Republicans & Conservatives: Archives

Anthony,

“I am sticking to the buy and hold system.”

See, the thing with that system is if your initial stock selection is crap, you’re screwed. Also, if the timing is off, you’re also screwed. I think it would be fun to further discuss the situation of the stock market as of now but that’s not political.

I would like to know what a calculator would look like if you factored Bush’s “plan” into it rather than adjust for our current system.

Intersting little calculator. I have to say I just did a little check on my 401K this weekend. I added up how much I have put in over the 15 years I have been working and how much I now have. Despite a stock crash in the 90’s and the one from a few years ago, I have tripled my investment. Not bad…

The best thing about a personal savings account is that nobody can take it away. I have no idea if in 30 years when I retire SS will be around for me. Maybe it’ll get means tested and I’ll have made too much to be included. Maybe it’ll be bankrupt and I’ll get half of what I put in. I’d sure rather control it myself.

Buy and hold doesn’t mean I make no adjustment, but I don’t try to time the market, except in the very broad sense and I look at the long term. It requires a diversified portfolio that you adjust periodically. In my 20+ years of experience with the system, it has produced very good results, even factoring in the downturns of 1987, 1990 and 2000. Maybe it was just luck, but anyone who followed a similar strategy was equally lucky and made about 11% a year on average.

I am not happy with the market this week, but over an investing life, it has been very good. I recall the saying from business school, “market timers end up with holes in their shoes.” People always tell me what they would have done, and somebody has advised me that the market was a bad investment every year for as long as I have been trying to invest. They were sometime right, but not usually.

A diverse portfolio has to include stocks. There is some volatility, but at the end of a working life, a portfolio without stocks is no more than a fourth the size. If you are a young man, and you have the ability to invest in the market and are not doing it, you are foolish indeed.

Jack
Are you crazy? Its almost like your advocating some type of individual choice.
A personal retirement account? That means that I and not the govt. would then be in charge of my own retirement.
That calculator is just plain craziness. If the govt says I will be happy with the little stipend they offer, then I will be.
HA! Me deciding for myself when I retire and with how much money is downright ridiculous….
oh wait, this is the red column.
Thanks for the link.

EVERY comparison of Social Security with “private” accounts that I have seen has used different assumptions about long term economic growth, and therefore wage and stock market growth.

Social Security assumptions are always conservative about economic growth, and stock assumptions are always more optimistic. As a result, these are always apple v. oranges comparisons.

When these comparison use the SAME ASSUMPTIONS for economic growth, social security looks like a much better deal.

If heritage would publish all its assumptions and let us dissect their model, I would take this a lot more seriously.

Jack, what a fallacious argument. Yes, by all measures, if we all keep all of our money to ourselves, a large number of us will be better off when we retire. But, what then would become of our nation? What would become of those elderly who outlive their meager means? What would happen to those disabled or dependents of those breadwinners whose demise occured before they could amass their small private savings?

Yes, we could all be better off in one sense if we all just plain refuse to pay one dime of federal, state, or local taxes. No question. But, who the hell would want to live and work in this society then? Certainly not me, not without national defense, without bridges and highways, without public schools, without our streets of America free from all manner of beggars and sick and dying who are currently aided by our generous contributions in taxes and yes, our great Social Security plan. It needs adjustment, it does NOT need to be done away with. Our society, our children and theirs, would fare far worse then we have and that is no legacy at all.

David

I don’t want to do away with SS, only fix it.

It is not an efficient way of accomplishing the social welfare you advocate (and BTW I also support) Social Security was designed for a society very different from the one we have today and even more different than the one we will have in twenty years. Franklin Roosevelt sold the system to us as something it wasn’t really. At first, the contradictions didn’t matter, but as time goes on they are becoming more serious.

We adjusted the system in 1983. It is time to do so again.

Skcomm

You can change some of the assumptions on the calculator. It is based on historic returns. If you want a different opinion, try www.tsp.gov. That talks about the rates of return etc, for the government pension system.

David’s got it right in one - this calculation is total nonsense.

The page says this is “how much you could accumulate with all your Social Security taxes in a personal retirement account”. This is only vald if all current SS benefits were immediately cut to zero.

In actuality, since almost all SS taxes go to pay current benefits, every dollar that gets diverted from SS taxes into a private account has to be balanced elsewhere by either a tax raise elsewhere, a benefit cut, or more deficit. Is that measured in the Heritage Calculator too?

“The best thing about a personal savings account is that nobody can take it away.”

You dont understand- they do not like this. They want to be able to take it away from you if some more “social good” comes along that is more important than you. It doesnt matter that you paid into the system- you have no property interest in social security. The only interest you have in is the extent to which you fellow citizens decide you have a right to it. That is, you have no real RIGHT to it at all.

This is why opposition to personal accounts is ideological rather than economic. Its a struggle over the nature of social security- not its outcome. It is a fight between those who think that you should own your own retirement, and thos that think your reitrement should be the object of legislative grace at any given point in time. I would tell you who i think is going to win this struggle, but it would just depress me.

I would say that by putting a dependence on Social Security, regardless of whether it’s private or not, is already a sign that you’re handing your fate over to the government. I mean, really, that 6% they take out of your pay check is not going to stop you from establishing your own retirement fund.

Misha, you could not be more wrong. You are talking about retirement, the Soc. Sec. program is insurance against the US looking like India with wall to wall beggars and street vendors, homeless and the dying.

And every person that pays the FICA taxes has as iron clad a guarantee that they will see their money again as one can find on the planet, the good faith and credit of the US Government which has never defaulted in its entire history. Guarantees just don’t come better than that.

And if you don’t live long enough to retire, rest assured your FICA taxes will be helping to keep America’s people, including your nuclear family survivors from going to the poorhouse.

The ideological battle exists. But, not as you see it. It is between those who believe they have no obligation back to their society, and those who do. It really is that basic. Those who support Soc. Sec. (and that is the majority of Americans) believe taxes are a good thing IF they benefit the greater good for the most Americans.

We had a depression once, Germany is going through one again today. It could happen here again too, especially in light of modern economic circumstances. And if it does, there will be a large number of Americans who today would like to privatize S.S. who will be damn glad and happy for themselves and their loved ones that Soc. Sec. survived their minority view of “to each his own”.

Many who want to privatize S.S. believe doing so will end the leaching of tax dollars by irresponsible people too lazy to work and save for a living. This is a fundamentally flawed and distorted view as is born out by the facts of who is aided and assisted by the S.S. program. I am grateful to live in a society that has, since 1931, believed all Americans have have an obligation and duty to insure that rampant unemployment, destitution, and poverty should never again become the plight of 25% or more of breadwinners and their families ever again. And that is why S.S. was created, and that is why its premise is just as sound today as it was in the 1930’s.

Santayana said, those who fail to learn their history are condemned to repeat it. He was speaking directly to those who would privatize S.S. today and partially recreate the conditions of the 1920’s in which the Elymosenary system was a hit and miss charitable system primarily benefitting some of the needy urban dwellers, and where failure of the economy or the demise of a family’s breadwinner spelled extreme hardship for survivors.

We became and still are today, a far more compassionate society than in the 1920’s despite Bush and his cronies’ policies and legislative attempts. Bush will NOT have his way on this issue simply because the majority of Americans see right through his “You will be better off” selfish appeal to the self-centered side of their natures. Americans believe in social contracts and they will hold the Bush administration to it despite all its kicking and wailing propaganda.

When is someone going to insist congress allow social securiy to invest excess revenues from social security taxes,and protect the system.If this had been done and still should be done there would be no solvency problem.What a sham on the American people agian by this administration.

My grandfather was a brilliant man. He taught me the meaning of the constitution. He taught me to be self reliant. He taught me the value of a dollar before and after the gold standard. He is the one who taught me to match FICA tax with my own savings. He told me that if I matched FICA tax with the same amount into my own investment portfolio, then when I retired the return from my own portfolio would be greatly more than SS. I am retired and Grandpa was absolutely correct. My SS is just short of $900 a month. My investment could be thousands of dollars a month. I choose to be conservative and take what is necessary with a little bumper. I suggest that you take several listings from NYSE, NASDAQ or what ever listing you want to favor and research them. Find out what the listings were doing in 1950, 1960, 1970, 1980, 1990, 2000 and so on to extablish their record. Then track the value of the dollar over the same period. You will find that a personal investment is a pretty good idea. If the younger generation had a program where their FICA tax were to be put into an investment program of just say mutual funds, for instance then we could some day look at SS as a different venture.

