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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: Little Joe who wrote (149803)	11/12/2010 11:53:14 PM
From: wonk	Read Replies (1) \| Respond to of 541740

…I think I am correct that the "lockbox" money is a loan to the government and bears interest as any bond, although I seem to recall that the interest rate is less…. I think you have it right, except for the effects. Remember this seen from “It’s a Wonderful Life”? youtube.com Well, as Jimmy Stewart said ... The money’s not there. What you paid in was long since spent: on Korea, and Vietnam and confronting the Soviet Union and some of it to pay benefits to others long since passed on. Now my daughters FICA is being used to pay your SS check every month, and a little piece of an Aircraft carrier, or the MRE some soldier in Afghanistan is eating tonite. And all she gets is a promise of a benefit. She could think of it as 90% goes to pay you and 10% is going to pay for those MREs OR she could think of it as 40% is going to pay you and the remainder is going to pay for the Aircraft carrier, and the Justice Department and everything else. But that is all insurance is ... a promise to pay. When you give your money to Hartford or Northwestern Mutual for an annuity they don't put your money in box. Your cash becomes an entry on a ledger. They use your money to build corporate offices, pay salaries and dividends, make investments. You trust they manage their business wisely. But you don't trust that they manage your "money" wisely, because its not your money anymore. You trade your money for a promise to pay later. But back to my main point. When SS has an excess (and it always has had) the upper brackets are quiet because it keeps their income taxes lower than what they would have been. But when it appears that it will run a deficit, like now as the Boomers are starting to retire, and the bonds will need to be cashed - well they hate that like a vampire hates holy water. So they’re creating fear. They want more SS taxes or fewer benefits so the yearly operating budget stays in surplus – so they never have to pay the bonds back.