Republicans & Conservatives: Archives

Chops
I know this is just a quick work in progress and all, but, if you don’t mind, I do have a couple questions.

“would ensure that ALL seniors receive enough support from the government”

“Elder Security would be received by poor seniors regardless of their contribution to the system.”

Wouldn’t this take away the incentive to work and to plan ones own retirement?
You could also “get paid under the table” never contribute a penny and still be eligible, thereby protecting your own money and pushing the burden onto others.

One more please: What would be wrong with making the “pension” part totally voluntary?

I agree that something needs to be done now and I am glad you took the “let’s discuss and come up with answers” avenue.

Thank you.

Good questions.

“would ensure that ALL seniors receive enough support from the government”

Sorry, my mistake. All seniors would have basic living needs met; only poor ones would receive that through Elder Security.

Wouldn’t this take away the incentive to work and to plan ones own retirement? You could also “get paid under the table” never contribute a penny and still be eligible, thereby protecting your own money and pushing the burden onto others.

There is this moral hazard, true. However, there’s a lot more to be saved on income taxes by going black-market, and that’s not a huge problem. The size of the Elder Security payouts would be small enough that very few people would be tempted by it.

One more please: What would be wrong with making the “pension” part totally voluntary?

For that matter, we could pull the government out and let people just use IRA’s to their hearts’ content. I don’t have a moral or ethical problem with that, but I think there’s a definite benefit toward forcing people to save - if we don’t, then they end up asking society for a lot of things later on. There’s also the benefit of protecting their savings from bankruptcy, creditors, etc. I know it’s a case of the government treating people like children, but far too many of us act like children with our money now, so until we grow up, I think it’s a beneficial program to have.

Chops,

This is a good approach to thinking about the issue. It’s always been tough to resolve the two sides of the SS equation.

I agree with how you’ve defined the “elderly security” side of the program. I’d be in favor of changes along those lines.

The pension side isn’t quite working for me though. Here are my thoughts on the private accounts:

As an early-thirties professional, retirement investment is hot on my radar right now. I’m investing pretty heavily in my company’s 401k and building up a savings account. So, I’m all in favor of promoting reducing debt and saving for Americans - it’s just good financial sense.

Here’s my problem: I don’t want my only option to be a government mandated program. If this is going to be a “private account”, I’d like it to actually be private. My company 401k is elective - I can choose to take it or leave it. If I want to go set up my own long term investments, I can take the money I would spend through the company program and invest it myself. I participate in the company program because they match my investment up to a certain amount. There’s incentive for me to participate. I only see downside to the government program - fewer options, no “incentive”, no guarantees.

For some people, who wouldn’t normally save money and/or don’t know HOW to make good financial decisions, this might pose a good option. For those like me, I’d want the option to invest it myself - even if I need to report the investments with my taxes.

Thanks for the reply Chops.
While I still believe it should be totally voluntary, your answers have given me some food for thought.
Nice article.

A compromise that might satisfy Tad and kctim could be allowing earners to opt out of the the program if they show that they are investing the minimum in a private retirement savings plan. The default, however, would need to remain a government withholding.

Yeah, that would be a decent compromise…

I’m curious about something. If we did away with the current federal income tax system & went to a simplified flat tax, we would no longer need the number of federal employees we now have working for the IRS. Could the money that is saved from wages & benefits of excess employees be used to pay for needed changes in SS.

Very nice article.
The biggest problem with Bush’s private investment plan is what it will open up. I’m a conserative democrat but on this issue I’m a ‘liberal.’ Once people start investing they’ll demand that more and more should be invested. That means if the investments fall through they’ll only have part of what they would have had instead of the 90 some percent under Bush’s proposal. So we’ll end up with another crisis. As long as we say only X amount can be invested and stick to that amount, can private investment supplements be viable.

Blaine -
I don’t know the numbers on this off the top of my head, but the short answer to your question is “no”. It’s one of the tragedies of government waste: the actual cost of the bureaucracy, even when wasteful, is much smaller than the cost of the programs these bureaucrats administer. Where I work (HUD), there are plenty of useless steps we all have to jump through and wasted salaries (like mine right now). But are they cutting the bureaucracy or reorganizing to make it efficient? Nope. They’re proposing chopping off two major programs, and leaving the bureaucrats with less and less to do in their cozy jobs.

