Social Security is Slipping Closer to Insolvency and Why Removing the Cap Won't Solve the Problem

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    Apr 25, 2012 2:09 AM GMT
    From the LA Times:
    http://www.latimes.com/health/la-na-medicare-report-20120424,0,7399775.story

    The nation's Social Security and Medicare programs are sliding closer to insolvency, the federal government warned in a new report underscoring the fiscal challenges facing the two mammoth retirement programs as baby boomers begin to retire.

    Medicare, which will provide health insurance to more than 50 million elderly and disabled Americans this year, is expected to start operating in the red in its largest fund in 2024, according to the annual assessment by the trustees charged with overseeing the programs. That's unchanged from last year.

    And the Social Security trust fund, which will provide assistance to more than 45 million people in 2012, will be unable under current trends to fulfill its obligations in 2033, three years earlier than projected last year.


    The longer politicians wait, the worse the problem will be to resolve because of the magic of compound interest. There was a factually incorrect title posted here with a link to a site called thinkprogress where they apparently are unable to do math. In fact, a Social Security Administration report looked at the effect of removing just such a cap in 2004 - here's the summary:
    http://www.ncpa.org/pub/ba470

    The biggest problem is that by breaking the link between contributions and benefits, Social Security becomes a welfare program than a social insurance program. Secondly it only delays the insolvency - it doesn't resolve the underlying problem.

    In a more updated review - taxes then become dramatically higher at the highest marginal rates: "lifting the cap would lead to some scary marginal tax rates. In my AEI outlook, I calculate that the maximum marginal tax rate on earned income, inclusive of federal income taxes, state income taxes, and payroll taxes, would rise to an average of 62 percent, ranging from a "low" of 57 percent to a high of 68 percent, depending on state."
    http://www.americanthinker.com/blog/2011/04/removing_the_payroll_tax_cap.html

    The article also doesn't understand this problem with insolvency - and I'm guessing basic accounting. Here's the problem right now with Social Security - social security was designed at a time there were far more people working than retiring. In fact, it was designed at a time when few people reached retirement age as a tool for nationalism.

    This system would have worked if the surpluses were saved and reinvested much as the annuity type model is described by proponents of social security. The problem is that it wasn't.

    Surpluses were spent by governments on things that didn't result in a return. It was reinvested in bonds that governments issued to cover deficit spending. Advocates of social security claim that there are these assets - ie Treasury bills but that's illusory because in order to collect it has to come from either issuing more bonds with people willing to buy them or surpluses in government spending.

    When this article suggests that even after 2033 75% of social security can still be paid, this assumes that there exists this pot of gold to draw down on. This pot of gold was already spent so the government will have to raise taxes dramatically or cut spending dramatically to pay for any part of it. I note as well that last year the Social Security fund went cash flow negative (ie it spent more than it took in) meaning that it now has to start redeeming bonds.
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    Apr 25, 2012 2:24 AM GMT
    What again was Obama's solution to this problem? Can't quite recall......icon_rolleyes.gif
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    Apr 25, 2012 4:01 AM GMT
    Here you go:

    http://www.realjock.com/gayforums/2324258

    Problem solved.
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    Apr 25, 2012 4:19 AM GMT
    Christian73 saidHere you go:

    http://www.realjock.com/gayforums/2324258

    Problem solved.


    Except they missed the math - apparently, so did you.
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    Apr 25, 2012 4:25 AM GMT
    riddler78 said
    Christian73 saidHere you go:

    http://www.realjock.com/gayforums/2324258

    Problem solved.


    Except they missed the math - apparently, so did you.


    Yeah. You seem to miss the fact that Social Security is untouchable politically, and should also be so morally (a concept I realize you don't understand, not having any discernible morals).

    BTW, how's all the socialist programs in Canada treating you these days? Enjoying the free healthcare and public investment that you would deny Americans?
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    Apr 25, 2012 4:35 AM GMT
    Christian73 said
    riddler78 said
    Christian73 saidHere you go:

    http://www.realjock.com/gayforums/2324258

    Problem solved.


