quote:

Originally posted by ensigmatic:
]Social Security was, until Congress "borrowed" a bunch of money from it and never paid it back.

Urban myth. This never happened.

https://www.ssa.gov/history/InternetMyths2.html

Q1. Which political party took Social Security from the independent trust fund and put it into the general fund so that Congress could spend it?

A1: There has never been any change in the way the Social Security program is financed or the way that Social Security payroll taxes are used by the federal government. The Social Security Trust Fund was created in 1939 as part of the Amendments enacted in that year. From its inception, the Trust Fund has always worked the same way. The Social Security Trust Fund has never been "put into the general fund of the government."

Most likely this question comes from a confusion between the financing of the Social Security program and the way the Social Security Trust Fund is treated in federal budget accounting. Starting in 1969 (due to action by the Johnson Administration in 1968) the transactions to the Trust Fund were included in what is known as the "unified budget." This means that every function of the federal government is included in a single budget. This is sometimes described by saying that the Social Security Trust Funds are "on-budget." This budget treatment of the Social Security Trust Fund continued until 1990 when the Trust Funds were again taken "off-budget." This means only that they are shown as a separate account in the federal budget. But whether the Trust Funds are "on-budget" or "off-budget" is primarily a question of accounting practices--it has no effect on the actual operations of the Trust Fund itself.

O.K. I have shown my ignorance. I had no idea it was such a small component of the budget. I'll change my request - Can we please stop giving it to people who hate us?

Thanks,

RMD

quote:

Originally posted by ArtieS:
It appears that the US spends just over 1% of the budget on foreign aid.

https://www.cfr.org/background...pend-its-foreign-aid

You are 100% correct. Eliminating all foreign aid will not come even close to solving our financial problems. Plus, in addition, a lot of foreign aid actually stays in the U.S. How, you say, is that possible? A lot of foreign aid is product, not cash. For example virtually 100% of the military foreign aid we provide to other countries consists of US military equipment and is manufactured in the US by American workers. Some of the foreign aid consists of grants or gifts of food products. The money for the food goes to American agriculture. Yes, it's foreign aid. And yes it's paid for by US taxpayers. But a lot of the cash actually stays here.

This is not a pro-foreign aid post. It's simply citing the facts.

quote:

Originally posted by rduckwor:
What rates would be necessary to support the country IF WE STOPPED ALL FOREIGN AID?
RMD

About twice what they are now, assuming zero-sum accounting.

Fedgov spends nearly twice as much as they take in. The last time I looked the number was 40% of all spending was using borrowed money, meaning they have to reduce spending by 40% just to get to a balanced budget!

In reality, increasing tax rates from where we already are at will result in tamping down the economy and thus reducing dollars taken in by fedgov.

There is no way to tax our way out of the deficit nor the national debt.

But I agree we should stop giving money away to foreign countries when we are in such tough financial condition here.

quote:

Originally posted by architect:
You know, another way of looking at it might be: aren't we lucky to be living in a country that is wealthy enough to afford such largess?

Don't get me wrong, I believe the Federal Govt. is out-of-control in their spending habits, and that this trend will eventually lead to an unsustainable situation where we will all be bankrupt. But it is also gratifying to know that the USA is by far the most successful and productive country that history has ever seen, by a long long shot.

Wealthy enough to afford? The Federal Gov't is spending TWICE as much as we can afford...And in case there is any question, it's 'unsustainable' RIGHT NOW!

well as I understand it Social Security is us getting paid back some of the money we loaned the government over the years that we worked.....

Now Medicaid and specifically Medicare is different... at least with Medicare it pays some of my medical bills... but then I'm paying for that out of my social security.... So far the government is way ahead on that deal with me..... but I've only been on Medicare for 6 months...

How is Medicare Financed?

Medicare is funded primarily from general revenues (43 percent), payroll taxes (36 percent), and beneficiary premiums (15 percent).

The "payroll tax" referenced above is simply that portion of your FICA tax that goes into the medicare trust fund. As you can see, beneficiary premiums only pay for just 15% of expenditures. And general revenues means just that. 43% comes from the same pot of money that pays for everything else the federal government spends money on from welfare payments to defense to the Food and Drug Administration.

Since 43% comes from general revenues, congress passed a law charging a higher premium for higher income people. There are two points of view on this. 1 - It's not fair to punish people who are successful. They paid their dues. Or 2- why shouldn't higher income people pay more since 43% come from the same pot of money as welfare, food stamps, defense etc.

As far as Social Security, the funding has been the same since 1937. SS taxes fund the program. There are three things you can do with the SS tax revenue.

Option #1 Let it sit. Do nothing except allow it to only go towards benefits due to beneficiaries.

