Politics

jruby said:

I am fan of General Sherman. When my great great grandfather came over from Ireland he was enlisted under Sherman. My dad used to have his uniform and rifle. Never held a very high opinion of those that wanted to separate this country.

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Flipper Dude said:

Sherman was a first rate POS. Carried over into his stratagems in the West following the war.

We still smell the powder burning.

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jruby said:

Guess he would not have needed to be if the South did not start a problem in the first place. He did what needed being done " War is hell" and he lived by it.

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farmer_john said:

Needed to be done? The south left the union for same reasons we left england. The yankee ststes were taxing them on imports and squeezing them to not be abke to sell their goods at msrket vslue abroad.

Secondly at the time every state was just that an independant. State per the original founding documents. And notes of our founders. The union destroyed the south under the guise of freeing slaves and it was already a dying institution by that point.

And what did we get for all that. Dei and told how bad we are we freed them. And not promoted at work

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Alistair said:

There is another economic consideration to the Trump accounts, which is either positive, or negative depending on your worldview.

That $3bn a year is required to flow into US stock markets. Those are the only investment vehicles allowed; passive ETFs tracking US markets.

Typical capital inflows are around $150-300bn into the SP500 in a 'normal' year, so this represents a 1-2% bump in total money available to US companies.

The right wing view is of course that this is good for the recipient, which undeniably, it is. They'd also argue that this is the US government providing companies cash to fund investment and growth, which... is debatable.

The left wing view is that this is a direct subsidy into US large cap companies, most of whom are already enjoying vastly overinflated valuations. This provides an artificial crutch to keep their share price high by providing forced buyers. The main beneficiaries are likely to be large existing shareholders and internal company execs who can draw big bonuses from an increasing share price. Which again, arguably is true.

Personally?

Issuing government bonds, to allow US companies to inflate their share prices sounds an awful lot like government subsidy of US companies. As a guy who owns shares in those indexes, I'm not mad. As a guy who tends towards free markets and small government, I don't love it.

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PHOENIX PHIL said:

What's the difference between these new accounts and where the tax money for Social Security is being invested? I'll bet these $1000 new funded accounts will result in the receipients getting far more in return than they will from Social Security if in fact SS is still around for these retirees some 60 years from now.

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PHOENIX PHIL said:

What's the difference between these new accounts and where the tax money for Social Security is being invested? I'll bet these $1000 new funded accounts will result in the receipients getting far more in return than they will from Social Security if in fact SS is still around for these retirees some 60 years from now.

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Alistair said:

Social Security generally isn't invested at all.

It's immediately paid out to cover current retiree payments.

When a surplus does occur, which it hasn't since 2020, it's invested into US Treasury securities.

That's an entirely different problem, because in theory social security contributions should therefore act as a major buyer of US government debt, which keeps the books balanced and stabilizes rates for government borrowing... now there's nothing spare to buy those bonds, which is a little bit of a liquidity issue, but hey, that's a different conversation.

Anyhow, these $1000 funded accounts will almost definitely exceed any social security payments these babies will get.

For what it's worth I'm 30, and I pay into SS every month with the full and depressing expectation that it'll be bankrupt and abolished long before even I retire, let alone the poor sods 30 years behind me.

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PHOENIX PHIL said:

Thank you for making my point. SS is the biggest scam to ever played on the American people. While I don't doubt it was started with good intentions, it turned into the biggest ponzi scheme of all time.

Imagine the average citizen being forced to invest their SS tax into a proper investment. For the average W2 employee where that amounts to 7.5% and their company matching that for a total of 15% of their salary, the situation FDR envisioned solving would easily be realized especially if those same employees were taking advantage of 401k accounts.

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farmer_john said:

Needed to be done? The south left the union for same reasons we left england. The yankee ststes were taxing them on imports and squeezing them to not be abke to sell their goods at msrket vslue abroad.

Secondly at the time every state was just that an independant. State per the original founding documents. And notes of our founders. The union destroyed the south under the guise of freeing slaves and it was already a dying institution by that point.

And what did we get for all that. Dei and told how bad we are we freed them. And not promoted at work

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PHOENIX PHIL said:

What's the difference between these new accounts and where the tax money for Social Security is being invested? I'll bet these $1000 new funded accounts will result in the receipients getting far more in return than they will from Social Security if in fact SS is still around for these retirees some 60 years from now.

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Alistair said:

Social Security generally isn't invested at all.

It's immediately paid out to cover current retiree payments.

When a surplus does occur, which it hasn't since 2020, it's invested into US Treasury securities.

That's an entirely different problem, because in theory social security contributions should therefore act as a major buyer of US government debt, which keeps the books balanced and stabilizes rates for government borrowing... now there's nothing spare to buy those bonds, which is a little bit of a liquidity issue, but hey, that's a different conversation.

Anyhow, these $1000 funded accounts will almost definitely exceed any social security payments these babies will get.

For what it's worth I'm 30, and I pay into SS every month with the full and depressing expectation that it'll be bankrupt and abolished long before even I retire, let alone the poor sods 30 years behind me.