    Except they missed the math - apparently, so did you.


    Yeah. You seem to miss the fact that Social Security is untouchable politically, and should also be so morally (a concept I realize you don't understand, not having any discernible morals).

    BTW, how's all the socialist programs in Canada treating you these days? Enjoying the free healthcare and public investment that you would deny Americans?


    I find that those who claim moral superiority are often the least moral - and in fact quite the opposite in justifying the horrifying atrocities socialists have been responsible for. Whether or not you want to touch it doesn't mean that the math works out any better.

    Hmmm your "morals" versus math. I wonder who will win.... icon_rolleyes.gif
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    Apr 25, 2012 4:44 AM GMT
    riddler78 said
    Christian73 said
    riddler78 said
    Christian73 saidHere you go:

    http://www.realjock.com/gayforums/2324258

    Problem solved.


    Except they missed the math - apparently, so did you.


    Yeah. You seem to miss the fact that Social Security is untouchable politically, and should also be so morally (a concept I realize you don't understand, not having any discernible morals).

    BTW, how's all the socialist programs in Canada treating you these days? Enjoying the free healthcare and public investment that you would deny Americans?


    I find that those who claim moral superiority are often the least moral - and in fact quite the opposite in justifying the horrifying atrocities socialists have been responsible for. Whether or not you want to touch it doesn't mean that the math works out any better.

    Hmmm your "morals" versus math. I wonder who will win.... icon_rolleyes.gif


    What atrocities have socialists been responsible for? And please spare us any sad attempt to conflate democratic socialism with Stalin, which was not socialism. icon_rolleyes.gif
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    Apr 25, 2012 4:58 AM GMT
    Christian73 said
    riddler78 said
    Christian73 said
    riddler78 said
    Christian73 saidHere you go:

    http://www.realjock.com/gayforums/2324258

    Problem solved.


    Except they missed the math - apparently, so did you.


    Yeah. You seem to miss the fact that Social Security is untouchable politically, and should also be so morally (a concept I realize you don't understand, not having any discernible morals).

    BTW, how's all the socialist programs in Canada treating you these days? Enjoying the free healthcare and public investment that you would deny Americans?


    I find that those who claim moral superiority are often the least moral - and in fact quite the opposite in justifying the horrifying atrocities socialists have been responsible for. Whether or not you want to touch it doesn't mean that the math works out any better.

    Hmmm your "morals" versus math. I wonder who will win.... icon_rolleyes.gif


    What atrocities have socialists been responsible for? And please spare us any sad attempt to conflate democratic socialism with Stalin, which was not socialism. icon_rolleyes.gif


    Of course it wasn't. icon_rolleyes.gif
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    Apr 25, 2012 5:11 AM GMT
    riddler78 saidFrom the LA Times:
    http://www.latimes.com/health/la-na-medicare-report-20120424,0,7399775.story




    When this article suggests that even after 2033 75% of social security can still be paid, this assumes that there exists this pot of gold to draw down on. This pot of gold was already spent so the government will have to raise taxes dramatically or cut spending dramatically to pay for any part of it. I note as well that last year the Social Security fund went cash flow negative (ie it spent more than it took in) meaning that it now has to start redeeming bonds.




    What on earth are you talking about?

    Even if the SOCIAL SECURITY TRUST FUND is tapped out in 2033 - Social Security recipients will still recieve about 75% of the full amount of their benefits.

    So what are you talking about when you suggest that that wont be true because some "pot of gold" will no longer exist.

    FYI - SS benefits are paid for with revenues that are drawn from the paychecks of younger workers.
    Currently the amount of benefit $ being paid out is greater than the amount of revenues coming in - so there is a deficit.
    That deficit is currently being made up by drawing money from the SOCIAL SECURITY TRUST FUND.
    The Social Security program has a separate trust fund that was amassed over the years.
    It's about 2.5 trillion dollars.
    The trust fund is being drained to help the SS program meet its monthly obligations.
    By 2033 it's predicted that the SOCIAL SECURITY TRUST FUND will run out.
    It is the SOCIAL SECURITY TRUST FUND - and ONLY the Social Security Trust Fund - that will run out of money in 2033.
    The Social Security program will still be in place and it will still have enough $ coming in from the paychecks of younger workers to pay retired Americans about 75% of their benefit payments.