Option #2 Invest in safe instruments like Treasury bills to get some interest and to put the money at work.

Option #3 Invest in private equity markets like stocks and bonds for a higher return on the money.

When you buy a savings bond (considered to be a very safe investment) what does the government do with the money? Anything they damn well please. Savings bonds and treasury bills are basically the same thing. They are considered safe. That's where the SS tax money is currently being invested. Interest is being paid. That's why people say the government is " robbing" the trust fund. Once the trust fund money goes into Treasury bills, the government is free to spend the money on anything. Since 1937 the trust fund has always been invested in Treasury Bills. And yes interest is being paid to the trust fund.

During the Bush administration a trial balloon was floated about allowing tax payers to invest a small portion of their SS tax money in the private equities market. The proposal went no where. The D's crucified the proposal as a "scheme" to rob SS to enrich the Rs wall street buddies.

I would have been fine with allowing more flexibility with SS tax revenue for individuals. But that will never happen in my lifetime.

The politician who takes from Peter to give to Paul can always count on Paul at election time.

No politician will ever give up the power to buy votes with other peoples' money.

Very few voters will ever pass up an opportunity for what they think is a free lunch.

quote:

Originally posted by ridewv:
Social security and medicare should be self funded not paid from tax dollars.

That's funny because it's not exactly true. People pay out of their wages and income into social security and medicare. The problem is that after people put their money into the social security and medicare funds, the government comes by, takes the money out, and drops an iou note in place of the money. They they go spend the money.

Keep an eye on that debt service piece of the pie. For the last decade or so fed funds rate has been between 0 and .5% And most of our debt was borrowed and refinanced at those great rates. Fed funds is now over 4%. Get ready for some pain.

quote:

Social security and medicare should be self funded not paid from tax dollars.

^^^^^^^^^^^^
I paid for years into Medicare. THey kept raising the ceiling every year. To top it off there is another graduated tax if you will on Medicare Parts B and D based on income. I have been paying social security taxes on my income since age 14. I did well with my self funded retirement plans and would have come out way ahead.

Rich folks are likely to be punished most in the recession. Poor folks are living high on the hog thanks to Biden and the Covid handouts. Sitting at home is more profitable.

quote:

Originally posted by ridewv:
Social security and medicare should be self funded not paid from tax dollars. Medicaid is a big problem though.

Think of the Social Security fund as a Lender who has funded congressional “projects” not their investors. Now that there little to no money left in The SS fund, taxpayers are left to pay back the loans Congress has made as well as being required to pour more money into the fund so Congress can borrow more money. That’s the part that needs reform.

quote:

Originally posted by nhracecraft:
^^^So then you're saying that Ukraine has DOUBLED what the US .gov spends on Foreign Aid...Got it!

You are determined to miss the point because the actual amount of foreign aid spending isn't what you thought it was.

I get it, you think it is too high, and that is okay. But curbing foreign aid will not cure any budget problems we have.

All irrelevant. The only instrument the SS Administration can invest the trust fund in is treasury bonds. So the government has essentially lent the trust fund money to itself, and spent it. So now as it needs the trust fund to finance benefits going forward, as an aging population puts SS into deficit, the government has to come up with the money, to pay itself back. How is this different than what Ensigmatic said? Also, how would this be different than if SS never raised the money for the trust fund in the first place, and just stuck with pay as you go, especially on a whole government basis?

quote:

Originally posted by Flash-LB:

quote:

Originally posted by ensigmatic:
]Social Security was, until Congress "borrowed" a bunch of money from it and never paid it back.

Urban myth. This never happened.

https://www.ssa.gov/history/InternetMyths2.html

Q1. Which political party took Social Security from the independent trust fund and put it into the general fund so that Congress could spend it?

A1: There has never been any change in the way the Social Security program is financed or the way that Social Security payroll taxes are used by the federal government. The Social Security Trust Fund was created in 1939 as part of the Amendments enacted in that year. From its inception, the Trust Fund has always worked the same way. The Social Security Trust Fund has never been "put into the general fund of the government."

Most likely this question comes from a confusion between the financing of the Social Security program and the way the Social Security Trust Fund is treated in federal budget accounting. Starting in 1969 (due to action by the Johnson Administration in 1968) the transactions to the Trust Fund were included in what is known as the "unified budget." This means that every function of the federal government is included in a single budget. This is sometimes described by saying that the Social Security Trust Funds are "on-budget." This budget treatment of the Social Security Trust Fund continued until 1990 when the Trust Funds were again taken "off-budget." This means only that they are shown as a separate account in the federal budget. But whether the Trust Funds are "on-budget" or "off-budget" is primarily a question of accounting practices--it has no effect on the actual operations of the Trust Fund itself.