(true story: we got complaints from entire field offices that they didn’t have enough work to do. They were supposed to be closed down years ago because their functions were centralized, but congressmen wouldn’t let that happen for fear of losing those little 10-man offices).

Seeing as I’m a Social Darwinist, I say screw Social Security. It does nothing that individuals cannot do, and it would make life simpler to eliminate it. Of course, that doesn’t really fix the problem at hand but I’ll leave that to you folks.

Zeek,

Ah, a social darwinist! I’m willing to bet you’ll be upset when you have a lot of elderly homeless, bothering you and your family for change when you are out. I don’t mean for my tone to come off nasty. Making statements like ‘get rid of it’ means we have to look at the consequences of such a choice. Still, there is some merit to social darwinism. I just don’t think it’s a good idea in this case.

William, compared to what I normally get, that was almost flattery =D.

On to the important stuff:

I believe that since Social Security can easily be bested by simple personal investments, it makes little sense to keep it as a nationwide retirement plan. To be quite honest, I don’t see how people can go through their entire working lives and not finish with enough money to see themselves through retirement.

Zeek,

I agree that you’re an idiot if you don’t save. But due to the sheer volume of idiocy out there, we can’t have masses and masses of elderly homeless. I don’t know if you’ve ever been to Santa Monica, CA but its not a pretty picture.

I don’t know if you’ve ever been to Santa Monica, CA but its not a pretty picture.

What came first, The chicken or the egg?

Do people not save because they think Social Security will provide everything they need? Or, Is Social Security necessary because people can not help but spend everything they make?

I think people will definitely save more if no one does it for them.

I wonder how much SS money goes for administrative costs? This goes with my question about the IRS.

Railroad Retirement is similar to SS. Employees pay a certain percentage & the railroads match. But, RR is very solvent. A couple of years ago the figures were done & RR is solvent for the next 75 years even if no further money was paid into it. There are two age groups of railroad employees: those who have been hired in the last 5 years & those with 30 plus years. In the next 5 years about 40% of railroad employees will retire & yet it will not put a drain on the system. The difference between SS & RR is politicians have not been able to get their hands on the retirement funds. I think SS would be in good shape today if the money had been set aside or invested instead of being added to the general fund. I think the reason SS is such a big issue to some politicians is because it cuts into their funds for programs.

Al Gore used to talk about the “Locked Box”. There was never a locked box. He should have called it the “blank check”. There is an old saying, “follow the money” & if we followed the money we would see why so many are against private accounts or against change in the current system.

ThereIsNoCrisis helpfully gives us the names of those Republicans who voted for deep cuts in social security and massive debt, and who are up for reelection in 2006:

Allen, George VA
Burns, Conrad MT
Chafee, Lincoln RI
Ensign, John NV
Hatch, Orrin UT
Hutchison, Kay Bailey TX
Kyl, Jon AZ
Lott, Trent MS
Lugar, Richard IN
Santorum, Rick PA
Talent, Jim MO
Thomas, Craig WY

I wish I had a solution to suggest. All I have is another point to consider. For each solution suggested, ask the following:

“How would this solution hold up during a 1929-sized market crash?”

After all, that’s the reason Social Security was put in place to begin with. It wasn’t created to safeguard a few idiotic investors. It was built to deal with the effects of a whole-market crash. The dot-com bust was nothing compared to the Great Depression.

And, with the state our economy is in, I’ll be pleasantly surprised if there isn’t another market crash of equal or greater size before I retire. As such, I consider this a very important question to consider.

Thoughts?

SS was set up for people who had basically no retirement. Old people drew small pensions for war service, etc. SS guaranteed people an income after they were to old to work. If it was such a good program & so successful, why don’t politicians pay into it? They figured out a long time ago, you couldn’t live on SS but that doesn’t stop them for telling the public to do it. After WWII, men came home from the military & took factory jobs, which were plentiful, and along with those jobs came retirement plans. Today, with an exception of a few, people don’t stay with one company. They may change jobs many times. Companies don’t offer the same pensions as say the auto manufacturers or steel industry did and many companies go belly up or sell out & people loose any company pension they may have had. Except for IRA’s & personal investments, the greatest thing going today is 401K’s.