Looking at that Calculator reminded me of all those “Studies” the Tabacco Industry made on how safe cigarettes were. I suppose it is normal for Conservatives to take this seriously. Afterall, where are all those smokers now?

For a discussion of the assumptions in this calculator, go to http://mediamatters.org/items/200504140007. This calculator isn’t as dishonest as some others have been, but still, it has problems that anyone using it should be aware of.

Ed Drone

Everyone should be entiled to a IRA large enough to totally fund your retirement. IRA’s should be the way to fund retirement(i.e. mandtory). SS is a very poor way to funding your retirement and really does a half a** job and does not succeed in totally fund retirement. SS should not be disabilty insurance. There could be other gov programs for that,or heaven forbid private insurance.(most state require insurance on your car so why not on group plans)THAT WAY PEOPLE WHO DID NOT PAY INTO A PLAN DO NOT RECIEVE MONEY THAT IS NOT THeirs. THAT IS WHAT WELFARE AND CHARITY ARE FOR, NO ONE IS ENTILED TO A FREE LUNCH. We need to stop the government from being in the financial planing business. Mainly because they do not have their clients best intrersts at hart. Plus the government is not very good at it. They are good at blowing money, not so good at saving it. SS needs to go away. It was a bad idea. Always has been. Any program that causes people not work when they could is againest free market capitalism which is the American way. Any system that takes my money and gives it to someone else in exchange for nothing is a bad system (even if they paid alot of money to some else in exchange for nothing.) If they would let me have my money I would not be a burden to the system. Sorry for all the free loaders .

Steve,
“Any system that takes my money and gives it to someone else in exchange for nothing is a bad system.”

Yeah, I got mine too, buddy. Screw ‘em all. But which ‘free loaders’ are the worst? Mentally ill people? Retarded people? Handicapped people? Ugh. All those ‘burdens on the system.’ And orphans! Let’s not even go there. But maybe hungry children are the worst of all. If it weren’t for the government regulations, the good-for-nothin’ kids would be allowed to work for their bread. And old people! No reason they can’t work. Stuff like Alzheimers and Parkinsons, those are just excuses. And if those mooching old people had just planned ahead… isn’t it sickening?

Yeah, let’s bring back the Dickensian world of Victorian London. Screw ‘em all. Cause I got mine, buddy.

Yeah, let’s bring back the Dickensian world of Victorian London. Screw ‘em all. Cause I got mine, buddy.
In combat I was taught to use a wounded person’s first aid kit and save mine for me. It makes sense to me to make sure my family is secure BEFORE trying to help someone else’s.
The President isn’t asking for all of SS to be private,only 4%.

Part of the problem is that social security was never intended as a retirement plan. It was intended as social insurance - insurance against getting too old and thus outliving your ability to provide for yourself. But now, it’s not insuring anything because there is no risk involved. Just as auto insurance is only viable because the chances of you getting in an accident are small, insurance against getting old is only viable if the chance of you getting old is small. With the retirement age set so low, we’re seeing insurance costs rise out of control. Imagine how much auto insurance would cost if it covered things that were certain like needing gasoline or tire changes - it too would be out of control. If liberals want to keep social security, then we should handle it the way FDR intended it to be handled - as insurance. The retirement age should be much, much higher, and should be tied automatically to life expectancy. That would lower the tax burden on the people who work in this country, and would encourage them to invest by themselves - especially if they want to retire at 65. A lower tax burden - on both employees and employers - would create jobs and generally improve the economy. Plus, keeping social security to only protect those who are the most needy should make liberals happy.

Although, the libertarian in me still thinks the private sector could handle “old age” insurance much better then the gov’t ever could. But one battle at a time…

It is easy to caricature anyone who opposes social programs as “I got mine. Screw you.” Sometimes this is valid, but not nearly as much as some people think.

The mistake is to view the world in static terms. In this imaginary world, the poor & rich, the lucky and the unlucky are stuck in their positions and they can’t do much, or anything, to change. In this case, of course it is unjust not to share more or less equally.

But the world is not static and people’s choices affect the outcomes. Individual choices can help them and others, or hurt them and others.

Consider choices that a person making about the median wage could have made thirty years ago. (I used only $20,000 a year unadjusted for inflation, so my figures are probably low. I used the actual returns for stocks and government bonds) The first guy saved 10% of his income and invested in stock mutual funds. He has about $702,000. The second guy saves 10% of his income, but invests in government bonds. He has $208,000. A third guy uses his money to take vacations and buy a new car.

The first two guys made good decisions. The one turned out better than the other, but both have a nest egg that will give them a reasonably secure retirement. The third guy did the wrong thing and has nothing.

Now they are all 65. Should we punish the first guy, who is rich? Keep the second guy equal, because he is middle class and reward the third guy because he is poor? Or maybe would it have been a better idea to get the third guy to do the right thing through a combination of threats and incentives.

A SS policy should be insurance against uncontrolled outcomes. Those that just make bad decisions need not be rewarded. Imagine setting up the rewards system that makes them all equal. If the two savers figure this out and do the logical thing (i.e. take vacations and buy new cars instead of saving) the free rider has no place to ride. Everyone is poor now. But is really equal. Some people would call it fair, but they would be wrong.

Jack, static or not, neither of your situations eliminates the poor and unlucky.

And your example is totally irrelevent since all three of those guys would be paying into Social Security anyhow. The car guy doesn’t even get a chance to be irresponsible with his retirement earnings.

You can argue that the stupid guy should be allowed to blow his wad on bling-bling so the responsible people can gain satisfaction from feeling superior, but that’s not what you guys are arguing. Instead, you’re pushing wacky little investment calculators from right-wing think tanks like the Heritage Fouondation.

I am arguing that choices make a difference and that INSURANCE should be for those who are unlucky. Being poor is perhaps a more nuanced problem. There are habits and actions that make and keep people poor. Only for a small minority is being poor a permanent condition. Conditions beyond our control is why we have insurance. It is the “beyond control” definition I sometimes distrust.

Take my example and feed it into SS. Make each guy save 10% and invest it all in government bonds (they make a little more than SS). The total at the end of the period for all three is $624,000, which is less than even one guy earned with his stock funds and much less than the total of $910,000 that the three of them earned, even when the deadbeat was taking his vacations.

It has to be about making the pie bigger as well as distributing the pieces. The situation I outlined is what realistically would have happened over the past 30 years, based on what actually did happen, not what I guess might be in the future. If we achieve equality by pulling down those that do better, maybe it is not a valid goal.

Jack, if the other two guys aren’t socking something away in addition to their SS investment, they’re idiots too.

If you want to add private accounts on top of the current SS benefits, I’m with ya’ buddy. Except at that point, why bother making it part of SS. Just open up a Schwab investment account, or something.

Of course, that’s where you’re going with this line of argument anyhow, isn’t it? You’re saying everybody should just have a private retirement account that they manage themselves. My point is that many will mismanage their accounts, or just not have one at all, then we’re back where we were seventy years ago with tens of millions of seniors living in complete poverty.

The reasoning behind Social Security is just as valid today as it was then.

If we achieve equality by pulling down those that do better, maybe it is not a valid goal.

Total straw-man argument. No one is being “pulled down” by Social Security.

And “acheiving equality” is not the goal.

This is my first post in the forum, so please cut me some slack.

I appreciate David’s comments, as most of the focus on SS has been on retirees. My Grandfather lived off of a SS check for 40+ years (the right side of his body had been paralyzed in a freak accident). Mind you, the SS check didn’t allow him to live like a king, but it sustained him. Looking back, I am thankful for the fact that the government provided for him for all of those years.

This aspect of the SS program makes it more clear why Bush is proposing that only a small portion of the tax be allocated to a PSA. In learning about the proposed PSA, I have scoffed over the insignificance of the amount that PSA would potentially contribute to my retirement. I’m in my mid-thirties and feel that my 401K and other investments will go much farther than a PSA and SS in general. In other words, my focus is on what I can control, not social security. The PSA proposal, as I understand it, doesn’t do much to improve my personal interest in SS. Fortunately for me, I am in a situation where I can take that stance. Low income, less educated, less fortunate people don’t have that luxury. I think the focus needs to be on improving the investment (boosting returns) of SS funds, as others have mentioned, and then the outflow of SS (who gets what). I think it makes sense to keep a cap on the SS tax, but that we should not guarantee SS payments to our rich retirees.

