social security

[Chris Rhines]

My touchstone for tax reform is the same as Lew Rockwell's - does the proposed reform reduce or eliminate a tax?

Bush's Social Security plan does not.  It is a bad idea, badly concieved, and it will make matters worse instead of better.

Social Security does not need reform.  It needs to be done away with.

- Chris

[Monkeyleg]

Wow! It's not often that I find myself in at least partial agreement with Bountyhunter, but miracles happen. We can't cut off benefits for those in the system, or those who are just a few years away.

Chris, you're being completely unrealistic on any number of levels. For as long as I can remember, Democrats especially used the Social Security "he's going to cut your benefits" bogeyman to attack Republican challengers. I worked the campaigns for many of those Republican challengers, and I know that it was a false charge, designed to scare the elderly.

But talk of raising the retirement age, cutting benefits, or other reductions to those my age aren't bogeyman stories. They're real. And they get my trigger finger itching.

Look: I didn't ask that Congress raise the SS tax from 2.5% in the 1960's (when I got my first after-school job washing dishes) to the 6.2% rate it's at today. I didn't ask that employers match the "contributions." I didn't ask that Congress keep raising the FICA ceiling every time I was able to increase my pay.

I didn't ask that JFK, LBJ, RMN, GRF, JEC, RFR, GHWB, WJC and GWB and their accompanying congresses raid the trust fund to divert the dollars that I and other workers paid in to government programs that had nothing to do with Social Security.

All I ask is that I get some portion of my money back. Considering that my father paid in dimes per month, and I've paid in nearly $1,000 per month while supporting him, that doesn't seem unreasonable.

There's always talk of "SHTF" scenarios on gun forums, and most of them are the words of keyboard commando's. But, take away the money I've worked my butt off for--under threat of deadly force by the SSA--and you'll see a real SHTF scenario. Take the food off my table, and you're going to see some bullets fly.

There is no easy fix to a program that was corrupt and immoral from the outset. History has taught us that corrupt and immoral governments and systems collapse under their own weight.

And so will SS. Again, it's not a question of if, but when.

In the meantime, we need to establish a transitional plan, one that gives my father, my older brothers, me, and everyone else who's been forced into the "system" what's been promised. At the same time, we need to give my nieces and nephews a plan that will increasingly give them a better retirement.

The biggest obstacle to any sort of SS reform over the last ten to twenty years has been seniors: they vote, often. Imagine the obstacles awaiting younger generations when my generation--the Baby Boomers--hold that sway.

I'd much rather deal with the problems now, before the slick politicians start scaring those of my generation, and the possibility of real reform is in front of us.

And, for those who don't think there's a problem: your turn is next. This is not going away.

Ready on the Right: I know you were being facetious with your post, but what you outlined are the very real possibilities if nothing is done now.

As I've mentioned repeatedly, I've paid in roughly $130,000 into SS since the 1970's. Do the math: break that figure down into thirty-year increments; put those dollars into conservative investments, and calculate where my account would be today. I've already done so. I'd be retired right now.

That's what I want for my young nieces and nephews. And for those here who are still young enough to benefit from decades of compound interest.

Finally, for those who think that Bush's plan is to help his Wall Street friends get rich (just like Halliburton): Wall Street isn't excited. The brokerage firms want clients who are contributing thousands of dollars a month, not hundreds. Given the paperwork involved, their profits will be a small percentage of what they get from the "real" investors now.

As usual, this is just plain political infighting when a serious issue is on the table. And, as usual, the politico's will do just fine while the rest of us take the real damage.

And, by the way, members of congress and the president pay into Social Security. But there's another retirement plan available to them that has real returns on investment. Anywhere from 5% to 9% annually.

But it's not available to those who work in the private sector.

[Sean Smith]

I've got to ask, how is this not an eloaborate Ponzi scam as it stands?

People would tell you that SS is basically just mandatory investment in government securities with employer matching.  If that was true, the current situation would simply be impossible, because the program wouldn't ever "run out" of money if there were 1 person or 100,000,000 people in it, unless T-bills suddenly quit paying 5% interest (or whatever).