I’ve said all this to say this: our country may have to bite the bullet on this one. It is going to cost the tax payer no matter which way we go. Wouldn’t it be better to actually fix the problem than to place another bandaid on it. As long as the government has its hands on the money, the problem will never be fixed. Politicians will always do what they do best: kiss babies & spend money. Private funds are much better than government programs, simply because of the waste that we have already talked about. Ask someone who has paid into SS all their life, after they see what they will get in return, & see if they would rather have invested that money in a private account.

Chops:

>”In the political atmosphere surrounding
>Social Security, the best thing that
>can be done at this time is brainstorming.
>There simply aren’t enough options on the
>table yet…”

C’mon. There are tons of options. Remove the pay in cap. Pay out less. Stop paying out. Legalize marijuana, crack, heroine, and prostitution to generate tax revenue. National Lottery. Sell “SS BONDS!”

Privatization is just ONE of the terrible terrible ideas. Republicans arguing that “nobody else is even OFFERING ideas” is silly.

Social Security is, literally, social security. It is a program that rewards people for being old. What’s wrong with that?

It’s a pickle Rob, no doubt about it. For Social Security to work, people must not exploit it. Since that is a farcry from what is happening, we are seeking to change the current system. In truth, no change would hold-up in another 1929-like stock market crash and depression.

I would go a step further on what Rob said and claim that another depression is inevitably going to happen within the next 10 years and shall last for quite a long time. All the while Social Security, our supposed safety net, is falling apart and history is repeating itself all over again.

However, as a Social Darwinist, I am not disposed to care whether those who idly twiddle their thumbs while impending doom shadows everything lose their means of survival. Still, it would be a pity for all those who depend on Social Security to starve to death out on the streets.

Chops:

Being new to the blogging, I just came across this site and your work for the first time. I haven’t had much time to digest your ideas, but I give you an A+ for your approach/methodology. Objective first. Original thought second. Partisan bickering last.

We probably disagree on a lot, but I really like how you approached the issue. I’m a former centrist Republican and current centrist pro-business Democrat. I have only one allegiance…an allegiance to progress.

I like your thinking on this issue. It’s nice to hear someone taking a goal oriented approach instead of a partisan oriented one. I see both parties confusing the objectives with the fight itself. Both parties want to own the issue by preventing the other from winning.

I like your stated social security objectives. You’re my type of thinker. I’ll be checking out your stuff more often.
Keep up the original thought!

The answer is very simple. Have the younger generations SS payments that are withheld put into the exact fund that the Congresspeople have. They seem to have quite a good program for their retirement.
Tom

Chops,

Being the partisan gate crasher about to be escorted from the room right behind Aldous, let me make a few points before I go.

This is a genuine, pragmatic start to the Social Security debate that should’ve been apart of the good faith, bi-partisan effort promised by the White House - back before it was a joke and a lie hearing it from Bush now.

Go ahead and label the Left as premature gloaters for pointing out that support for Bush’s private accounts has dropped to 35% percent. But, knowing that the majority of Americans opposed have obviously found convincing evidence to the contrary, it’s difficult to imagine that more of the same distorted rhetoric from the Republicans (that looks nothing like your proposal) will change that number.

For the record, Democratic lawmakers were just waiting for the promised call from the Bush White House, open to finding a consensus on the Social Security issue - a call that never came.

Let me be clear. Congressional Democrats refusal to acknowledge such overtures are not based on the conviction of having already won, but due to clear evidence of the extreme and reckless lengths the Republicans will go to avoid compromise.

I’m not surprised to find a check of the Red Column archives produces no defense so far, of the expected ‘nuclear option’ being threaten by Senate Republicans. Which is a blatant attempt to eliminate a minority party’s power to at least force a compromise in the U.S. Senate.

Going through with such a threat, the Republicans will be convinced they can effectively frame Senate Dems as ‘obstructionists’, a notion based on the assumption that a contrary argument already put forth by Harry Reid & Co., will not sway average Americans.

That’s what you thought about Social Security, too.

Perhaps someone else saw the same polls a few days ago. I saw them but could not get any follow up material. While it is true the popularity of President Bush’s SS private accounts is falling, there is an increase in polls for those supporting private accounts when Bush’s name is not attached to the poll. They covered several age groups in the polls & basically those 50 years & below were in a majority for private accounts. Did anyone else see this report? I’m sorry I can’t give more info. It was reported on Fox News.

Chops,

If brainwashing doesn’t work, maybe brainstorming will.

