I say yes, you say no, OR People are Strange

Wouldn't it be ridiculous for that amount of money to not be earning interest? Maybe some would prefer it be invested in the stock market?? What are other options?

From the SSA webpage:

The last 5 Trustees Reports have indicated that Social Security's Old-Age, Survivors, and Disability Insurance (OASDI) Trust Funds would become exhausted between 2037 and 2041 under the intermediate set of economic and demographic assumptions provided in each report. If no legislative change in enacted, scheduled tax revenues will be sufficient to pay only about three fourths of the scheduled benefits after trust fund exhaustion. Many policymakers have developed proposals and options to address this long-range solvency problem.

Barbara -

Social Security must, by statute, invest excess funds (funds not needed to pay current benefits) in interest-bearing Treasury securities.  So, technically, the federal government is "borrowing" from Social Security in the same way the federal government "borrows" from state and local governments and any other person or entity buying Treasury securities. 

The reason most state and local governments require some investment in US Treasury securities is because they're generally acknowledged as one of the safer investments.  Was it Orange County, California that was in trouble a decade ago for investing in derivatives and junk bonds?

E

Bren and E, I am not surpised that there is a discrepancy. It is pretty hard to get conclusive information from the SSA website.

Can someone enlighten me as to what the goverment is thinking dropping the social security contribution from 6 to 4%? I mean, maybe they think that will help people and improve the economy. But when people don't have jobs, what good will this do? And to stimulate job creation, they could have cut employer contribution by 2%. Maybe I am just dense but I don't get it.

I think businesses would hire more people if their SS contribution would go down. That represents a significant savings for a company, IMO. But I still think this is a stupid idea, although I will be happy for every extra cent I get.

Barbara -

I agree!  Dropping payroll taxes was phenomenally stupid.  It's supposed to be temporary - for one year - but we all know how "temporary" temporary tax cuts/taxes are.

But E, doesn't the whole thing sound like a pyramid scheme? Issuing securities then 'selling' them to SS? To me, it seems like an accounting scam.

The idea of the 2% cut in the payroll tax on workers is to stimulate demand by putting a little extra in workers' take-home pay.  It was a replacement for the "making work pay" tax credit in the original stimulus bill (which was a flat $400 individual/$800 joint . . . can't remember if eligibility was subject to an income cap and if so what the cap was).  The payroll tax cut gives less to low earners (breakeven would be wage and salary earnings of $20K individual/$40K joint) and more to those with higher incomes. Not the best policy either for equity or for stimulus, but it's what could get through the Senate without a filibuster.

The cost of the payroll tax break is coming from Treasury, not the Social Security system.  I'm not sure of the exact mechanics for that, but I do know that the system is *not* taking a revenue hit.  So there's no impact on its long-run solvency.

IMO, giving additional tax breaks on the business side, unless they were very specifically targeted, would not do much for the economy.  It's not that the corporate sector doesn't have $$ to hire and invest -- businesses are sitting on a HUGE stash of cash right now -- it's that they look around and don't see the consumer (or government) demand to justify putting on more workers.

L

If they were issuing the securities against, say, gold, then fine but *what* are they issuing it against? Future taxes at a 50% rate? That's pretty much what it's going to take at this rate.

I have read the last three pages of this thread and I am very impressed at the civility of the posters and the quality of the information posted. 

As for Social Security, I too think a great deal of the problem will be fixed if we removed the cap on SSI contributions.  When I was working, I stopped paying into SSI in June every year.  I enjoyed the extra money in my pay check, but I would not have gone broke if I paid in every month of the year.

Although I am a progressive politically, I think the Tea Party has some excellent ideas.  I am not confident that those ideas will actually be implemented.  It became very difficult for sincere people to have an affect since the SCOTUS ruled that corporations had the right to directly contribute to politicians.  Corporations are controlling the agenda more than they ever have. 

Corporations are fighting the removal of the salary cap because they would have to pay the employers share for all employees rather than the bottom two thirds of earners. Health Insurance companies had tremendous input into the health care bill.  They are now having record profits. Corporations are now the super citizens of America.  

BarbaraA - where would SS invest the money if not in gov't securities? Stock market? Foreign securities? I'm not saying it's safe invested in Gov't securities, but I don't see any alternative.

So, I can't believe that no one will even comment on the fact that the US really doesn't have as free a speech as you think it does.  If the gov't doesn't like what you have to say, they will send in the FBI to investigate.  Not open & honest like the Canadian Gov't so everyone knows exactly what is & isn't tolerated, but sending in the Feds to investigate.  I realize I missed the whole commentary being at the Oncologist's for testing, but nothing????

Give it time MFrog...  Maybe they're fed up with the veggie talk?  But it's so nice to tone down the dialogue with a non-contentious conversation.

Your locale reminded me of when I took the ferry from Port Hardy to Prince Rupert a few years ago -- we saw one of the elusive white Spirit Bears on one of the islands.  So beautiful where you live.

Kona & Bin,  Probably because I had to read through 130 replies in a short period of time & listen to how bad we have it in Canada, that we are muzzled in what we can say.  Then in the newspaper that very day is an article showing a professor being investigated, I just thought that it would illustrate the point.  I'm not looking for a fight or even a discussion, just some acknowledgement that perhaps the US is not all that different from us.

Elizabeth, I've never seen a white bear aka as the "Spirit Bear" they are quite rare.  I live on a small island just off Nanaimo, we have no bears here, but I've seen a number of them (none white) on Vancouver Island, 

We really don't have true freedom of speech in America,imo..  For example, these type discussion groups can tell us what we can and can't say.  They get to make their own rules for what they will allow and if we want to interact, we have to agree to follow "their" rules.  Frankly, I think true freedom of speech should allow people to talk about whatever subject they want to as long as they are not being obscene or causing other posters problems in their lives.

I had an experience many years ago back down South having to do with "freedom of speech".  We had this really bad kid who was in the dark of night robbing neighbors and would stand across from my home and curse me out in the worse of the language with the "f" word being constant.  I called the police and reported him but was told as long as he was not physically doing me harm, he could call me all kinds  of names and curse me but they could not do a thing to him.  It was a part of his "freedom of speech".  

Well, I may be petite in size but I am quite large in determination when I get angry.  I decided "I" would catch him doing his robberies and end the neighborhood of this kid once and for all.  I stayed up "all" night and at 4 am I saw him returning to hide more of his theft items in his garage.  I called the police and had them catch him "with the goods".  He might have his freedom of speech but he now had to use it in a juvenile detention facility and all the robberies came to an end.  I later found out that I did the kid a favor by having him caught because it steered him into a better life.

So I think "freedom of speech" can be used for too many wrong purposes in the US.