(Of course this leaves out the whole question of validity of the government forcing investment in itself, to be paid back by itself, as it skims extra cash from it at the same time... but that makes my head hurt, so I'll ignore it for now. :shock: )

But of course, even supporters of the current SS scheme can't really say that.  Demographics are placing the program in financial danger as much as anything else, which of course is the giveaway that this is more like a Ponzi scam and less like a benign way to give taxpayer money to what is arguably the richest demographic in the country already.

The flipside of this is that I don't see how Bush's plan adds up, unless it is a small step toward eliminating SS entirely.  In which case, it is small even by baby-step standards, hysterics notwithstanding.

[bountyhunter]

Solvency, both short-term and long-term, is not a simple issue. I would like to see some more concrete plans from Bush on this issue. But simply sticking your head in the sand and saying "There are no problems that can't be fixed without a little more taxing and benefit readjustment." is ridiculous. Something new has to be done.

I never said it was simple, but your claim that SS can not be sustained using common sense (and fair) adjustments is ludicrous.

I also never said it was NOT a pyramid scheme, because it has some of those aspects.  But here is the real question:

SO WHAT?

The brain disconnect here is you are trying to believe that SS is some kind of self sustaining entity that can exist without change.  It can't, because of two reasons:  declining birth rates and longer life spans keep shifting the ratio of workers to benficiaries.

The point is not to scream and whine that it isn't self sustaining, it is to recognize what it is and what it isn't and do what's right.  SS is nothing more or less than a program to guarantee a baseline existence for old people...  so they don't have to eat cat food casserole more than two times  a week.  That is something we can choose to do as a nation, or we can choose not to do and say:  "Screw em".

If we have to divert tax funds to pay the benefits, then that is how it is.  If we have to reduce benefits, that is another option.  If we choose to increase contributions, that is on the table.

The point is, SS is not an investment program, it is taxing working people to feed non working people.  The program can be maintained without ripping it to shreds, and the best way to start would be to make what the govt does now illegal: as much as 50% of money collected for SS gets diverted into the general fund and spent on all kinds of other crap.

Bottom line, sanity should prevail and could maintain SS benefits.  Bush is grandstanding with a program that does not address the core problem and will only make things worse.

[bountyhunter]

Is that SS is not an investment program where you put in money with your name on it and get it later.  It is a program where you tax this bunch of people to pay benefits to another bunch of people (also, fund other government programs including defense spending).

Bottom line, that folks is what is called a:

social program

GASP!!!!  The nemesis of all republicans, taxing the hard workers to pay people sitting on their butts!

But that's what it is, and it does not fund itself because of the shrinking ratio of payers to payees....  and we need to recognize it is nothing more or less than an entitlement program you buy your way into by paying in at an earlier date.  If the program is to maintain existence, there are a set of options:  reduce benefits or increase taxes.

PERIOD.

If you allow money diversion to private accounts, the lost tax revenue has to be replaced either now with increased taxes or in the future with increased taxes to pay off the bonds Bush would use to raise the near term cash.

Bottom line, we need to get together and first recognize SS for what it is and then figure out how to fund it... and admit there is no magic "money machine" that is going to allow people to live longer, draw more benefits, and yet magically never reduce premiums paid or require increased revenue from either worker contribution, employer contribution, or general tax revenue.

The math is simple folks.

[Monkeyleg]

Bountyhunter, it's true that privatization is going to cost us money now or cost us later. The question is how much now versus how much later. Many, including Greenspan, have concluded that the cost later will be much greater.

And, just because SS is an entitlement program/scheme--which it is--doesn't mean it always has to be.

Some of the proposals for privatization involve younger workers being able to divert one-third of their SS payments (or roughly 4% of their gross income) to private accounts.

Let's take a typical college grad starting a new job at, say, $30,000 a year. He/she puts $1200 into a bond fund or other relatively conservative instrument. Each year that amount goes up as the worker gets raises and moves up on the career ladder.

