Poverty among plenty


The Bay Citizen has a fascinating map by census tract of poverty in the Bay Area. Among the things that jump out: There's plenty of serious poverty in the area -- and it's worst than the map shows. The definition of "poverty" is a family of four living on $22,113 -- in the Bay Area. Hard to imagine how a family of four can even pay rent, much less eat, in this part of the world on $22,000.

Aaron Glantz makes an interesting point: "In many parts of the Bay Area, the wealthy and poor live in close proximity to each other." Check out the census tract in the Richmond, right next to Seacliff, where some of the richest San Franciscans live. A full 20 percent of the residents of that area are under the federal poverty line -- and they can walk a couple of blocks to the mansions where millionaires live. There are 60 people living in extreme poverty in the 35-square-block area around Presidio Heights, where the likes of Sen. Dianne Feinstein and Rep. Nancy Pelosi live.

Poverty among plenty. Just a tiny fraction of the wealth of Feinstein, Pelosi and their neighbors would pull all of those 60 people way above the poverty line. And the Presidio Heights denizens would never miss it.


The data also show that in many parts of the Bay Area, the wealthy and the poor live in close proximity to each othe

Source: The Bay Citizen (http://s.tt/14J0t)

The data also show that in many parts of the Bay Area, the wealthy and the poor live in close proximity to each other. 

Source: The Bay Citizen (http://s.tt/14J0t)


As this stream still seems to be 'active', I'll ride the wave. Here's my 'request for information/clarification' from anyone, regardless of political affiliation.
My layman's understanding is that all Social Security 'deductions' were theoretically/legally supposed to be deposited in a 'dedicated account' and only used to make appropriate payments to those who had been required to pay into the system.
For many years the 'rumor' has been that the Social Security 'account' has been routinely used to fund 'other programs'. For many years we have been told by our elected representatives that the Social Security System is close to bankruptcy. I'm not a number cruncher or smart enough to figure all this out so I have a few simple questions for those who are; does anyone know:-
1) Since 1935, how much has been paid into the system.
2) Since 1935, how much has been paid out in legitimate claims.
3) Assuming 1 & 2 above, what should the minimum current balance be,
discounting or including "return on investments")
4) What is the current balance.
5) If there is a discrepancy, where did our money go and how can we get it back,.

Posted by Patrick Monk. RN on Dec. 12, 2011 @ 11:30 pm

Wikipedia is usually a decent place to begin research, especially the footnotes and reference material at the bottom of the main articles that link to primary source material.


According to the writers of the wikipedia article, in 2007 the SS Trust Fund had an "excess" of $2.2 trillion: ie, the difference between all SS taxes paid to date by employees and employers, less cumulative amounts paid in benefits. Somewhere around 2020 (give or take a few years) as baby boomers continue to retire en masse, the benefits paid out will be greater than the current payroll taxes received each year. At some point between 2030 and 2050, the current $2 trillion Trust Fund will be depleted altogether and other tax revenues will be needed to pay SS benefits or benefts will be sharply curtailed (most likely).

The Trust Fund is a misnomer since there is no actual money in the fund, only scraps of IOU paper. Congress has used "excess" SS tax revenues over past decades for other government expenses (the incessent foreign wars, welfare tax subsidies to landlords and wealthy bondholders, etc.) that will have to be repaid from general fund revenues at some point starting later this decade.

As typical of all complicated subjects, there are no easy or simple answers. It's always a foggy morass of gray where our personal biases will color our perception and policy prescriptions. If you are wealthy, the SS system works fine since it's irrelevant to your economic well-being. If you're under 30, you should want Congress to immediately end the combined 15% employee/employer FICA/SSI/Medicare taxes taken from your paycheck since there won't be any money in the system by the time you're ready for retirement.

A few quotes from wikipedia:

"In 2011, there will be 56 million beneficiaries and 158 million workers paying in. In 2010, total income was $781.1 billion and expenditures were $712.5 billion, which meant a total net increase in assets of $68.6 billion. Assets in 2010 were $2.6 trillion, an amount that is expected to be adequate to cover the next 10 years. In 2023, total income and interest earned on assets are projected to no longer cover expenditures for Social Security, as demographic shifts burden the system. By 2035, the ratio of potential retirees to working age persons will be 37 percent — there will be less than three potential income earners for every retiree in the population. The trust fund would then be exhausted by 2036 without legislative action." http://journalistsresource.org/studies/government/politics/social-securi...

Social Security taxes are paid into the Social Security Trust Fund maintained by the U.S. Treasury (technically, the "Federal Old-Age and Survivors Insurance Trust Fund", as established by 42 U.S.C. § 401(a) [In 1937 the US Supreme Court upheld the program because "The proceeds of both [employee and employer] taxes are to be paid into the Treasury like internal-revenue taxes generally, and are not earmarked in any way". That is, the Social Security Tax was constitutional as a mere exercise of Congress's general taxation powers." Helvering v. Davis 301 U.S. 619 (1937)

"Current year expenses are paid from current Social Security tax revenues. When revenues exceed expenditures, as they have in most years, the excess is invested in special series, non-marketable U.S. Government bonds, thus the Social Security Trust Fund indirectly finances the federal government's general purpose deficit spending. In 2007, the cumulative excess of Social Security taxes and interest received over benefits paid out stood at $2.2 trillion.[89] The Trust Fund is regarded by some as an accounting trick which holds no economic significance. Others argue that it has specific legal significance because the Treasury securities it holds are backed by the "full faith and credit" of the U.S. government, which has an obligation to repay its debt."

