow.. you just skip past the b/t problem as you would with a grammar fobar – unless of course you’re not well grounded on the facts or refuse to believe them.

    re: pay-as-you-go – they DO run supluses AND deficits and that’s why every public and private provider of insurance carries a contingency fund AND looks ahead at demographics.

    the primary difference is that your insurance company can and does adjust it’s premiums and coverage usually on a yearly basis and social security is on a longer cycle and literally takes an act of Congress to change,

    There is NO EXCUSE for you to continue to PURPOSELY misrepresent the facts here – guy.. it’s dishonorable

    re: ” It implicitly assumes that demographics never go against you. I mean nobody is that stupid, right?”

    it’s more misrepresentation on your part Groveton.. you started off saying that pay-as-you-go should not run a surplus even though you knew that Ronald Reagan agreed to increase FICA in anticipation of the baby boom and you ALSO KNEW that the SS trustees do an ANNUAL 75 year look ahead PRECISELY because of the demographics.

    the “trust fund” is about 2 trillion dollars – FICA generates nearly a trillion a year and pays out nearly a trillion a year. Clearly the trust fund is not anything more than a contingency fund.

    Again, you’re either being willfully ignorant here OR you are purposely engaging in the same right wing propaganda that has become rampant .

    It’s not you …or it ought not to be you.

    re: investments – by law – ALL 150 trust funds are done exactly the same way Groveton – on purpose – because had they been invested as you suggest they would have LOST MONEY as most everyone who had a 401 did.

    re: interest vs COLA, Groveton if you had money in a bank – would it earn more interest than SS pays in COLA?

    there is an answer to that question. You ought to find it before you offer an opinion….

    re: ” Now, if we’re going to run a surplus in order to account for the future….”

    because it was a first step… and they knew more steps would be needed on a phased-in basis…

    they knew this because the system was explicitly designed to function that way – that’s why they do an annual report that includes a 75-year look ahead.

    So, let’s review here:

    1. SS – IS a pay as you go in fact and operates very much like private insurance pay-as-you-go works – you’re engaging in right wing idiocy by continuing your insistence that it’s not what it really is.

    it’s not what you’d like it to be – that’s different… that’s YOUR PROBLEM.

    2. the “surplus” was the FIRST of a multi-step process. OBM has 30 options to choose from and I can provide a link to it if you’d like to see it.

    3. re: many will not see. SS has NEVER not paid benefits but the benefits have changed over time… and will continue to do so as long as FICA is a payroll tax.

    SS has since it’s inception been explicitly a pay-as-you-go system as most every social security system like it – worldwide – is and as most all private insurance also is.

    It’s much more than a retirement system. If you become permanently disabled or die – you also receive benefits.

    Medicare Part B – hospitalization is also part of SS,

    You don’t have a plan for reform.

    you’re looking backwards and looking to assign blame -based on either ignorance of the facts or purposeful misrepresentation of the facts.

    that’s not the Groveton that I’m used to knowing.

  20. larryg Avatar
    larryg

    Groveton – the SS folks must have had folks like you in mind when they wrote this.l

    It’s worth a read – especially the part about PONZI, pay-as-you-go, and “the start up problem with pension funds”

    http://www.ssa.gov/history/ponzi.htm

  21. Groveton Avatar
    Groveton

    LarryG:

    Did you actually read the article you posted?

    Here’s the money quote:

    “Social Security is and always has been either a “pay-as-you-go” system or one that was partially advance-funded.”.

    Even the bureaucrats at the Social Security Administration can’t bring themselves to spout the crapoola you spew. Even they won’t claim it’s a pay as you go system. Unfortunately, my college libtard is a bit rusty. Can you translate “partially advance-funded” for me?

    Here’s my guess – you are an early Baby Boomer and, therefore, a financial beneficiary of this incompetent and inept government program. You didn’t pay into the suplus built prior to 1983. You paid in from the 1983 until you retired. However, you will be benefit from the surplus for the vast majority or all of your retired life.

    Now consider somebody who was born in 1961. They started full time employment in 1983, just in time to hit the Social Security plan when it changed from pay as you go to “partially advance funded”. They will turn 65 in 2025. Unfortunately that “partially advance funded” surplus from the sometimes pay as you go, sometime not retirement plan will be gone.