The only thing ANYONE needs to look at is the fact that personal accounts can be transfered to your heirs. Not so with Social Security. If I die, I’d like my investment in Social Security to be passed on, not taken back by the system.

Social Security has been the longest living social scam in this country.

DP: The best thing about a personal savings account is that nobody can take it away. I have no idea if in 30 years when I retire SS will be around for me. Maybe it’ll get means tested and I’ll have made too much to be included. Maybe it’ll be bankrupt and I’ll get half of what I put in. I’d sure rather control it myself.

And maybe the investments in your “personal Savings Account” will go belly up in the five years before you retire as well. Social Security will go “belly up”, as you put it, ONLY if we tell our elected officials to allow it to.

AZCon: The only thing ANYONE needs to look at is the fact that personal accounts can be transfered to your heirs. Not so with Social Security. If I die, I’d like my investment in Social Security to be passed on, not taken back by the system.
Not true. A large chuck of Social Security goes to the widows/orphans of people who die before collecting. What if I die during a downturn in the market, and there’s no social security benefit for my wife & kids? They’re screwed. Social Security protects them.

Private accounts in addition to SS are a good idea and everyone should have one.

We have to reform SS because it will run out of money. The SS tax is already high enough and I am not in favor of making my kids pay even more for my retirement and those of the other geezers.

SS was conceived in a misconception that it was a savings and insurance system, when actually it is a transfer payment. It was set up for a world where there were many workers for each recipient and most people did not live beyond 65 years. These things have changed and so must SS.

Personal accounts can be a first step in weaning people away from the need for government mandated SS. Yes, that is my goal. I want people who can to save for their own retirement. I know the government will have to step in to protect those who are too unlucky or lazy to save for themselves. But I don’t see why EVERY senior in the country needs to be given a stipend by the USG, especially since seniors, as a group, are the one of the richest segments in our society.

The only thing ANYONE needs to look at is the fact that personal accounts can be transfered to your heirs.

That’s not necessarily true. Bush’s private accounts plan doesn’t let you withdraw everything upon retirement. By default, the money is used to purchase an annuity for you that can’t be passed on.

We have to reform SS because it will run out of money.

Of course, but private accounts don’t address that problem at all. In fact, they make it worse.

Personal accounts can be a first step in weaning people away from the need for government mandated SS. Yes, that is my goal.

I know. I don’t understand why you guys just don’t admit you want to dismantle Social Security in the first place. When it finally gets dragged out of you, it makes you look deceitful for first attempting to argue that you’re trying to save it.

AP and David
As you know, I have come around alittle bit on my SS stance. I would like to ask a few questions, with all sincerety and no sarcasm.
I ask these with ONLY the retirement portion in mind.

“My point is that many will mismanage their accounts, or just not have one at all”

What business is it of yours or mine what people do with their money and how they plan for their retirement?
If you feel bad for the people who elected not to plan and I think it is their own fault and do not care, are you not imposing your morals or beliefs onto me?

“then we’re back where we were seventy years ago with tens of millions of seniors living in complete poverty.”

Total scare tactic to get votes. There is just as good of a chance MORE people would plan for their own future.

Could SS as a retirement option not work on a voluntary basis?
You want it, it is there for you to contribute and get your benefits.
If you do not wish to contribute to SS but instead want to do it yourself, then pay a much smaller percentage to help support the non-retirement portion of SS.

Thanks for your responses.

AZ Con said: “Social Security has been the longest living social scam in this country.”

No, not true. The US Military and publicly funded schools have been the longest living social program in this country and they are no more scams than Social Security is. Soc. Sec. is necessary, ask anyone who knows about or lived through the 1930’s in this country, or child who has been saved by Soc Sec. after the breadwinning parent became disabled or died while they were young.

Soc. Sec. is an investment in our economy by insuring the broadest possible number of consumers are avaiable to support business and industry. And that includes the retiring baby boomers whose consuming is rapidly becoming the mainstay of the economy. Without all those retirees receiving back their FICA taxes to consume American products and services, what do you think our economic future would look like over the next 40 years, eh?

Fact is, Soc. Sec. keeps America from becoming a sea of beggars, criminals, and cardboard box street tenants. Don’t like taxes - move to S. America or Mexico where a few bribes can exempt you from them and cross your fingers in the hopes that your child isn’t kidnapped for ransom. America is a great nation and it became great as much because of the growth of the middle class that Soc. Sec. helped create as due to entrepreneurship, inventiveness, and government regulation.

I suspect many are reacting as much to their recognition that the American middle class is not getting any further ahead today than 30 years ago. But, that is not the fault of Soc. Sec. That is the fault of inflation, an inefficient political and government system, and lack of adequate consumer protections to prevent the Savings and Loan Crisis and Enron, and a myriad of other corruptions of the free enterprise system perpretrated by a small number of capitalists and managers of capital.

While I tend to favor a “reform” of Social Security, along the lines of encouraging people to put more money in a broad range of retirement investments, I have absolutely no confidence in Bush to come up with a decent plan. Put simply: the man is a liar.

Here is an example. Bush has stated that social security is a “bad deal” for African Americans because they don’t get as big a “return” from it because of their statistical shorter life span. That’s misuse of statistics. African Americans’ shorter life spans are primarily caused by two factors: a higher infant mortality rate and a higher murder rate than the rest of the population. If you look at the lifespan of African Americans who reach retirement age, it’s not very different from the population as a whole. Add to this the minor redistributive effects of Social Security, and they may even come out ahead.

In short, Bush has manipulated some tragic facts about African Americans to try to sell his Social Security privatization. He hasn’t done anything to bring down the infant mortality rate in this country (which is an embarrassment compared to the “socialized medicine” countries), nor have I seen him step foot in an inner city and talk to African Americans about crime.

Zeek:
“I would like to know what a calculator would look like if you factored Bush’s “plan” into it rather than adjust for our current system.”

Yeah, good point. But it can’t be done, because never really did come up with a solid “plan”, did he?

David wrote:
“Bush will NOT have his way on this issue simply because the majority of Americans see right through his “You will be better off” selfish appeal to the self-centered side of their natures. Americans believe in social contracts and they will hold the Bush administration to it despite all its kicking and wailing propaganda.”

Corr-ect! Give that man a cigar!
The majority of American’s know that SS has been a wonderful idea for seventy years — they just don’t like the idea that the fund is being robbed. Lockbox anyone?

The American Pundit:
“The reasoning behind Social Security is just as valid today as it was then.”

Ab-solute-ly right! We have another winner! :^D

Despite the fantasies of the The Heritage Foundation and other Neocon think tanks, Grover Norquist, or the Fat Cats on Wall Street, who (let’s be perfectly honest shall we folks?) actually want to end it, not mend it, Social Security is thankfully here to stay.

kctim, one has to be realistic about human behavior. One can say, if you sacrifice for 50 years up front in order to save for a comfort level of 10 to 30 years at the end of your life, this is a good capitalist disciplined approach.

One can say that. But, the fact of human behavior is such that there are only two groups who will buy into that rationalization. Those who already have more than they need during their working lives, and that percentage of those who don’t, but, have a belief in and committment to, the future that allows them to believe 50 years of sacrifice is worth 15 in the end.

For almost all others, living for today means making ends meet and with what is leftover, trying to enjoy as much of the fruits of their labor with their children, parents, friends, and themselves as possible. The fact is, most working Americans would do more for their children if they had more income. Thus, the idea that voluntary saving for retirement would be a higher priority than one’s children or spouse today, is not rational nor does it make sense for most working Americans at a gut level. That is one reason voluntary savings simply does not work in America for a very large majority. It fares better with large incentives, such as 100% company matching of retirement savings, but, even then, a very large number of Americans put living and getting by today ahead of worrying about a future decades off, which may not ever arrive.

This then brings the discussion to the social cost of voluntary savings. If 150 million Americans or more could not see their way clear to save for retirement if all retirement were voluntary, what would happen when the bulk of them did leave the work force? They would rapidly become destitute. America does not like and has shown its unwillingness to tolerate highly visible destitution in her streets and alleyways. Hence, American tax payers of the future would end up picking up the tab for that destitute retired generation in large measure.