    WTF you're talking about with all this "pot of gold" crap is really just a mystery.

    Either you're very confused or you're being deliberately deceitful.
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    Apr 25, 2012 12:20 PM GMT
    RickRick91 said
    riddler78 saidFrom the LA Times:
    http://www.latimes.com/health/la-na-medicare-report-20120424,0,7399775.story




    When this article suggests that even after 2033 75% of social security can still be paid, this assumes that there exists this pot of gold to draw down on. This pot of gold was already spent so the government will have to raise taxes dramatically or cut spending dramatically to pay for any part of it. I note as well that last year the Social Security fund went cash flow negative (ie it spent more than it took in) meaning that it now has to start redeeming bonds.




    What on earth are you talking about?

    Even if the SOCIAL SECURITY TRUST FUND is tapped out in 2033 - Social Security recipients will still recieve about 75% of the full amount of their benefits.

    So what are you talking about when you suggest that that wont be true because some "pot of gold" will no longer exist.

    FYI - SS benefits are paid for with revenues that are drawn from the paychecks of younger workers.
    Currently the amount of benefit $ being paid out is greater than the amount of revenues coming in - so there is a deficit.
    That deficit is currently being made up by drawing money from the SOCIAL SECURITY TRUST FUND.
    The Social Security program has a separate trust fund that was amassed over the years.
    It's about 2.5 trillion dollars.
    The trust fund is being drained to help the SS program meet its monthly obligations.
    By 2033 it's predicted that the SOCIAL SECURITY TRUST FUND will run out.
    It is the SOCIAL SECURITY TRUST FUND - and ONLY the Social Security Trust Fund - that will run out of money in 2033.
    The Social Security program will still be in place and it will still have enough $ coming in from the paychecks of younger workers to pay retired Americans about 75% of their benefit payments.

    WTF you're talking about with all this "pot of gold" crap is really just a mystery.

    Either you're very confused or you're being deliberately deceitful.


    I'm going to guess it's the latter, Rick.

    There's no real issue with Social Security that can't be solved by some minor adjustments to taxation, mostly removing the cap and raising payroll taxes slightly. I'd guess most Americans would be willing to pay more to ensure the program is there for them when they retire.

    The goal of privatization is to create another market for financial services companies. Similar to the student loan issue, banks wont' add anything to Social Security but will skim their profits off the top at the expense of our seniors.
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    Apr 25, 2012 1:04 PM GMT
    I wonder if any of you bothered to read the report? Or even the public summary?

    The point is that the outlook has changed mostly due to changes in the economic assumptions used... and the problem is eminently fixable within the existing framework.

    There's no need for radical and wildly untested ideas here, or silly panicky hysteria. just some action (remember that??) from our legislators. The funding gap is actually very small indeed---to quote mr micawber:

    "Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."

    Let us not follow his example in waiting for something to turn up.
  • GQjock

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    Apr 25, 2012 1:16 PM GMT
    Ahem ..... You need to know what you're talking about when you post things

    Is Social Security running into a bind later down the line?
    Yes it is
    but let's dial back the old time clock ... Shall we?
    Let's use the Simon and Poindecter WAy Back Machine and go back to 1983 when Ronnie was in office
    You know the Alzheimery guy you like so much?
    There was another money crunch back then and Ronnie called in that guy Greenspan .... The same one that sat on the Fed when the housing bubble was happening and was surprised as shit when it blew up in his face ..... Yeah that one

    Well they changed the Social Security monetary system from a pay as you go into a fund that WASN'T SUPPOSED to be used for anything else
    ROFL.... Oh F**kin MARY that's a good one

    Well the payroll tax mainly taxed the poor and the middle class to the Of 25 trillion this SUPPOSED to be in there by now