    How is that fair, LarryG? You only paid in to part of the surplus but you’ll enjoy distributions from the surplus throughout your retirement. The person born in 1961 will pay into the surplus every year a surplus is created but will never see a dime of that surplus. Why? Because people like you will have drained it dry all the while mumbling something about pay-as-you go.

    Let’s review:

    1. Pay as you go retirement plans never work. You’d have to be very stupid to believe they will work. The Democrats enacted such a plan in the 1930s.

    2. When the absolute absurdity of a pay as you go retirement plan became obvious in 1983 two Irish American politicians managed to sober up long enough to do something about it. In between shots of Jameson’s they created a non-pay-as-you-go plan that will revert again to a pay-as-you-go-plan. Both believed they would be dead before the consequences of their idiocy were felt. They were right.

    3. Now, those who suck at the teat of a surplus largely contributed by people other then themselves intentionally obfuscate the truth in an effort to seem less vile and greedy. No doubt they also believe they will be dead before the consequences of their idiocy are felt.

  22. larryg Avatar
    larryg

    Groveton – I do not believe it was I that said “partially advanced funding”.

    if i said that .. then give me the quote and I’ll likely agree it was wrong to say so.

    I have maintained all along that Social Security has been DOCUMENTED – BY THE GOVT – as a pay-as-you-go program and NOT a pre-funded pension plan.

    I stick by that and I can provide you with dozens of links from SSA that say that and I have YET TO SEE a single reference from you that shows otherwise.

    continuing to insist as you do is dishonest.

    and sorry to disappoint you – I do NOT get Social Security.

    my primary interest here is that we cannot have a debate on the merits as long as we have people who are ignorant of the facts and argue on emotion.

    let’s reivew:

    1.- pay as you go – is a common private business product – worldwide

    publically-funded pay-as-you-go programs – worldwide – are the STANDARD not only for Social Security but for Medicare, MedicAid, Tricare and the VA.

    2. – if you want a pre-funded retirement plan INSTEAD – then stop stupidly blaming a system that was never designed to do that in the first place and lay out your plan for how to transition to one.

    again – worldwide – pay-as-you-go social security and health care are the DEFAULT de facto standard.

    I would not expect you agree that it is “right” to do it this way but I WOULD EXPECT you to admit to the truth… instead of pretending otherwise.

    3. – sucking at the teat of the surplus –

    the truth? you can’t stand the truth!

    the TRUTH here is that there is no SURPLUS … and no one was expecting to benefit from it – least of all – me.

    see Groveton – you don’t know bat crap from guano…here.. and the bad part is you know it but won’t admit it.

    Of all the entitlements that we have – SS is the least that is in trouble and because it is not funded from the general revenue fund – it will never be a threat to the budget.

    that’s not true of the other entitlements. those entitlements are not only pay-as-you-go but the funding for them comes from income taxes.

    it’s important that if you believe entitlements are a problem – that you understand which are and which are not – and why.

    you still don’t know … and apparently are too willing to believe propaganda rather than do your own due diligence on the facts.

  23. Groveton Avatar
    Groveton

    “Groveton – I do not believe it was I that said “partially advanced funding”.”.

    No, LarryG, it was in the web site from the Social Security Administration which you referenced (via link) in your comment.

    You didn’t say it – the people who run the agency did.

    Do you read the material from the links you post? You should. It almost always contradicts you.

  24. Groveton Avatar
    Groveton

    LarryG:

    Here is the link YOU posted …

    http://www.ssa.gov/history/ponzi.htm

    And here is a sentence from the SSA at the web site addressed by that link….

    “Social Security is and always has been either a “pay-as-you-go” system or one that was partially advance-funded.”.

    I didn’t write those words, the Social Security Administration wrote those words.

    Then you wrote …

    “I have maintained all along that Social Security has been DOCUMENTED – BY THE GOVT – as a pay-as-you-go program and NOT a pre-funded pension plan.”.

    Not true. Remember the link you provided? Remember the sentence from the web site it referenced? From the Social Security Administration?

    Even the SSA can’t bring themselves to call it “pay as you go”.

  25. Groveton Avatar
    Groveton

    I give up, what does “partially advance funded mean?”.

    I voted for the war until I voted against the war.

    It depends upon what the meaning of the word is is.