Which is better? To require all working Americans to contribute to the funding required to prevent mass destitution in the future, or commit a future working generation to make the choice between increasing their own taxes to save their parent’s generation from starvation and homelessness, or simply let them die in the streets and alleys of America?

Personal accounts can be a first step in weaning people away from the need for government mandated SS. Yes, that is my goal.

Thank you, Jack, for making your position clear - finally. The Red Team view is that SS is income transfer and that therefore, SS should be ended. People should rely on themselves, not the government - that the government shouldn’t be responsible for, or even involved in, the security of people in our society.

I say fine - make your real argument, the one you believe in, and see if you convince the public. But that’s not what you’re doing. Instead you’re throwing around misleading numbers and impossible promises.

Your “calculator” promises that we’ll all be millionaires at age 65, which sounds attractive. But it’s computed under the premise that we start now paying NO SS tax at all, and hence screw over the current generation of retirees - for about 1/3 of whom SS represents 90% of their income or more.

A while ago I posted Honest George Will that made this point. Fine, you want to end SS. But argue your principles, argue what you believe - quit using scare tactics and poison-pill promises.

David
I understand what you are saying, I just dont agree with all of it.

“But, the fact of human behavior is such that there are only two groups who will buy into that rationalization.”

Very few people ever reach the level of your first group.
What is wrong with the way the second group approaches life? What you call sacrifice should be just a way of life. Live within your means.
I know some would have to choose between a loaf of bread and putting that money into their future and I think those FEW need aid. No problem there. But the MAJORITY of people will go out and buy the latest CD or DVD instead of planning for their future and I don’t believe they deserve a dime.
You do not need the latest stuff in order to enjoy time with your family.

I agree that most Americans do not think saving for their future makes sense. But that is because they have come to rely on and believe that the govt will take care of all their problems when they get older.

“a very large number of Americans put living and getting by today ahead of worrying about a future decades off”

That is their choice though. MOST believe they do not need to save because SS will take care of them.

Your last two paragraphs are purely hypotheticals. One could easily say “what if” only 10 million people were irresponsible, think of the surplus SS would have then.

I really do understand the “human nature” aspect of your post, but doesn’t that deal more with “imposing your morals and beliefs on me” question I asked?
Do you have an opinion on that?

Thanks again for taking the time to address my questions. I hope they don’t make me seem heartless or anything, but these are just some of the problems I have with forced SS for retirement and all info I get helps out you know.
I just hope AP doesn’t sharpen his talons if he chooses to also address my questions. LOL!

AP

The goal is to make it possible (to make it relatively easy) for old people to live out their retirement in comfort. Social Security has helped people do that and nobody wants to close down the system immediately. But it no longer works as well as it once did, for a variety of fiscal and demographic factors. It has always been a system that transfers wealth from young people to old people. It is a political decision about how much you want to do this. You can raise the SS taxes very high, which would transfer very much to the old guys, or you can lower the taxes and transfer little. The third option is to let the old people pay more for themselves.

Comparisons with the 1930s are fictitious. The country has many times the wealth compared to the 1930s. Poverty is relative. If you forced a poor person to live in the conditions of an average middle class family of 1935 (i.e. one bathroom for a large family, maybe not indoors, crowded rooms, indoor and outdoor air pollution, necessity to shovel coal to keep warm etc) you would have a problem. Even as late as 1955, a middle class family had the buying power of someone today living in poverty when you compare things like car ownership, square feet of living expenses, access to travel etc. So you could take the shopping list, housing and disposable income of any middle class old person and make him look poor. And people who were actually poor were even worse off.

The proper measurement is the relative positions of the old and the young. As I mentioned above, it is a political choice how much you want to redistribute their incomes. I prefer to let the young people keep a little more of what they earn.

Blah, blah, blah. I’ve heard all the back and forth, with the “smart” conservatives comparing SS to IRAs, and the “bleeding heart” liberals pointing out that not everyone is lucky enough to depend upon the stock market. What’s really cool, though, is this part of the calculator, evidencing its truly neutral character:

Promised Social Security Benefit
(Social Security has insufficient funds to pay this amount.)

This is, of course, complete BS, since I will be dead before that happens. This is hardcoded into the presentation of the results, and doesn’t change depending upon your age. Just might be enough to dismiss this as the crap it is, as well as expose the Hairy-tage foundation for what it is.

Oh, and Jack, yes, let’s not transfer any wealth from the young to the old. I much prefer from the poor to the wealthy, through subsidies to the oil industry, uncontested contracts, large corporate scandals backed by political patronage, and, let’s not forget, the massive shifting of the tax burden. Thanks for caring, man.

Have a nice!

I remember Republicans whining incessantly about the Federal budget deficit back in the 80’s and early 90’s. They made the same lame comparisons back then: comparing the Federal government to a private business. Now that the Republicans take 100 percent of the blame for the Federal deficit, they talk about Social Security instead. Again, they compare the government’s “retirement plan” (Social Security is not a retirement plan) to what you get from private industry. It’s a false comparison.

so all the dems talkin on here instead of whining and making up things what would be your way of fixing the problem

Dsak,
How would I fix the problem? First, I’d vote out the Republicans in ‘06.

The long-term problems are caused by deficits, lack of job creation, and demographics. Seriously, if one party or the other doesn’t address the deficits &, most importantly, job creation, there are no proposals that will help.

Change the deficit & employment numbers, and the SSI projections will look great. Institute a long-term program of encouraging legal immigration on a large scale, and they’ll get even better.

Balancing the budget and eliminating the national debt - now there are some causes I could get behind. I know that both Al Gore and John Kerry advocated it; that was the single strongest pull they made for my vote. Neither got it (wasn’t old enough to vote in 2000 and would have voted Bush anyway), but it was attractive. I’m not sure how sincere Democrats are about reducing spending and the national debt - its easy to make good noises about those things when you’re not in power. But I am deeply uneasy at our federal deficit and national debt.

It would be worthwhile, I think, to start a thread on proposals for balancing the budget. I’m not satisfied with what the current administration is putting forward as its plan - I would prefer more drastic action.

Now, about Social Security …

Will you Dems please lay off the character assassination you almost always engage in? Honest to God, most of us Republicans do not hate old people, we do not have wet dreams about Americans in poverty, and we are not the party of the rich against the poor. I’m as tired of hearing those accusations made against us as you seem to be of having your patriotism questioned.

Honestly, almost everyone would almost certainly be enormously better off at retirement if they wisely invested the money that they currently pay into Social Security. There’s a strong pull for that idea, both from a personal freedom standpoint and from a practical financial standpoint. That’s the big draw for conservatives. We don’t like the idea of millions of people depending on the government for their retirement. That’s why conservatives back reforming Social Security - at least, that’s what I’ve been told and that’s what I believe.

Now, you can make the argument that our plan simply won’t work the way we want it to, because if people have the choice to use their money however they want, most people will spend as opposed to save. That’s a powerful argument, and you’re steadily persuading me with it. I’m not quite there, but I’m getting there. I don’t like the paternalist side of that - the idea that we the wise government are better at dealing with your money than you are. But I’m coming around to your perspective - after all, I am cynical about people and their motivations.

You can also argue that our plan falls short for people who become disabled early in life, or live far beyond what they’re able to provide for themselves at retirement. I think your argument here is even stronger. These people need to be taken care of … it would be far, far better for everyone involved if either their extended family or their local church would take care of them in that case. I like that option far better than having the government take care of them. I don’t like government being a provider of social services … though if given only a choice of government providing social services or no social services at all, I’ll bite the bullet and accept governmental involvement. I don’t like it, not at all, but I like the idea of people having no recourse even less.

My last remaining question is this - can we actually pay for Social Security? And will we be able to pay for it into the future? The fact of the matter is that people are living to later and later years in this country (a very good thing). However, can a workforce that is an ever smaller proportion of the population actually pay for these benefits? I’m unconvinced.

You see, using government to provide social services has certain costs. I’m cynical about human nature, and also very cynical about governmental involvement … after all, government is made of those same people I’m cynical about. Government providing social services involves bloated bureaucracy, ridiculous red tape, stupid mishandling of money, etc, etc.