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PHOENIX PHIL said:

What's the difference between these new accounts and where the tax money for Social Security is being invested? I'll bet these $1000 new funded accounts will result in the receipients getting far more in return than they will from Social Security if in fact SS is still around for these retirees some 60 years from now.

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rookhawk said:

As others have mentioned, social security is a ponzi scheme with no assets other than IOUs pledged from the Federal Gov't for monies spent out of the general fund.

The $1000 account is the Trump Account, the Michael Dell Foundation out of their own pockets gifted kids born in the last ~2 years a $1000 to start them off on the Trump Accounts.

The Trump Accounts "kinda" suck. A parent or grandparent can deposit up to $5000 total into a Trump account for a minor child each year. Employers can offer up to $2500 to employee's children per year, although I'm aware of no company that offers this benefit yet.

The Trump Accounts are exclusively invested in ticker SPYM, a low cost S&P 500 index fund. When the kid turns 18 the Trump Account converts itself to a Traditional IRA.

Why they suck:

1.) Only one stock index is offered
2.) They are capped at $5000 per year
3.) They convert to a Traditional IRA, thus the growth will be taxed upon withdrawal.
4.) Withdrawals are very restricted, primarily that you must be 59.5 years old, or taking out no more than $10k for a first home purchase, or to pay for higher education.

What is better:

1.) For a child, the ROTH IRA is the golden ticket. Kids pay no taxes as their wages are below the US poverty line.
2.) ROTH IRAs are capped at $7500 per year.
3.) ROTH IRAs can invest in any stock, bond, or index fund available.
4.) The child paid virtually no taxes putting the funds into the ROTH, but they also pay no taxes upon withdrawal for retirement so it is double tax advantaged.

The only shortcoming of the ROTH IRA vs the Trump Account is this: To have a ROTH IRA, the kid has to have earned wages. This is why many parents find a way to acquire 1099 income and they hire their kids to do work for them. (children are exempt from FICA if working for a parent...another bonus)

The only reason to have a Trump Account is if you want to save more for your kids than the ROTH iRA limit allows. $7500 ROTH + $5000 Trump = $12,500 a year. Obviously, these are much better ways for a kid to save for education since both are exempt from disclosure on a FAFSA, compared to custodial accounts and 529 plans that just punish the kids for saving and increase the total cost of college.

My opinions of what I think is really going on:

A.) I believe the Trump Accounts are laying a groundwork for alternatives to Social Security to soften the revolt when the SS ponzi scheme falls apart in the next 5-10 years.

B.) The returns on the S&P 500 are likely to diminish by the government's encouragement that more people/children invest in the markets. That will make cost of capital cheaper for firms, but there will be more demand for S&P 500 shares which will lower cost of capital and probably suppress total market returns to shareholders. It's one of the sad consequences of more people taking investment for the future seriously.

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Flipper Dude said:

Sherman was a first rate POS. Carried over into his stratagems in the West following the war.

We still smell the powder burning.

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Russ16 said:

All true. But it doesn’t have to convert to a Roth. It can be used for eligible expenses once the kid turns 18.

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• College Withdrawals: Because Trump Accounts are structured as traditional IRAs for kids, you can technically withdraw funds before age \(59\frac{1}{2}\) for qualified higher education expenses without incurring the 10% early withdrawal penalty.
• If Removed For Education or First Home Purchase: Although you avoid the 10% penalty, you will still owe regular income tax on the account's earnings when you withdraw the money.

rookhawk said:

A Trump account does NOT convert to a ROTH IRA, it converts to a TRADITIONAL IRA at age 18.

For a breakdown of how they function:

• College Withdrawals: Because Trump Accounts are structured as traditional IRAs for kids, you can technically withdraw funds before age \(59\frac{1}{2}\) for qualified higher education expenses without incurring the 10% early withdrawal penalty.
• If Removed For Education or First Home Purchase: Although you avoid the 10% penalty, you will still owe regular income tax on the account's earnings when you withdraw the money.

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Russ16 said:

Correct i

I mistyped. My point was they don’t tha r to leave it in until retirement. They can use it for those qualified expenses. During the debate over the accounts the emphasis was that they assumed most people would use them for those expenses and that was the goal of them. To help people get a start not save for retirement.

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rookhawk said:

It is 100% identical to a Traditional IRA as of the child’s 18th birthday. So there are a finite amounts of exceptions to the 10% withdrawal penalty before they are 59.5 years old. Zero difference in the withdrawal exceptions and rules: $10,000 max lifetime for purchase of first home, extraordinary medical expenses, or qualifying education expenses.

The education expenses are the most precarious because it’s treated as ordinary income which could result in lower student aid due to greater student income. (A withdrawal is considered taxable income)

The aforementioned exceptions for Trump Accounts and Traditional IRAs does not avoid taxation, they are taxed withdrawals, the exceptions merely avoid a 10% penalty.


Note: this is why the ROTH IRA is so so much better. The same exceptions to the age 59.5 rule exist, but there is no tax on early withdrawals of principle balance, AND you’re allowed to withdraw the growth balance for first time home or higher education.

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