  26. Groveton Avatar
    Groveton

    “the TRUTH here is that there is no SURPLUS …”.

    Let’s again go to Social Security’s own web site …

    http://www.socialsecurity.gov/history/reports/adcouncil/meeting/advisory_council_031095.html

    Here’s an interesting paragraph …

    “Olivia Mitchell, co-chair, Technical Panel and Steve Zeldes, member, Technical Panel, reported on alternative methods of investing the trust fund surplus. They stated that it would be easier to remedy the long-range balance of the trust fund if action is taken now. However, in doing this, the surplus in the trust fund will grow even larger. Two alternatives they examined involved investing some of the trust fund surplus in the stock market and channeling some of the surplus into individual accounts.”.

    I think that’s 5 references to the non-existent surplus in one paragraph.

  27. larryg Avatar
    larryg

    pay-as-you-go is defined to be a regular source of funding that is then spent on benefits as opposed to money collected and kept in an account for later use.

    pension funds are often (but not always) pre-funded but most insurance including SS is pay-as-you-go.

    Both private insurance and SS will – if the look-ahead indicates future unfunded liabilities will increase premiums to build up a temporary contingency fund to smooth out the transition to higher premiums/different coverage.

    If you read the SS info or just any info on how pay-as-you-go programs – both public or private actually work – this is how they work

    There is nothing nefarious or criminal or ponzi schemish about it

    Now.. some folks are ignorant of how SS was designed and that’s okay as long as they work to understand the realities.

    Others are not only not willing to do that but they are more than willing to get their info from folks with agendas who basically peddle misinformation and propaganda.

    then a 3rd group know the facts but refuse to admit them because they basically are opposed to the CONCEPT of SS.

    I don’t really have a 100% fixed position on whether or not SS should be a pay-as-you-go system or a pre-funded pension system,

    I know that a lot of private pensions were converted from defined benefits to defined contributions for reasons related to the problems now being experienced by some kinds of pensions and insurance that are affected by baby-boom demographics.

    My primary issue here is to deal with the realities and to oppose lies, propaganda and misinformation no matter who is peddling it.

    And ..my friends… Groveton is peddling… it…

    and it’s not something he should be particularly proud of.

  28. Groveton Avatar
    Groveton

    Gotta love LarryG:

    He can prove himself wrong with the very evidence he cites and then not have the guts to admit his error.

    He has spent months claiming that Social Security is “pay-as-you-go”.

    Now, the social security administration web site he references questions that assertion.

    Does LarryG admit that Social Security is not “pay-as-you-go”?

    No. He helpfully provides a definition of “pay-as-you-go”:

    “pay-as-you-go is defined to be a regular source of funding that is then spent on benefits as opposed to money collected and kept in an account for later use.”.

    Very good (sort of). Now, about that $2.4T that is being kept in an account for later use over at Social Security…

    Doesn’t that mean Social Security is NOT pay as you go?

    Of course not!!!

    Here’s the babbledy – gook, double talk from LarryG:

    “Both private insurance and SS will – if the look-ahead indicates future unfunded liabilities will increase premiums to build up a temporary contingency fund to smooth out the transition to higher premiums/different coverage.”.

    That sure sounds like money collected and kept in an account for later use to me.

    Let’s review …

    1. Social Security was a “pay as you go” plan from 1937 (when payroll taxes were first collected) until 1983 when a decision was made to build an intentional surplus. That’s 46 years.

    2. Social Security will be a plan which “keeps money in an account for future use” until, at least. 2024 when that account runs dry. That’s 41 years.

    Larry’s “temporary contingency fund to smooth out the transition to higher premiums/different coverage.” will last for 41 years, at least. Interesting use of the word “temporary”.

    Social Security is the monster from the black lagoon. Originally envisioned as a modest plan by Roosevelt, the early years saw a 1% tax on payrolls paid by employer and employee alike. That tax has risen almost 700% faster than wages since the start of the program and still the advertised benefits cannot be paid out (at the level advertised) after 2024.

    Social Security was originally designed as a “pay as you go” system. That design lasted until Ronald Reagan and Tip O’Neill were forced to admit that such a stupid design would never work with America’s changing demographics. So Dutch and the Tipster switched Social Security from a “pay as you go” plan to a pre-funded plan. Of course, being government practitioners, neither Ronny nor Tommy could figure out a plan that would work so they did what politicians always do …

    Raised taxes and kicked the can down the road for another 41 years.