    BUT ,........ And this is a BIG BUT

    That LOCK BOX ??? Remember that little catch phrase
    That lock box has been opened more that a slut on wheels

    What do you think funded the Iraq and the Afghanistan Wars
    And almost ANYTHING that needed quick cash that the government didn't want you to know about

    So when you say that Social Security needs fixing .... It's been done before
    And see where it got you?
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    Apr 25, 2012 2:29 PM GMT
    RickRick91 saidThat deficit is currently being made up by drawing money from the SOCIAL SECURITY TRUST FUND.
    The Social Security program has a separate trust fund that was amassed over the years.
    It's about 2.5 trillion dollars.
    The trust fund is being drained to help the SS program meet its monthly obligations.
    By 2033 it's predicted that the SOCIAL SECURITY TRUST FUND will run out.
    It is the SOCIAL SECURITY TRUST FUND - and ONLY the Social Security Trust Fund - that will run out of money in 2033.
    The Social Security program will still be in place and it will still have enough $ coming in from the paychecks of younger workers to pay retired Americans about 75% of their benefit payments.


    This cacophony of leftists squawking in protest is telling. It's sort of like a litmus test of people who can and cannot do math or have any basic understanding of finance - the difference between say a stock (asset) versus a flow (income/expense). So everyone from TigerTim to Rickrick to Christian here - let's look at where you went wrong -

    Where do you people suppose this Social Security Trust fund was invested? Treasury bonds - it's the reason that the largest investor in US bonds isn't China. This is money that future retires lent to the US government.

    Where does the US government keep this money? Oh, they DON'T! They SPENT it! So where is this money going to come from in the future considering the US continues to spend dramatically more than it brings in? Are future borrowers going to be as willing to lend to the US (this is an underlying assumption)? Let me repeat again, this Social Security Trust fund was invested in an IOU that the US government has promised to pay some point in the future. It's unfunded.

    Now here's why the problem is getting worse:
    ss.jpg

    In 1945, there were 42 workers for every recipient. In 2027 there will be 2.2. Those who actually believe that these 2.2 workers are going to be able to pay 75% of benefits please raise your hand (and it's actually going to be even fewer than this). It's not like paying for the retirement of someone else is all taxpayer dollars go towards. You liberals like to believe government is better at things like healthcare, medicare, medicaid, education, infrastructure, and the list goes on - exactly where is the money for these things going to go for if 2.2 workers are paying 75% of the benefits of one retiree? No crisis Tim? Really? This isn't quantum physics. It's the beauty and horror of compound interest and simple addition and subtraction.

    Decoupling benefits from contributions means that this is nothing more than a welfare scheme. Further, it does not even resolve the problem as past social security administration studies have shown - this isn't some small funding crisis (it might have been if the US had actually saved the money in the surpluses and invested it in assets that generated income).
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    Apr 25, 2012 2:44 PM GMT
    Another laughably math deficient article as posted here:
    http://www.realjock.com/gayforums/2323996

    Liberals seem to be their own worst enemies. Their willingness to believe in these fairytales without actually examining the numbers is stunning.

    You'd think they'd be the first to leap at trying to ensure that the retirements of the old are protected. There's a ant and grasshopper parable here somewhere.
  • GQjock

    Posts: 11649

    Apr 25, 2012 3:05 PM GMT
    riddler78 saidAnother laughably math deficient article as posted here:
    http://www.realjock.com/gayforums/2323996

    Liberals seem to be their own worst enemies. Their willingness to believe in these fairytales without actually examining the numbers is stunning.

    You'd think they'd be the first to leap at trying to ensure that the retirements of the old are protected. There's a ant and grasshopper parable here somewhere.


    No ... Rid
    You need to take off your republican glasses and see what the real problem is

    The PROBLEM is priorities
    As I showed you the Government has PLENTY of money
    But there are certain people who can't take their hands off the cookie jar

    If we didn't have the WAR CRIMINAL action in Iraq
    Do you think we'd be having a quote -unquote CRISIS right now?