In less than ten years, that worker will have accumulated enough in the account that, if left untouched, would by itself more than quadruple in value over thirty years (assuming a 5% rate of return). That's a whole heck of a lot better than SS has done with our money over the last thirty years.

It's possible to slowly increase the amount of privatization until nearly every worker owns his/her account. It would take decades, but it's possible.

There are plenty of other alternatives out there. But raising FICA taxes or cutting benefits just won't fly. At best such proposals will result in a stalemate, and a continuation of the status quo. And that's what many politico's in DC want.

[bountyhunter]

Bountyhunter, it's true that privatization is going to cost us money now or cost us later. The question is how much now versus how much later. Many, including Greenspan, have concluded that the cost later will be much greater.

I don't necessarily dispute your item points, but I was pointing out the big picture:  SS is just welfare for old people paid for by younger people.  And welfare comes from tax money, period.  Taking it out of different pockets doesn't change the fact that it comes out of some tax revenue somewhere.

All the razzle-dazzle about shifting the source to private accounts, selling bonds now and praying tax revenue goes up when they are due, and all the rest just misses the point:

There will be "X" number of old people needing to be paid their benefits.  The money has to come from somewhere.  I am certainly not convinced "private investment" will assure some greater return... I watched the market crash and then lay dead for four years.  But I know for a fact the lost tax revenue now has to be replaced in order to pay current benefits.

IMO, SS should be a program set up with fixed benefits for citizens regardless of what they paid in, possibly with a "wealth derating" for people with high taxable incomes who don't really need the money as much as others who are poor.  I realize that means many of us will pay in more than we get back, but we do that now.  And that may be more fair if the other alternative is cutting benefits for all.

If Bush wants to enable a private fund program IN PARALLEL where we have the option of investing a portion of our income before it is taxed....I would love that.  It used to be called an IRA until they did away with the "pre tax" part.  That would give people incentive to save without risking their SS benefits.

The point is, Bush's plan is just selling the old cow for magic beans.

There is no magic plan that will make it all right.

[Moondoggie]

I'm in agreement, Monkeyleg...I'm 52 and even though I've made plans that are working out well for retirement, I've always planned on SS as a part of the picture.

The biggest thing that worries me about the private account concept is the number of Wall Street types that won't be able to resist temptation, trading untold millions skimmed into Swiss Banks in exchange for a few years in club fed.

[Fly320s]

Wow, I am amazed. :shock:

All of the previous posts deal with fixing Social Security to make it last longer.  Have none of you realized that Social Security is a Socialist System retirement plan?  Do all of you who wish to fix SS also want other Socialist forms of government?  Socialized medicine?  Socialized schools?

The fact is that SS was designed to take money from lots of people to give it to a view people.  It is a somewhat mild form of wealth redistribution.  Now that we have a shift in the median age of our population the scheme is falling apart.

I can't count the number of times that people on THR, TFL, and the like were screaming about the Welfare program and what a crock that is.  How is that different than SS?  They are both designed to take money from those people to give to these people.

Not many people ever get back what they paid into SS, with the exception of the first beneficiaries.  I know I never will.  That's because I am already saving my money and investing my money so that when I retire I won't have to rely on someone else to support me which means I won't qualify for SS benefits because I will have too much income.  So all of my money will go to someone else.  Sounds real fair to me.

I think that most people here would agree to the theory that each person is responsible for himself.  So, why then do so many of you want to maintain this socialist system?

[macavada]

Socialism abounds.  State and local taxes used for infrastructure - redistribution of wealth, socialism, whatever you want to call it.  Interstate highways, medicare, social security, public schools, local roads and bridges, garbage pickup, wastewater, tap water, all socialism.  Or, community and cooperation.  If you don't depend on socialistic programs, then you would be independent in every form imaginable.

This country doesn't work with just one system - libertarianism, capitalism, conservatism, liberalism, or socialism.  It works because all political influences work together so that no one philosophy has complete control or power.

[trapperjohn]

SS is just welfare for old people paid for by younger people. And welfare comes from tax money, period. Taking it out of different pockets doesn't change the fact that it comes out of some tax revenue somewhere.