    Now that we can see the place where the can will stop rolling we need another “fix Social Security for all time” plan (this will be perhaps the fourth such plan). Let’s see … it didn’t work as a “pay-as-you-go” plan, it didn’t work as a pre-funded plan, what’s next?

    Oh, I know … Solyent Green!! We’ll fund the plan by turning human corpses into food! Good news on two fronts …

    When a person dies we don’t have to pay any more benefits from the “whatever-the-hell-it-is” plan, and …

    We can fund the surplus or add to the “pay as you go” by selling the food created by rendering human remains.

    Somewhere, well inebriated, Dutch and the Tipster must be laughing their asses off.

  29. Groveton Avatar
    Groveton

    And what does the current “look ahead” tell you, LarryG?

    “Both private insurance and SS will – if the look-ahead indicates future unfunded liabilities will increase premiums to build up a temporary contingency fund to smooth out the transition to higher premiums/different coverage.”.

  30. larryg Avatar
    larryg

    social security is DEFINED as a pay-as-you-go system and it OPERATES as a pay-as-you-go system.

    Groveton has yet to provide a single reference that says it’s not.

    SS has trust fund with a balance. So do other govt trust funds.

    that’s because govt trust funds are essentially checking accounts.

    they build up balances so they can pay out when revenues falls short – like in recessions – like now.

    unfunded liabilities are what happens in the future if you do nothing between now and then,

    Unfunded liabilities in SS are what happens if not changes are made but since it is funded from FICA it has no impact on the Federal budget which is not funded form FICA and does not give SS money from income taxes.

    Private pay-as-you-go systems ALSO have “look ahead” and can see future unfunded liabilities. The way that private insurance handles it is that when your policy expires at the end of the year they raise your premiums or cut your coverage or both.

    they do this every year to keep their finances solvent,

    SS does the same exact thing but it does not update on an annual basis but rather every few years – that literally takes an act of Congress to accomplish.

    perhaps if SS made annual adjustments Groveton would not get his panties in such a wad, eh?

    Groveton – you’re a stitch.. you start off ignorant about how SS actually works but then once you find out – you can’t admit it….

    just keep twisting that elastic on those drawers

  31. larryg Avatar
    larryg

    the thought occurs (or perhaps it’s wishful thinking) that Groveton really does not understand how the trust fund actually works.

    Every day there are hundreds/thousands of transactions in the trust fund. Every time an employer sends in FICA money – it gets deposited in the Trust fund – the Treasury issues redeemable notes for the FICA money.

    At the same time SS is cashing in / redeeming notes held from a year ago.. with interest and pay out benefits.

    what’s left in the fund is the balance and since it’s positive, it’s characterized as a “surplus”.

    In years of recession the balance gets drawn down further as there are less people employed that are paying FICA taxes but there are still the same number of retired receiving SS checks.

    At some point fairly soon.. FICA will no longer generate enough money to keep a fixed balance in the trust fund and they’ll start to draw it down.

    in the early years it won’t be a huge amount – but as more people retire the outflow will start to accelerate – until about 2037 (or earlier if we keep reducing the FICA tax) when the trust fund will hit a zero balance and from that point on FICA will pay out everything that comes in but payouts will dip to 75% of “scheduled” benefits.

    Before that ever happens, Congress will take action to implement one or more of the 30 options that OMB has developed to alter the program.

    This process is not a new one. Over the years, dozens of changes have been made to FICA and Social Security – as a direct result of the annual 75year “look-ahead”.

    but the trust fund is not some static fund that will only be “opened” at some later date when SS needs it.

    The trust fund undergoes hundreds of transactions every day.

    Now the big problem here is that many, many people do not understand this – to include the 80% who support SS but don’t understand how it works.

    The folks on the right – like Heritage – see this ignorance as opportunity to misrepresent the reality and they do it in hopes to get more people to give up on SS as not a viable program.

    it’s working “pretty good” depending on one’s perspective.

    but there is no real way to have an honest debate as to possible changes to SS – perhaps to a pre-funded pension fund – if we can’t or won’t use the facts about it right now.

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