With America becoming more and more a minimum wage society, companies cutting back on benefits, including pensions, companies defaulting on pensions, and the right trying to screw the little guy out every penny he has left, where will the money come from for the less than average American to save for retirement.
Bush had no plan that he wanted to admit to in the first place. To criticize the Democrats for not putting forth a plan of their own is the height of hypocrisy.

Rob C & Zeek,

I have to say that I agree with Zeek that no Social Security system known to man could survive a 1929-style crash. If we rely on the stock market, we’re screwed, if we rely on tax revenue, we’re screwed, if we rely on the trust fund, we’re screwed because the Federal gov’t won’t be able to pay back their T-bills.

Bert,

Being the partisan gate crasher about to be escorted from the room right behind Aldous, let me make a few points before I go.

Rocky,
America is not a minimum wage society; if you followed the thread on the minimum wage in another post, it showed that only a tiny minority of adults over 25 are working at min. wage.

Blaine,
The Gallup website has a nice long article on public opinion, with enough statistics to keep your mind humming all day: http://www.gallup.com/poll/content/?ci=15283

It’s important to note that the much-quoted 37% figure is not who is in favor of private accounts, but who thinks Bush has done a good job handling the situation. I agree with most Americans that he’s done a piss-poor job. Even if it was a good proposal (which, in his form, it’s not) he’s done a poor job.

The figure that I think most strongly backs my thesis that we need to discuss and solve this is that 75% of Americans think this needs to be fixed during the next 10 years.

My personal theory is that the Congressional Dems are only being feet-draggers on this issue until 2009. They sure as heck don’t want a cornerstone of 21st-century society to be thought of as a solely Republican achievement, and they know it won’t hurt much to wait a few years, so they’ve circled wagons until they can get much more influence on and credit for the legislation. Hey, it makes sense: it’s not like they’re relying on Social Security.

Chops,
The pension fund “Would be the possession of Uncle Sam”.
Isn’t that the reason Social Security is in trouble? These funds are the possession of Uncle Sam and the polititions are spending as fast as we pay it.

Ron -
The only reason the politicians are able to loot the Trust Fund is by investing it in T-Bills. If we diversify it all around the economy, Congress won’t have any way to get their grubby paws on it.

In the meantime, it should be obvious to everyone that we need to put the existing Social Security fund in the lockbox with Al Gore for the interim.

Chops,

Your ideas could never fly, you are making too much sense for an issue that is being driven by partisan hacks jockeying for position.

Why doesn’t the government sell cookies like the girlscouts ? They should come up with some products that people would like to buy and then run things like a real business.

“America is not a minimum wage society; if you followed the thread on the minimum wage in another post, it showed that only a tiny minority of adults over 25 are working at min. wage.”

Chops,

Does your figure include illegals that are paying into S.S. but have no chance to collect?

Do the illegals really matter? I mean, honestly, isn’t the Social Security issue/problem/crisis/apocalypse a little bigger than the “illegals” aspect? Besides, I fail to see how someone paying into SS but not drawing money out is a problem for us (not that I support illegal immigration heh heh).

Whatever happened to the “Insurance” in Social Security Insurance? SSI is supposed to be a guaranteed income to insure a level of care to retirees, their survivors, or disabled workers. No matter how the administration is spinning this, it sounds like an abandonment of that philosophy. Maybe that could be a topic in this thread?

Chops,
I agree with you, somthing needs to be done.
Maybe we ought to put the current system in a lock box with Owl Gore.
I’m about 5 to 10 years away from retirement, and if things keep going social security won’t be thre for me. Anyone under 40 can forget it if something isn’t done.
Maybe if they manage to fix social security right, then they’ll work on medicade.

Franklin Roosevelt began this social “insurance” to gain political favor and reassure the people that the government would not forget them. Now look where we are.
Where are the families of the Senior Citizens in their time of need?
Why does the government need to provide support for seniors, where are their families?
I do not want to support Billy Bob’s grandpa and grandma while he guzzels beer and drives his pickup over to the lake. Why should I?
Those seniors with true need should receive help.

Abolish the IRS and personal income tax. Create a fair national sales tax.

Stop all aid to foreign countries.

Pull the troops out of South Korean and Europe.

Cut all social welfare programs by 50 percent.

Count the savings, adjust the Social Security Program and help those who can not help themselves. Not everyone who believes they have earned it!