I’m convinced that investment on the private sector would provide enough money to provide for everyone. I am not convinced that governement taxation is going to be enough … and even if it is, I’m not happy about the cost. However, I don’t want anybody to be rendered destitute. Nasty sticky world.

I just hope AP doesn’t sharpen his talons if he chooses to also address my questions. LOL!

kctim, I only file my teeth when the partisan BS starts spewing. If you ask an honest question, I’ll give you an honest answer. :)

If you feel bad for the people who elected not to plan and I think it is their own fault and do not care, are you not imposing your morals or beliefs onto me?

David covered that one more eloquently than I could,

America does not like and has shown its unwillingness to tolerate highly visible destitution in her streets and alleyways. Hence, American tax payers of the future would end up picking up the tab for that destitute retired generation in large measure.

Basically, you’re going to end up supporting the elderly one way or another. Better to amortize the cost over the entire population than to deal with it piecemeal. But I understand where you’re coming from.

then we’re back where we were seventy years ago with tens of millions of seniors living in complete poverty.

Total scare tactic to get votes. There is just as good of a chance MORE people would plan for their own future.

Not based on people I know and work with. :)

Could SS as a retirement option not work on a voluntary basis?

Ahh… Now that’s a good question. I don’t know. Certainly not as the program exists today. As far as I know, no one is proposing anything like that. BTW, what if you opt out, then change your mind later? Or what if you opt out and retire destitute? Somebody’d have to bail you out. Could we get charitable organizations to sign contracts obligating them to shelter, feed, and care for the poor? Interesting suggestion.

nobody wants to close down the system immediately [nice qualification - AP]. But it no longer works as well as it once did

That’s the first time I’ve heard that, Jack. As far as I know, seniors are still getting their checks and it’s working as well as it ever did. And it’s forecast to work well for at least the next half a century. And after that, even the worst predictions only show the benefits coming up 25% short.

Day for day I surf around in net to meet interesting people and international places. It’s great to see that it really works.

The Social security program is an insurance program that is covering more than it was intended to do. First it was based on the CPI or inflation index until the 50’s when they shifted it to the rise in wages index which has a faster curve in a healthy economy (which we have had for decades). Also it was set to the age of 65 which back in the 30’s the average age of death was 67. This being said Roosvelt and congress back so the need for it because old people were dying from starvation and exsposure do to their lack of being able to provide for themselves. If we go to this private accounts plan we will find that much of the poor elderly will be in the same predicament. Also the switch to the personal account system will cost just TOO MUCH, leaving us, the people under 55 with a greater future tax burden nullifying the advantages of the personal account system. How bout we increase the age and make 401Ks mandatory?

David and AP
Thanks for your time and input.

dsak: so all the dems talkin on here instead of whining and making up things what would be your way of fixing the problem

We can start by defining the problem correctly. For starters, stop saying that Social Security is “going bankrupt.” It has a moderate funding gap that won’t materialize for more than 30 years under the most pessimistic economic assumptions.

For example, the problem can be solved TODAY by enacting legislation today to raise taxes on wealthy workers STARTING 30 YEARS FROM TODAY.

Under less pessimistic assumptions (those that are consistently used by conservatives to extol the virues of stocks, the funding gap doesn’t materialize for some 50 years.

Now that I’ve clearly stated the problem & offered a solution, please tell me where dems are “making up things.”

Also [Social Security] was set to the age of 65 which back in the 30’s the average age of death was 67.

The proper measurement is not average age of death, but instead the average life expectancy of a person upon retirement age.

Our “average age of death” has dropped dramatically over the years due to reductions in infant mortality and a host of other things. While it is absolutely true that the elderly are living longer (and therefore requiring more social security spending), the increase is not as dramatic when we consider the impact of the population as a whole.

My last remaining question is this - can we actually pay for Social Security? And will we be able to pay for it into the future? The fact of the matter is that people are living to later and later years in this country (a very good thing). However, can a workforce that is an ever smaller proportion of the population actually pay for these benefits? I’m unconvinced.

This is an extremely wealthy country. We CAN pay for Social Security. We have a very low level of taxation compared to other wealthy, advanced nations. The proper question is: Are we willing to pay for social security?

Every generation of Americans does better than the previous one. We can pay for Social Security if we are willing to forgoe a little of that added wealth and transfer it to our seniors.

sk
You did not state the problem honestly or clearly. 2005 to 2018 is 13 years not 30 years. SS has always been in trouble financially. Your soulution is like something you would find in your hand. SS is like the proverbial finger in the dike. It always has been that way. Why does Congress not allow the SS monthly payout go large enough for people with less financial resources to have enough to live comfortably? One real solution is to put those that pay into the system to go on the same program that the congress people are on. They aren’t complaining about their returns.

Back to retirement accounts.

Being forced to give money to other person for no exchange in value is robbery. In the public sector it is called soical sercurty. Being required to put YOUR money in YOUR retirement account and using for YOUR retirement or giving to YOUR hiers is a far superior idea morally, and economically. For the life of me, I can not understand why anyone wants or thinks that the government should be in the retirement businesss.(They don’t even do the whole job.) Please stop the stealing, from me, from you and every wage earner in America. It is time to stop the endless debate. The only way is to get rid of this progam and let Americans keep their own money.

I forgot one item. Every member of congress should by law have a squirrle on their staff. Simply because they know how to save for the future.

Zeek,

People stop putting money away when they don’t get a tax break. People stop putting money away when they don’t get a company match. People don’t put money away when the are young and think they have time, and people don’t put money away when they have to choose between the rent and food or retirement. NONE of these factors changes the amount money need for retirement. SS does not cover all the money anyone needs for retirement anyway and promises a poor return. So to answer you question yes, some people do stop saving because of withholding.

kctim, look, I understand your reply and why you feel the way you do. But, either you believe in democracy in which the majority of Americans have their views and values reflected by the government, or you don’t. It is a fact that the majority of Americans believe in the social contract of S.S. and have for 7 decades and will continue to throughout the rest of the Bush administration. That fact, is what democracy is about.

As many on your side have said in the past, if you don’t believe in America for Americans, why are you living here. It is fine to hold a dissenting minority opinion. But, Republicans are intent on killing SS despite the majority desire for its salvation. The attempts by Republicans to subvert the American majority will on this subject speaks volumes about how the current Republican party members trying to subvert SS really DO NOT believe in democracy, but, in a politburo style one party government which knows best and presumes utter ignorance by the public, thereby justifying their decision to end SS despite the will of the people.

No wonder Bush and the Chinese are getting along so well despite China’s potential threats to our treaties and economic power. They are working from the same platform.

Tom: You did not state the problem honestly or clearly. 2005 to 2018 is 13 years not 30 years.

Social Security does not “go bankrupt” or face ANY financial problem in 2018. That is the year that Social Security begins to start drawing down on its Treasury Securities. These are T bills, just like the Chinese (among others) Central Bank is happy to by from the U.S. Treasury depatrtment by the billions.

Unless you believe that the United states government is going to deliberately default on its debt, drawing on those securities poses no problem at all.

2030-something (or later) is the year that Social Security revenues (including Treasury securities) does not cover the expected payout.

“kctim, look, I understand your reply and why you feel the way you do. But, either you believe in democracy in which the majority of Americans have their views and values reflected by the government, or you don’t.”

But just because the majority of Americans favor SS, does not make it right or fair for those who do not.
Case in point, gay marriage. The majority of America’s views and values towards gay marriage are reflected by our govt right now but these views and values are denying gay people their right to get married.
Forcing gays to live their lives according to the views and values of the majority is no different than forcing people to accept the views and values of the majority when dealing with SS.
This is why I believe our slide away from being a Constitutional Republic to being a democracy will end up ruining our country. Democracies fail.

David, I probably agree with you alot where it concerns this administration, but when you said:

“Republicans are intent on killing SS despite the majority desire for its salvation”

it made me cringe some because I know you do not believe in majority rule. The desire of the majority is not always right or fair and it is something both sides of the isle use only for their own political advantage.

I’m not saying dismantle SS, just give people back their freedom of choice.
Afterall, that is what this country USED to be about, “FREEDOM”

Amen to your chinese reference.

kctim said: “But just because the majority of Americans favor SS, does not make it right or fair for those who do not.”

Quite right. That is why anti-war Americans still have to pay taxes to support the military. They benefit from it whether they like it or not. They are protected by the military whether they want to be or not. Just as all Americans paying FICA taxes benefit from the insurance and retirement coverage and benefits whether they want ot pay into the system or not.