    The PRIORITY right now in Government is to subsidize the corporate over the populace .... The fund the wealthy over the poor and the middle Class

    We ..... As in the people PAID for the WARS with the money that SHOULD have went to Things like Social Security ... But NOW we have to pay back that WAR CRIMINAL debt


    So Once again THANK YOU GEorge and thank you to the republican party for making us have to pay for it ALL OVER AGAIN
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    Apr 25, 2012 9:34 PM GMT
    The only thing that seems absolutely clear here is that you seemingly have little understanding of the changes that occurred to Social Security in 1983 (or the composition of the budget at all). A bipartisan commission chaired by Alan Greenspan recommended changes under the Reagan Administration (Republican) but passed by the Democratic controlled Congress.

    The changes? In an attempt to make it more sustainable (Social Security was already effectively insolvent in 1983) - they began taxing social security above certain thresholds and they increased the age eligibility requirements. The problem is that they didn't anticipate people would live even longer and as a result changes were only a bandaid solution.

    As to this fund that you've talked about elsewhere? It wasn't pilfered - unless you count buying US Treasury bonds pilfering - because of the way the US government spends money, then you've got a point. The other change made was this fund and borrowings went off balance sheet so the deficit isn't reported consistent with the general budget.

    Now to your claim that the funds have been squandered on the military. Again you're wrong. Not sure where you got your numbers, and sure they can appear big if you add up the 10 years of the Iraq war but the reality is that even AFTER you account for both wars, military spending as a percentage of GDP is lower than the average it's been since WWII.

    http://www.politifact.com/virginia/statements/2011/aug/05/randy-forbes/forbes-says-us-defense-spending-measured-against-g/
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    Apr 25, 2012 9:47 PM GMT
    riddler78 said.
    laughter.jpg
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    Apr 25, 2012 9:50 PM GMT
    TropicalMark said
    riddler78 said.
    laughter.jpg


    Hey it's ultimately your social security "fund" and your economy - but it's in no one's interest globally for the US to go to waste but I assume that's basically the same attitude with which you treat math. icon_rolleyes.gif
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    Apr 25, 2012 9:54 PM GMT
    riddler78 said
    TropicalMark said
    riddler78 said.
    laughter.jpg


    Hey it's ultimately your social security "fund" and your economy - but it's in no one's interest globally for the US to go to waste but I assume that's basically the same attitude with which you treat math. icon_rolleyes.gif
    There ya go on one of your diatribes again.. My post was laughing at you.. had nothing to do with 'math', economy or global interest.. but you sure like to spin shit dont ya?icon_rolleyes.gif
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    Apr 25, 2012 9:56 PM GMT
    TropicalMark said
    riddler78 said
    TropicalMark said
    riddler78 said.
    laughter.jpg


    Hey it's ultimately your social security "fund" and your economy - but it's in no one's interest globally for the US to go to waste but I assume that's basically the same attitude with which you treat math. icon_rolleyes.gif
    There ya go on one of your diatribes again.. My post was laughing at you.. had nothing to do with 'math', economy or global interest.. but you sure like to spin shit dont ya?icon_rolleyes.gif


    Spin? You must have laughed a lot in grade 8 math which apparently you seem to think is all math. I've referenced all my points and in turn they either reference government data or are a little left wing - all you can do is suggest this is "spin" while I've laid your facile ideas to waste.
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    Apr 25, 2012 9:58 PM GMT
    riddler78 said
    TropicalMark said
    riddler78 said
    TropicalMark said
    riddler78 said.
    laughter.jpg


    Hey it's ultimately your social security "fund" and your economy - but it's in no one's interest globally for the US to go to waste but I assume that's basically the same attitude with which you treat math. icon_rolleyes.gif
    There ya go on one of your diatribes again.. My post was laughing at you.. had nothing to do with 'math', economy or global interest.. but you sure like to spin shit dont ya?icon_rolleyes.gif


    Spin? You must have laughed a lot in grade 8 math which apparently you seem to think is all math. I've referenced all my points and in turn they either reference government data or are a little left wing - all you can do is suggest this is "spin" while I've laid your facile ideas to waste.
    You just cant handle it when you're the one being laughed at can ya?
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    Apr 25, 2012 10:01 PM GMT
    TropicalMark said
    riddler78 said
    TropicalMark said
    riddler78 said
    TropicalMark said
    riddler78 said.
    laughter.jpg