Agreed. Now please show me in the constitution where congress is given that autority.

[brimic]

Bottom line, that folks is what is called a:

social program

Then cut retirement as a social program- especially to people under the age of 35 who still have time to take responsibility for their own future.

If you don't save enough for retirement, you don't retire. There's no reason .gov has to be a nanny to anyone over the age of 18.

[Monkeyleg]

Fly320s: "All of the previous posts deal with fixing Social Security to make it last longer."

Please go back and re-read what I've said about privatization. It's not about making SS last longer, but rather a way to rid us of the system long-term.

If I had not paid what I keep repeating I've paid, and if I was just waiting until I turned 65 to get some money from the government, then it would be a pure welfare system. Will I receive "benefits" from age 65 until I die that total more than what I put in? Probably.

But...what if I'd been able to put the same dollars into a system that actually had a respectable rate of return, one like the city of Galveston briefly established in the 1980's? If so, you wouldn't have to worry about paying for my "benefits" until I die, and I'd be looking forward to a better future after I stop working.

Higher payroll taxes, lower benefits, later "retirement" age, a raise on the FICA ceiling, or some form of privatization over the long term. Those--or some combination of those--are the only ones on the table now. Pick or choose.

Look on the bright side, though: FDR's probably having to eat Hitler's navel lint in H*** right now.

[Phantom Warrior]

Fly320s,

Don't get me wrong.  I would love to see private accounts replace and ELIMINATE Social Security down the road some day.  I think it's a bad idea and waste of money.  However, pragmatically, there is no way we can get rid of Social Security today, tomorrow, or even 20 years from now.  There are too many people who have paid into it and refuse to give up the benefits they feel they are entitled too.  With some justification.  If I had spent 40 years losing part of my paycheck to SS I might want something back too.  My long term goal is to see SS eliminated, but it is going to have to be sustained in the short term because eliminating it immediately is not politically viable.

Socialism abounds. State and local taxes used for infrastructure - redistribution of wealth, socialism, whatever you want to call it. Interstate highways, medicare, social security, public schools, local roads and bridges, garbage pickup, wastewater, tap water, all socialism. Or, community and cooperation. If you don't depend on socialistic programs, then you would be independent in every form imaginable.

macavada,

You are misunderstanding the definition of socialism.  Or using a different definition.  Whichever.  Courtesy of m-w.com:

Main Entry: so·cial·ism
Pronunciation: 'sO-sh&-"li-z&m
Function: noun
1 : any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods

Socialism involves community control of "production and distribution of goods."  Which is what Social Security is.  The government is controlling the distribution of money in our society.  Or reordering it.

Roads, bridges, schools, etc are not socialism.  Those are the basic functions of government.  The things that we can do more efficently collectively than individually.  Imagine if ever person was responsible for paving the road in front of their house.  How many nicely paved roads do you think we would have?

[Sean Smith]

SS is just welfare for old people paid for by younger people. And welfare comes from tax money, period. Taking it out of different pockets doesn't change the fact that it comes out of some tax revenue somewhere.

If it is a welfare program, why does it give taxpayer cash to old people who have plenty of money?  Why does the richest demographic in the country deserve to suck the government teat simply for sucking oxygen a long time?  To a rather large extent, Social Security steals from people with less money and gives it to people with more money.  It isn't even socialist, it is bloody random stupid insanity.

Unless it is an "investment," of course, in which case it is just a wildly corrupt racket.  In that case, everyone who "invested" in it would be due their slice of the return.  Except that there is none, of course.  Neither explanation is very comforting.

I actually wouldn't mind a program that straightforwardly gave cash to old people who can't work anymore and don't have much money.  At least it would have the virtue of simplicity and exist on an honest basis, not the mountain of B.S. that Social Security is based on.

[Waitone]

Social Security is a train wreck in the making.  In an ideal world Bush's plan hints at the right solution.  Problem is his solution ignores the fact that while he is trying to avoid one train wreck he is oblivious of two other simultaneous train wrecks.