It is hard to believe, as many journalists have suggested, that Democrats will obstruct anything that could lead to a permanent solution on Social Security. They will cling to the outdated program simply for it’s nostalgic benefit. Those same journalists suggest that anything that leads to solvency out 50 or so years can be called a permanent fix.

Nancy Pelosi says “personal accounts breaks the promise that FDR made to the people.”
Truth is personal accounts would restore FDR’s promise broken even before being enacted. A Social Security Pamphlet distributed in 1936 said, ‘this money will be set in your account and will be paid to you as your right.’ The Supreme Court ruled that workers have “no right to receive benefits.’ Payroll taxes are paid into the treasury and are subject to the whim of congress.

Let’s look at the rest of the promise in that pamphlet, ‘you and your employer will each pay 1.5 cents on every dollar you earn up to $3,000 beginning in 1940. This will be gradually raised until in 1949 when you and your employer will each be required to pay 3 cents for every dollar you earn. This will be the most you will ever have to pay.’ Another Promise broken.

Truth is Social security has been fixed 20 times, but like an old car it is no easy task to keep it running.
There is a solution. It is a gradual transition over 60 or more years to an account of your own where the funds are subjected to compound interest. Ernest Christian, former Treasury official, calls it a young American’s tax cut. They would still be required to pay, but would in effect be paying for their own retirement fund. Conversely, with the rejection of the Presidents plan all they have to look forward to is more benefit cuts and most assuredly heavy tax increases. Congress is whistling past the graveyard with more than 7 Trillion SS shortfall by 2042 and the same or more shortfall in Medicare.

In addition to benefit cuts, a personal account should be set up for every newborn child beginning today and the government should fund that account with $100 or more real dollars only to be used at retirement or death. In addition, these newborn children would be allowed to add all their payroll taxes to this account up to their 22 birthday. This period could be increased gradually after the baby boom generation is gone.

Unfortunately, the chances of a permanent solution are slim. The pain of transition is high and politicians are looking at their next election, not at something of which they will never reap the benefits. They also have the vested interest in the current policy. As long as payroll taxes are paid into the treasury the money is theirs to spend.

Solution: We as americans must raise our kids to be investors. Investment income does not have to pay SS tax. As we own the stocks and bonds of emerging nations our wealth grows as does theirs. Repeal the death tax so I can pass my fortune on to my children and they too can become successfull investors. Own a little bit of everything! We must control illegal immigration as they will cause our population to grow too rapidly and upset the apple cart of an investor society that necessarily needs to be small and self sufficient in comparision to world population. Such a small country with such wealth could field a technologically superior military so as to defend ourselves from the inevitable wealth takers out there that would do us in out of envy. Nothing like 10,000 nuclear warheads to tell the world to buzz off!

I am 23 years old. I did not go to college, but graduated High School a semester early in order to get a headstart in the process of making money. When I began my career my thoughts were of course make money now for things now. I had that atitude for long enough to buy a vehicle, secure a domicile, and find a girl. That took all of a year.

At the start of my second year as a wage earner I never thought, “All that money I just put in SS! Great I don’t have to worry about it when I get old.” I actually looked at that money as no longer mine. The way I understood things was the person that should be concerned about my old age was me.

I saw my grandfather living on SS and his modest retirement savings. His SS was good for keeping his cable on and ensuring he had no lack of sweets. That’s about it. I will depend on it for even less than he did. When I try and understand someone else taking such a keen intrest into “holding on to my money so I will for sure have it” I get a little nervous.

Why do you want to hold my money for me? Do you have any reason to believe I will some how waste my money? Guess what! I made the money, how bout I do with it as I see fit? If I squander it than I will have to make more. Or go hungry. If I squander my money I may learn a lesson. But If I give it to someone and they squander it and then say “Oh yeah I got your money, it’s just well I had to use it for a while, so don’t worry count on it bein here for you, ok?” Then no lesson learned plus I am now old and not able to go out into a job market and compete.

So I think SS really is a sham. If W. gets reform done on it I hope no one’s current benfits are effected. If you are middle aged and depending on SS for a Retirement I pitty you. I myself will count on my Simple IRA, my ROTH IRA, and the money from my investments for security in my golden years. It will be like all the rest of my adult life, and the way I think it ought of been. If someday my parents retire and find out they are not sitting well, I will gladly be there to help them, as they did their parents. And I hope in my old age if I some how need to have money, I hope I have raised my children to be in a position to help bail me out.