    Hey it's ultimately your social security "fund" and your economy - but it's in no one's interest globally for the US to go to waste but I assume that's basically the same attitude with which you treat math. icon_rolleyes.gif
    There ya go on one of your diatribes again.. My post was laughing at you.. had nothing to do with 'math', economy or global interest.. but you sure like to spin shit dont ya?icon_rolleyes.gif


    Spin? You must have laughed a lot in grade 8 math which apparently you seem to think is all math. I've referenced all my points and in turn they either reference government data or are a little left wing - all you can do is suggest this is "spin" while I've laid your facile ideas to waste.
    You just cant handle it when you're the one being laughed at can ya?


    Oh I don't mind at all. I think it's important to be able to laugh at yourself. I the problem is that when it comes down to it, the only ones embarrassed here are those like you who are so clearly unable to do math icon_rolleyes.gif

    I mean it's the one defense you have - so I get it. icon_wink.gif
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    Apr 25, 2012 10:03 PM GMT
    riddler78 said
    TropicalMark said
    riddler78 said
    TropicalMark said
    riddler78 said
    TropicalMark said
    riddler78 said.
    laughter.jpg


    Hey it's ultimately your social security "fund" and your economy - but it's in no one's interest globally for the US to go to waste but I assume that's basically the same attitude with which you treat math. icon_rolleyes.gif
    There ya go on one of your diatribes again.. My post was laughing at you.. had nothing to do with 'math', economy or global interest.. but you sure like to spin shit dont ya?icon_rolleyes.gif


    Spin? You must have laughed a lot in grade 8 math which apparently you seem to think is all math. I've referenced all my points and in turn they either reference government data or are a little left wing - all you can do is suggest this is "spin" while I've laid your facile ideas to waste.
    You just cant handle it when you're the one being laughed at can ya?


    Oh I don't mind at all. I think it's important to be able to laugh at yourself. I the problem is that when it comes down to it, the only ones embarrassed here are those like you who are so clearly unable to do math icon_rolleyes.gif

    I mean it's the one defense you have - so I get it. icon_wink.gif
    Pathetic riddler, try again!
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    Apr 25, 2012 10:14 PM GMT
    TropicalMark saidPathetic riddler, try again!


    Ah yeah that's pretty much the best you can do isn't it? Thank you for proving my point. I mean it's a bit sad - you do realize few people actually - even your ideological allies even agree with you. It's pretty embarrassing to them in that regard.

    You come out with some ridiculous counterpoint get disproven and all you can come back with is "spin". But like I said, ultimately it's American tax payers who will have to bear the consequences, but at least you can't say you weren't warned or that the signs weren't obvious.

    Expect: significantly higher eligibility ages, a shorter transition period, reduced benefits and significantly higher taxes for everyone. These are the only mechanisms available to solve the problem the longer you wait and it will get worse as time drags on.
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    Apr 26, 2012 12:26 AM GMT
    riddler78 said
    TropicalMark saidPathetic riddler, try again!


    Ah yeah that's pretty much the best you can do isn't it? Thank you for proving my point. I mean it's a bit sad - you do realize few people actually - even your ideological allies even agree with you. It's pretty embarrassing to them in that regard.

    You come out with some ridiculous counterpoint get disproven and all you can come back with is "spin". But like I said, ultimately it's American tax payers who will have to bear the consequences, but at least you can't say you weren't warned or that the signs weren't obvious.

    Expect: significantly higher eligibility ages, a shorter transition period, reduced benefits and significantly higher taxes for everyone. These are the only mechanisms available to solve the problem the longer you wait and it will get worse as time drags on.
    I did? where is it? find it rid.. find it.icon_rolleyes.gificon_rolleyes.gif

    Are you even part of this earth? or your own private alberta?icon_rolleyes.gificon_rolleyes.gif