Two other train wrecks you say?  Medicaid and Prescription Drugs for Medicare.  Medicaid costs are exploding due to deliberate social policy mandated by the federales on the state level.  We are watching the slow collapse of medicaid while its demands are increasing exponentially.  

Prescription drugs has to be perhaps the most stupid, unnecessary sell out to corporate America I've seen in my life.  There was no popular demand the the "problem" be fixed.  The fix is precisely the wrong thing to do.  It was a simple attempt to buy votes by the majority party.  The problem with Prescription drugs is the costs.  Historically social problems generate a factor of 9:1 between initial concept and final stabilization.  So when the program starts at $550 Billion we are looking at a stabilized cost of $5 trillion.

Medicaid is grandly expensive and will only get obscenely more expensive.    Don't know what the annual costs will grow to, so let's just assume it will assume a $1 trillion figure at some point in the future.  Prescription drugs will cost $5 trillion if history is a guide.  Now Bush wants to transition to an Ownership society (excuse me while I snicker).  He says the transition cost now will be $2 trillion moving $11 trillion if we delay any appreciable time.

So lemme do some math:
$1 trillion Medicaid--a SWAG is there ever was one
$5 trillion Prescription drugs--
$2 trillion to $11 trillion for SS conversion
-----------
Total $8 trillion to $17 trillion--and this is just 3 programs.

We can't afford any of this nonsense.  Looking at SS without looking at associated train wrecks is idiocy.

And we haven't even begun to look at the implications of an income based tax system funding forcing exportable jobs overseas.  The US is in deep yogurt and Bush's SS will do nothing to fix the real problem we face---70 years of socialism's bills are now coming due on the backs of my children.  A real leader would deal with the problem instead of playing games wth the symptoms.

[bountyhunter]

Wow, I am amazed. :shock:

All of the previous posts deal with fixing Social Security to make it last longer.  Have none of you realized that Social Security is a Socialist System retirement plan?

 Yes, but some of us think it is OK to use tax money to subsidize the living baseline of old people rather than  force them to eat dog food.  

It is welfare for old people, so it's not perfect.  But the bottom line is:  in a society with the wealth that ours has, should we not take some steps to assure that they can have at least a decent existence?  Although, living off SS would hardly be what I would call a decent living....

[bountyhunter]

Medicaid and Prescription Drugs for Medicare.  Medicaid costs are exploding due to deliberate social policy mandated by the federales on the state level.  .

Actually, they are exploding for two main reasons:

1) The drug companies own our government and are raping our citizens.

2) Law suits are driving medical costs through the roof.

[bountyhunter]

SS is just welfare for old people paid for by younger people. And welfare comes from tax money, period. Taking it out of different pockets doesn't change the fact that it comes out of some tax revenue somewhere.

If it is a welfare program, why does it give taxpayer cash to old people who have plenty of money?  Why does the richest demographic in the country deserve to suck the government teat simply for sucking oxygen a long time? .

I agree, and in one of my posts I said that the benefits should be "derated" based on a means test of gross income.  You are right that SS should not go to people who don't need it.

[bountyhunter]

Bottom line, that folks is what is called a:

social program

If you don't save enough for retirement, you don't retire. There's no reason .gov has to be a nanny to anyone over the age of 18.

 That's not a new idead.  reagan was chided for his economic plan:

"Just say no to poor people."

Yours is the same.  In a perfect world. people would plan, save, and retire with their own money.  In the real world even upper middle class are living check to check carrying masive credit debt.  Expecting them to save on their own is not reasonable or even consistent with reality.

It falls to a simple question:  do we just say:  "They didn't plan, so screw 'em!"  or do we implement a baseline program that allows them not to starve?

It  is socialistic welfare, but it may also be necessary in a society with a conscience filled with people who are fiscally irrational.

[Unisaw]

bountyhunter,

It is socialistic welfare, but it may also be necessary in a society with a conscience filled with people who are fiscally irrational.

This is a problem.  You are advocating using the force of government to take from those who did plan ahead and give to those who didn't.  I don't have any problem doing that voluntarily, but a government taking is another matter.