Where would the country be if folks could just opt out of taxes for any policy or program they felt they didn’t need or want? Public roads, public schools, public libraries, public monunments and land reserves, national parks, etc. None would exist if folks could just opt out of paying their share of taxes that support the programs.

The fact is, Social Security helps maintain a broad middle class and helps prevent a growing poverty class. And poverty breeds: it breeds crime, more criminals, dissent, and general disrespect. There are many intangibles like these which are the product of the Soc. Sec. program and they do have a monetary value even if precise calculation of the dollar amount is not possible.

I absolutely agree David, but remember, I am only talking about the retirement portion of SS and not ALL of SS.
All of the things you mentioned are programs that use tax money to (or are supposed to) benefit society.
SS as retirement says you do not know what is best for you, the govt does. I don’t think its right for the govt to tell me who I can marry and I don’t think its right for the govt to tell me how to plan for my future.

Maybe, if that part of SS was voluntary, more people would take responsibility for their own retirement which would cause less of a burden on SS. In doing this and strictly enforcing eligibility, SS could actually become what it was meant to be and be effective.

Its always fun David. I think our main disagreement is about where personal responsibilty ends and big govt begins.

David

We have a representative democracy. We decide who represents by means of elections. I doubt that President Bush will get all he proposes re changing Social Security, but what he does get will be determined by democratic process.

President Bush was elected by a majority of voting Americans and each of the members of Congress was elected by a majority of voters in their own districts. The current President and Congress represent the will of the American people. They will decide. They will take into account what they believe is public opinion, but we don’t govern by opinion poll or consensus of the pundits. That is a good thing, too given the nature of polling.

SK

The U.S. government is not like other debtors and creditors, but Social Security taxes are a lot like other taxes. In 2018 (or whatever year) the SS begins to draw down the U.S. will have to tax the current generation of taxpayers to pay the excess. There is no money in the bank or hidden under the mattresses and given the nature of the USG it cannot (not will not) save money. You can drive taxes up as high as you want to support the older generation, but there are costs involved.

In the U.S. government, current taxpayers pay for current expenditures. The money you pay today for SS goes to some old geezer in Florida and some of it is used for general government programs. SS operates like part of the tax system because it is a tax. The question is whether future generations of tax payers will be willing to continue to support future generations of old people when the tax rates go way up.

You seem to forget that the 1983 Reagan Commission on Social Security Reform are the architects of the current social security program. Among other reforms this hallowed Republican Commission recommended replacing real money surpluses with â€special†non negotiable Treasury Bond IOU’s. This allowed Congress to spend all cash contributions to the Trust Fund made by workers, employers and the self-employed in the same year the contributions are received. In order to made good the IOU’s more taxes need to be levied in the future…for a second time.

Greenspan was a member of this hallowed Republican Commission. He and other members stated to the effect that their reforms would work “…if government kept its fiscal house in order…â€. Then the largest deficit in our Country’s history occurred on President Reagan’s watch.

Today, Republicans who remember the facts offer in defense of the Commission’s reform the same old excuse “…who would have ever thought it could happen?†This is the standard defense of Republican politicians today. A variation is “Nobody ever told us this could happen!”

Now Greenspan says tax cuts are good, and so are private investment accounts. Gee, every time I pump a drink out of that well I get a belly-ache. I guess we should try again. Yeah, sure…

Rather than using the voodoo calculator on the Heritage site, I think a more realistic future will read like this press release:

DATELINE 2051: Slopping like hogs, Wall Street CPA’s and MBA’s belly up to the trough and devour all the money in individual retirement accounts. U.S. Government will investigate… accounting irregularities…SEC violations…no funds left after Feds collect huge penalties…private investors are screwed……retirement age increased to 100-years old…Congress to study new Government-managed social security program…taxes will increase…history repeats itself…â€

Steve,

“So to answer you question yes, some people do stop saving because of withholding.”

What the hell? When did I ask that question? I’m confused… Are you sure you aren’t talking about someone else?

I think everyone is forgetting the retirement plan that solves all our problems: the silver bullet. The plan goes thus: when retirees discover they have no money to continue living, they can always put a bullet in their head.

The U.S. government is not like other debtors and creditors, but Social Security taxes are a lot like other taxes. In 2018 (or whatever year) the SS begins to draw down the U.S. will have to tax the current generation of taxpayers to pay the excess. There is no money in the bank or hidden under the mattresses and given the nature of the USG it cannot (not will not) save money. You can drive taxes up as high as you want to support the older generation, but there are costs involved.

Rolling back Bush’s tax cuts will pay for it.

That was exactly how Clinton planned to solve the long range Social Security shortfall. Use the Federal budget surplus to retire debt. Then when Social Security begins to draw on the Treatury, re-issue public debt. In the long run, the Federal debt-to-GDP ratio is unchanged. We can do that now by cancelling the Bush tax cuts.

SK

There are good reasons to balance the budget now, but saving Social Security is not one of them. That was a tag line that Clinton cleverly used.

The current SS recipients get their money from the current taxpayers. The future SS recipients will get their money from future taxpayers. We can’t enact a tax today that we can make a future generation pay.

The problem with SS is demographic. The financial part is only commentary. People live much longer and collect for a longer time. The number of U.S. young people is declining relative to older people.

Zeek

You are referencing the “lugar retirement plan” I have often told people who do not have children and/or refuse to help fund schools that they have to choose the lugar retirement plan.

All the old people depend on the younger generation. Workers support non-workers. That is the secret of all investment and the secret of Social Security. The difference is that investment entices them to pay while SS compels them.

Jack, I’m not quite sure what you’re saying… Are you disagreeing with me or something?

Jack, it is a bubble, it will pass. We only need to make adjustments to get us through the bubble. Your underlying assumption that we will have perpetually ever more retirees than workers is an historically false demographic assumption. Demographics go through cycles, as I am sure you are aware.

When we needed more workers in the past, we invited immigration. We can and will likely do so again in the future. If real value of the middle class dollar earned continues to erode, that demographic alone portends more births, for as any with even a small knowledge of demographics know, as income drops, births increase, and vice versa.

Zeek

No - I am taking your joke seriously, however. I always get annoyed when childless people complain about the cost they incur through taxes etc to bring up the next generation. Theirs is a defendable position only if they never plan to rely on the next generation. For those not lucky enough to shuffle off this mortal coil before they retire, I suggest the lugar (or the Smith & Wesson) retirement plan. It gets their attention and they scream loudly, but it makes the point.

David

By the time the bubble passes so also will all of us. I like to take an Olympian perspective, but only when it is reasonable. Per capita incomes rise when births drop, but within a reasonable band of births, total incomes drop. I know people say we are just going to replace dependent children with dependent old people The problem is that old people cost more to maintain and they are getting more expensive every year as new medicines and treatments make it possible to extend life and make it better.

I know we also have a philosophical difference. Socialism (and SS is a brand of socialism) is useful at a lower level of societal development than we have today. When people are all poorer and less educated, the government has to step in –paternalistically – and protect them from themselves and others. This is what SS does. I believe we have begun to outgrow the need – as a society. There are still some individuals who need paternalistic care. Evidently about 20% of today’s seniors rely entirely on SS. We need to address their problems, but putting everyone in that same boat makes less sense.

Jack, I’m not quite sure what you’re saying… Are you disagreeing with me or something?

Ditto the reply to my post.

I think I stated categorically and very clearly that social Security’s shortfall can be solved by raising taxes. Maybe I haven’t read carefully enough, but I haven’t seen a post in this forum where anyone refutes that.

The problem with SS is demographic.

Few people are aware that the time period in this country when we had the largest dependent population passed us 30 years ago. In the early 1960’s, at the tail end of the baby boom, the U.S. had the most dependents per worker than at any other time.

Talking about workers per retiree is only part of the picture. While it is true that the needs (financial & other) of children are different from seniors, no one bitched and complained about the cost of building all those schools and the other infrastructure needed to raise them. We successfully funded everything they needed and did so without a reduction in our standard of living. This country can do the same with Social Security in the next 50 years.

SK

Sorry I am not clear on yours either.

I don’t disagree with your premise, but I disagree that it is a solution and I also disagree with the time frame.