"In 2009 the Office of the Chief Actuary of the Social Security Administration calculated an unfunded obligation of $15.1 trillion for the Social Security program. The unfunded obligation is the difference between the present value of the cost of Social Security and the present value of the assets in the Trust Fund and the future scheduled tax income of the program."

"In each year since 1982, OASDI tax receipts, interest payments and other income have exceeded benefit payments and other expenditures, for example by more than $150 billion in 2004.[98] As the "baby boomers" move out of the work force and into retirement, however, expenses will come to exceed tax receipts and then, after several more years, will exceed all system income, including interest. At that point the system will begin drawing on its Treasury Notes, and will continue to pay benefits at the current levels until the Trust Fund is exhausted. At that point, benefits will be reduced to about three-fourths of current levels unless additional revenue is found.

In 2005, this exhaustion of the Trust Fund was projected to occur in 2041 (by the Social Security Administration[99]) or 2052 (by the Congressional Budget Office[100]). Thereafter, however, the projection for the date of this event was moved up by a few years after the recession worsened the system's financial picture."

Finally, the bottom 1/3 of the very long wikipedia entry mentions many critiques about the current system.

"Critics, such as libertarian Nobel Laureate economist Milton Friedman, say that Social Security redistributes wealth from the poor to the wealthy.[117][118]

Workers must pay 12.4 percent, including a 6.2 percent employer contribution, on their wages below the Social Security Wage Base ($110,100 in 2012), but no tax on income in excess of this amount.[119][120] Therefore, high earners pay a lower percentage of their total income because of the income caps; because of this, payroll taxes are often viewed as being regressive.

Furthermore, wealthier individuals generally have higher life expectancies and thus may expect to receive larger benefits for a longer period than poorer taxpayers.[121] A single individual who dies before age 62, who is more likely to be poor, receives no retirement benefits despite his years of paying Social Security tax."

Repeating this key point about the SS system:
"A single individual who dies before age 62 [or 65 if they didn't elect early payments], who is more likely to be poor, receives no retirement benefits despite his years of paying Social Security tax."

Bottom line: Social Security is not a retirement program. As we would expect from a country like the US that was initally founded by wealthy bondholders and big landlords, Congress used a regressive tax on working people rather than a more progressive tax system. A better system would fund SS - a very popular and worthwhile program - with community wealth like land rents, 75% tax rate on all capital gains and a robust estate/inheritence tax system on estates over $1-3 million.

A final quote:
"As with Ponzi’s scheme, when the number of new contributors dries up, it will become impossible to continue to pay the promised benefits. Those early windfall returns are long gone. When today’s young workers retire, they will receive returns far below what private investments could provide.[147]"

Posted by Guest on Dec. 13, 2011 @ 10:17 am

The projected Social Security deficit can be easily and completely eliminated by removing the income cap on the Social Security tax.

Currently, all income above $107k per year is simply (and outrageously) not taxed for Social Security.

Remove the cap, and Social Security becomes solvent for the rest of eternity.

Posted by Eric Brooks on Dec. 13, 2011 @ 10:37 am

abolish SS and pay all benefits from general revenues, raising income tax by the required amount.

SS is kept separate to maintain the fact (or the illusion, depending on how you look at it) that SS is actually a contract and not a benefit.

So you get out of SS what you put into it, with some limits of course.

And that's why the contributions are capped - because the benefits are capped. So are you arguing for unlimited SS benefits?

Posted by Guest on Dec. 13, 2011 @ 11:26 am

Don't have a max earnings cap, while the people who make the most money probably live longer than people who make less.

So the people who make 150,000,000 collect at their greater rate for 20 years. The people who make 40,000 collect for 10 years.

Doesn't seem to work out in the long term.

It might work for a few years as the income to SS goes up right away, when all those big payers retire they would be using it all up.

Posted by Guest on Dec. 13, 2011 @ 3:58 pm

generally died a couple of years after retiring. Back then it was not envisaged that we'd have people being retired for decades drawing 2K per month on the dime of a diminishing workforce.

It needs to be redesigned from the ground up but the problem is that we can't get there from here. We can't DK on the benefits promised to people who have worked their whole life. So we're between a rock and a hard place.

PersonallyI'd privatize the whole thing, buy everyone out at present value, and shut it down. But of course that won't happen.

So we'll muddle along and kick the can down the road.

Posted by Guest on Dec. 13, 2011 @ 4:10 pm

Appreciate your response. Will do some more research as you suggested, though with my limited old luddite computer skills it gets pretty tedious. If I read you correctly there is approx 2 trillion in the fund now, that will be depleted in about 40 years. However there is approx 15 trillion 'owed' to the fund that has been used for other purposes? I know that's a very simplistic interpretation but I'm trying to wrap my tired old brain round the issue.

Posted by Patrick Monk. RN on Dec. 13, 2011 @ 1:22 pm

The "fund" consists of a bunch of IOU's from the government, to be made good from future revenues.

SS is essentially a ponzi scheme. It pays out current contributions to current retiree's, and worries about future obligations, well, in the future.

Right now, most boomers are still working but as that changes, it's going to be a real problem. Those under 50 should be scared, very scared.

Ditto for Medicare, by the way, and probably even more so.

Posted by Guest on Dec. 13, 2011 @ 3:57 pm