[bountyhunter]

Your point is valid:  it is taking money from people who can pay (and as you say, planned better or were more successful in life) and giving it to people who were not.  My point is:  the government does that all the time for the greater good.  I pay horrendous property taxes to support schools even though I have no kids.  I pay taxes to support a war I knew was unnecessary (that is wrong as well).

So, there would be nothing new in taking taxes "without consent" and using it to keep dummies from starving..  I think that is basically what SS was conceived to be in overall principle, and I think it's OK to do that.

[Fly320s]

Bounty, you and I will just have to agree to disagree.

I understand your point about taxes being taken for causes that people find unfair; the government has plenty of those out there.  I just can't agree that one person's money should be taken to be given directly to another.

Taxes for military and infrastrucure and even space exploration have some benefit to us all.  Taxes for welfare don't.  You could make the argument that keeping people fed and housed will keep them off of the streets and less likely to commit crimes to support themselves, but people should be doing that for themselves.  At least the taxes going to the "general good" of infrastructure, et al., are paying for items that can be used by everyone.  I can't get any money from the welfare or SS program.

In the real world even upper middle class are living check to check carrying masive credit debt.

That is 100% their fault.  No excuses can deflect the blame.  I am in the upper middle class (I think; where's the cutoff?) and have only my house payment as credit debt.  If I can do it; you can do it.

At the time Social Security was introduced, what percentage of the US population was poor/homeless/qualified for SS or Welfare.

Today, after all these years of social programs, what are the percentages?  Really, I'm just curious; not trying to prove a point.

[bountyhunter]

Bounty, you and I will just have to agree to disagree.

OK

I just can't agree that one person's money should be taken to be given directly to another.

The government does it all the time.  We even pay taxes to give schooling and medical care to illegal aliens in our state.  If you live on a border, you do too.

Taxes for military and infrastrucure and even space exploration have some benefit to us all.  Taxes for welfare don't.  

That's been debated since the dan of time.  Some claim welfare is responsible fior specific minority groups not advancing.  I think guaranteeing a baseline income for old people is an OK use of my taxes.

In the real world even upper middle class are living check to check carrying masive credit debt.

That is 100% their fault.  No excuses can deflect the blame.

It's not that simple.  Some people  get into trouble without it being 100% their fault.  A woman marries a guy and has three kids... he dumps her and she finds out he left her owing back taxes.  She is broke and the kids should starve?  I don't think so.  I have no problem "taking from some to give to others", but I admit the agencies don't do a good enough job differentiating who should get help.

If I can do it; you can do it.

I can do it, my point is not everybody starts at the same point and should not all be measured with a single yardstick.

Today, after all these years of social programs, what are the percentages?  Really, I'm just curious; not trying to prove a point.

I don't know about today, but I studied it back in high school (1970) and I was FLOORED to find out 40% of the families receiving AFDC (aid to families with dependent children, ie welfare) in kali had at least one parent working 40 hours a week or more...  but at minimum wage so they could not live on it.  I was a good old redneck back then and figured everybody on welfare was some fat-butt lazy woman popping out kids like crazy...  maybe some are, but a lot of people getting welfare were busting their asses and still qualified.

As a matter of fact:  we qualified for AFDC when we moved to Kali, because my father had just retired at full colonel after 30 in the Air Force.  I think his retirement pay was maybe $650/month (?) back in 1966.  For a family of six in kali, that qualified for AFDC back then.  My parents would never take it because for them, being "on the dole" was the ultimate disgrace.  So, he went straight out and got another job...  that's how he spent his retirement:  working until a heart attack dropped him and made him 100% disabled at age 57.

Summary:  not everybody on "welfare" is a deadbeat.

[Sean Smith]

The government does it all the time.

I don't think anybody is arguing that the government doesn't do it all the time, they are arguing that it is WRONG to do so.  Not the same thing.

Summary: not everybody on "welfare" is a deadbeat.

True, but it doesn't follow that therefore welfare should exist.  Just because some of the people who benefit from a program aren't scum doesn't mean that it is a good program, or that any program like it should exist at all.