We certainly can tax at whatever level our representatives determine and the people will bear. We could ask each worker to pay 50% of his income to support one non-worker. We don’t want to do this. It is wrong, especially when there are alternatives. The government needs to be in the redistributive business, but it should be in as little as possible.

As for the timing, you can’t tax today to save money for tomorrow. The USG spends all the tax money it takes in. It can’t save for tomorrow. I don’t like the current budget deficit and I believe that we should work to cut spending and perhaps even raise some taxes.

Solving this problem will make the U.S. stronger and better able to cope with whatever financial challenges we face. But it will not save Social Security. When the demographic bill comes due, the current generation of taxpayer will be paying off the current generation of recipients. To the extent that we better manage our finances now, they will be better or worse able to do that, but there is no getting around that they will be taxed at a higher rate.

The USG can’t save money because it doesn’t have any place to invest it except in its own debt. It just changes pockets and writes a check to itself. It is the source of money and not only the source of American money, but the dollar is the world’s reserve currency. Ironically, if the dollar rises, the size of the U.S. debt also rises relative to other currencies.

The economy and deficits are tricky things. Nobody understands their relationship. Balancing the budget by raising taxes may cause a decline in economic growth, which in the time frame we are talking about may actually make Americans poorer.

I know I didn’t answer straightforwardly, but it’s not a straightforward problem.

I guess the best way to explain what I mean is through an analogy. We all need a certain amount of vitamin C each day. If we get enough, it keeps us healthy. If we get to little, we get a range of troubles. More is not better, because if we consume more vitamin C in a given day than our body needs, we just piss it away. We can’t save it for another day. The government and taxes are like that. If it takes in more, it just pisses it away. It can’t save for another day.

“I think I stated categorically and very clearly that social Security’s shortfall can be solved by raising taxes.”

Why is this ALWAYS the answer to EVERYTHING?
Our leaders are millionaires, live like royalty and get everything free but yet we work 50+ hours a week to make ends meet. Yeah, give another paycut to the American people. Thats what raising taxes does, cut our pay and therefore cuts our standard of living.

I wish we were free and had a choice, but if we must be forced to pay into SS, then at least make it so taxes collected for SS only go to VALID SS needs, nothing else.

The economy and deficits are tricky things. Nobody understands their relationship.

Hmm… Clinton and Rubin predicted that balancing the budget would improve the economy - even if part of the strategy was raising taxes a little. Then they proved they were right.

Now, I’m not the smartest guy in the world, but it seems to me, if that worked once, it’d probably work again. The Bush strategy of running up record deficits sure isn’t revving up the economy.

O how I miss the Golden Age of Clinton…

I do not understand how diverting SS $ into “private accounts” helps in the following situations:

Man, 32 years old, is killed in a drive-by shooting. He leaves a wife and 2 kids.

Disabled-from-birth woman is not able to work.

Migratory farm couple worked all their lives picking our food, but never made more than $16,000 a year.

Private accounts may appear attractive if you assume good pay, long life and good health. In other words, good fortune and no surprises.

But life isn’t like that for everyone. And SS was never designed to be an “investment” - it was, is, and always should be a “safety net”. It is one of the three legs of the retirement stool - the others being pension income and private savings. Do we not have enough private savings vehicles already - 401(k), IRA, SEP? We can talk about enhancing these vehicles, but you can’t argue there’s no opportunity to invest privately.

And yes, SS returns are not the highest. But SS provides a guaranteed (eg extremely low risk) payout. Investing 101 teaches us that returns and risk are inversely proportional.

Representative Tom Allen of Maine said it best when, in response to a proponent of privatizing SS, said (paraphrasing) “That’s true, you can run numbers and show private accounts will end up larger than SS. But what if, god forbid, something happens to you early in life and prevents you from ‘running your numbers’? The difference is your view is about “me” and our view is about “us”.

“Investing 101 teaches us that returns and risk are inversely proportional.”

Oops, make that “are proportional”.

“I think I stated categorically and very clearly that social Security’s shortfall can be solved by raising taxes.”

kctim: Why is this ALWAYS the answer to EVERYTHING?

It’s not always the answer to everything. It is sometimes the answer to some things. Social Security is one of those things. Conservatives have, it seems to me, come into the habit of stating the above whenever tax increases are discussed, rather than discussing the purpose of the increase. To rephrase Bush: “You’re either for fully-funding Social Security or you’re not.” Can we talk about that?

Jack: As for the timing, you can’t tax today to save money for tomorrow. The USG spends all the tax money it takes in. It can’t save for tomorrow.

Dedicate Social Security surplus for public debt reductions (a/k/a lockbox). I seem to recall that Bush agreed to that before he decided he could blame any fiscal problem on 9/11.

Jack: The economy and deficits are tricky things. Nobody understands their relationship. Balancing the budget by raising taxes may cause a decline in economic growth, which in the time frame we are talking about may actually make Americans poorer.

We raised taxes AND balanced the budget in the mid-to-late 90’s and the economy grew very well. Can you point to genuine economic analysis, or historical data, that supports your assertion to the contrary?

I read Robert Rubin’s book. In fact I still have it sitting on my desk. He has some definite ideas about the economy and I respect him very much. However, we still don’t know what caused the bubble of the late 1990s and I would also point out that the decline (as anyone invested in the stock market knows) started in March of 2000 when Clinton was still President.

I think Clinton did a good job with the economy. But I also think that the discipline of the Republican Congress helped him do the right think. The Clinton years from 1994-8 were the best. His policies before that time sucked and in the last part of his presidency he was too consumed with other things (although I won’t say the policies sucked).

The boom of the late 1990s was also aided by an unusually benign international environment. Oil was cheap. Commodity prices were down. Terrorists were building for their big strike, but they were still doing smaller things. The Cold War and Cold War spending over. Internally, we had weathered the Savings and Loan crisis and come out stronger. Businesses had radically downsized in the late 1980s and early 1990s and were now lean and able. We were in a demographic sweet spot, where well-educated baby boomers were in their peak earning years. New technologies were beginning to pay off etc. In short, government was the sole or even the most important cause of the boom. And the policies of any partial president are only part of that government subset.

The reason I am certain that nobody understands exactly why the boom of the 1990s happened is that nobody is making piles of money now. People can claim to understand the past, but the only test of their theories is the predictive value. Rubin and Clinton have made a lot of money off their books and speaking tours. Their investments are not remarkable.

There is no lockbox. It is a fiction that everyone talked about for political reasons. If there is a lockbox, where do we put the money? You can pay down the debt and that is good to an extent, although the USG needs to run a debt to keep the economy stable. But you will still be issuing Debt bought by SS., which you still have to pay with future taxes. Besides, do you really think that the politicians can stay away from spending? The surplus of the 1990s led politicians from all parties to spend more. If you give them the cash, they use it.

It will be a good and necessary thing to get government spending and the deficit under control, but it will not save Social Security.

Jack:It will be a good and necessary thing to get government spending and the deficit under control, but it will not save Social Security.

I understand where you are coming from, please consider the following. (all numbers made up, but not too far off the mark).

Assume U.S. GDP is $10 trillion. Further assume that the government has $4 trillion outstanding in publicly-held (i.e., non-Social Security) debt. That’s a debt-to-GDP ratio of 40%. (By contrast, the highest the US debt-to-GDP ratio has ever been (under a modern economy) was over 100% in the aftermath of WWII, the lowest was about 28% in the mid-70’s.)

Now let’s assume that the GDP grows by $5 trillion over ten years. The government runs deficits totalling $1 trillion. Our new publicly held debt is $5 trillion and the debt-to-GDP ratio has fallen to 33%. The Federal govenrment could then still issue debt to cover Social Security the tune of $1 trillion to keep the debt-to-GDP ratio unchanged from where we started.

That $1 trillion in Social Security debt is the same thing as the Social Security administration drawing down on its accumulated T-bills.

But before anyone responds, please consider the following:

1. Most of the public doesn’t understand this one bit; they don’t even know what “GDP” in “debt-to-GDP ratio” means.

2. There is no magic number for our Debt-to-GDP ratio. Like I said, we were once over 100% and the economy was booming, down below 30% and it was stagnant.

3. The scenario I describe above was the policy behind the politics of Clinton’s statement that he would “use the surplus to save Social Security” back in the 90’s.

4. What makes this approach more difficult to get through today is that the nature of U.S. debt has changed so much in less than ten years. Ten years ago the dollar was the undisputed king of world currencies and most of the T-bills were held within the U.S. Now the Euro is challenging the dollar and a sizable share of our debt is held overseas, meaning investors may be less likely to want to buy (and hold) T-bills.

“so all the dems talkin on here instead of whining and making up things what would be your way of fixing the problem” - dsak

OK, you asked, here’s my solution and rationale:

1. Exempt the 1st $25,000 of earned income from FICA taxes. Rationale: current system is highly regressive; 1st $25K has high utility (eg is spent on food, clothing and shelter).

2. Remove the cap on FICA taxes. Tax all income above $25K associated with employment, regardless of form. This includes wages, salary, FMV of options, “free” loans, use of corporate jet, “golden parachute” payments, and any other “perks” received only by the corporate elite. Rationale: current system is highly regressive - it taxes the poor and middle class far more heavily than the wealthy.

3. Means test. Provide full SS benefits for those with little or no private retirement income, and gradually reduce SS payments as private retirement income rises, eventually eliminating SS payments at a certain level. My own opinion: start the phaseout at $75,000 annual private retirement income, and eliminate SS payments at $150,000. Rationale: It makes no sense for the government to cut checks to the fabulously rich simply because they “paid in” to the social safety net. Look at it this way: you pay property tax to support local fire and police departments. Do you expect to get a tax rebate because you never interacted with either during the year?

I know what you are saying and you are right about the general trend, although the deficit as a percentage of GNP these days is lower than it was in the middle 1990s.

Getting spending and the deficit under control is necessary.

But as you say, the ratio of debt to GNP does not determine the country’s prosperity, at least in the short run. And no matter what the state of the economy in 2020 or 2040 or 2060, the current generation of taxpayers will need to devote a greater part of their income to paying for the old people. They will also have the same pressures to spend money in other ways that we have today. What makes you think they will be enthusiastic about making those extra payments? Do you really think that a guy starting work in 2045 is going to be glad to pay additional taxes because he is grateful that we balanced the budget in 2010 – fifteen years before he was born?

And do you really believe politicians will keep their hands off the money they take in? More likely, they will come up with additional needs and we will just get a bigger government and European style growth rates.

I don’t know how we can even consider this. Demographics are coming back with a vengeance. David is right that it is a bubble, but it is a bubble that will last our whole life. Beyond that, the demographic pyramid in low birth rate countries comes to be more of a cube. There just are not enough workers to support the old people under our current scenarios. I have kids and I hope to have grandchildren. I don’t want to burden them supporting me and I sure don’t want to have them paying a big part of their wages to support some people who didn’t have any kids. That is not an economic argument; it is more political or moral. But I don’t think the generation of 2045 will be willing to support the geezers (maybe myself included) at a higher level than they can support their own kids. Those without private savings should get to like cat food.

I know what you are saying and you are right about the general trend, although the deficit as a percentage of GNP these days is lower than it was in the middle 1990s.

One’s years deficit is not as important as the long-term debt picture, which is what I’m referring to.

Getting spending and the deficit under control is necessary.

Alas, no mention of revenues! Shouldn’t how much we collect in taxes be part of the equation as well? Why only spending? What spending programs?

Do you really think that a guy starting work in 2045 is going to be glad to pay additional taxes because he is grateful that we balanced the budget in 2010 ? fifteen years before he was born?

That guy who starts work in 2045 isn’t alive today. He’s not paying any taxes, “additional” or otherwise. Virtually everything about his life: his income level, his tax burden, the quality of the health care he receives, is beyond our imagination right now. I can say cataegorically that he will enjoy a significantly higher standard of living than we have now, even if we double his taxes. DO you think the taxpayers of 1925 had a higher standard of living than the adults of 1965, even though taxes were lower? And don’t you think the standard of living today is better than 1965? My point: you can’t judge the “tax burden” of someone living in an economy that doesn’t exist yet.

And do you really believe politicians will keep their hands off the money they take in? More likely, they will come up with additional needs and we will just get a bigger government and European style growth rates.

For starters, “European style growth rates” are actually pretty good. By many measures, Europeans enjoy a higher standard of living than we do in the U.S. (ask them about their vacations). When gauging how “well off” we are, we have to look beyond the dollar signs.

You use the phrase “bigger government” like it’s evil. Well, I know a lot of conservatives who love big government when it comes to areas like defense spending. If you are against government programs, please spell out those you oppose and why. Generalizations about “big government” mean nothing.

And we had a damn good consensus on leaving Social Security money alone in the last few years of the Clinton administration. But Bush fouind a convenient excuse to throw that away with 9/11.

European lifestyles might be “pretty good” but their growth rates are not. You can’t put vacation in the bank or pass it to the next generation. And the Germans, for example, have been enjoying double-digit unemployment, so I guess 11-12% are on permanent vactation. It is small consolation to know that the Europeans will face the pension crunch sooner than we will.

There was no consensus to leave SS money alone because you can’t do it. You can’t save it for the future. And the politicians had already begun to lose what discipline the deficit imposed on them.

I have said before, I believe Clinton did a good job with the economy, but he was also very lucky to have the economy he did and the timing. Remember also that the great economy began in March of 1991 (before Clinton was in office) and stopped in March of 2000 (when Clinton was still in the White House). Remember also that we were still living with the Clinton budget priorities throughout 2001 and that economic policy takes at least a year to have noticeable effects.

As for cutting the government, we have to go for entitlements. They used to make up about a third of the budget. Now they are about two thirds. You can’t manage the government if this continues. Bush’s SS plan is a first step in that direction.

As for the taxpayer of 2045, I also have confidence he will be better off. But that doesn’t mean he will want to pay higher taxes. We are very much richer than people in the 1950s or even the 1970s, yet most of us don’t feel rich and many of us complain we are poor. Besides, we assume the old folks (us) of that time will also want a higher standard. I just don’t think we can rely on our grandchildren to run not only surpluses, but also significant surpluses for a whole generation, when we have been able to generate small surpluses only with when we had the best economy in a generation and a lot of good luck.

I don’t think they will pay. I wouldn’t want to and I expect they will think of ways around it. So I repeat my advice: get a private account or get used to cat food (and not even gourmet cat food.)

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I knew a discussion on Social Security Privatization would end up becoming as “open” as one of Bush’s Town Hall Meetings!

:-)

(smileyface means this is a JOKE folks !)

European lifestyles might be “pretty good” but their growth rates are not. You can’t put vacation in the bank or pass it to the next generation. And the Germans, for example, have been enjoying double-digit unemployment

Heh. I read Jeremy Rifkin’s, “The European Dream”. His answer would be: So what?

How prosperous does a country need to be? As long as everybody has food, shelter, education, and healthcare, and a quality of life Americans can only dream of (mmmm… six week vacation… 35 hour work week) how much more do you really need? Even unemployment in Germany is way better than some “careers” here.

AP

The problem is that Europe is behaving like an old man in so many ways.

Europeans are living off their accumulated capital, intellectually and financially. This is comfortable for the current generation, but will lead to problems. I find Europe attractive and comfortable, but vaguely depressing. It is like a museum, with all the pros and cons that implies.

Personally, I would very much enjoy living in Europe BECAUSE I am older and more or less satisfied. I wouldn’t want to try to make it there.

I am not sure I agree about this leisure time idea either. Leisure is attractive to us because we don’t have it. Europe is kind of the land of the lotus-eaters in this respect. The Euros say they we live to work, while they work to live. The problem is that work takes up much of one’s life. You better get to like it or you won’t be happy watching that clock tick down. Work and leisure are both important aspects of a meaningful life. Neither most Americans nor most Europeans achieve a good balance, but I would not want to go over to their system.

I worked at a union shop when I was in college. The union made sure you didn’t do anything more than the contract stipulated. The union steward even demanded that we go to the bathroom and sit there at least fifteen minutes so that the boss wouldn’t get too much work out of us. I found avoiding work much harder than actually doing it. I thought more about work then than I ever have since. Now my work and my non-work life flow seamlessly into one another. I have a good job. That is true. But one reason I have a good job is because I have always seen it as a central part of my life, something worth working and sacrificing for. Some of my colleagues who were more concerned about what they would get from the work and making sure they didn’t give too much, are still trapped in their pernicious world of working to live.

How prosperous does a country need to be? As long as everybody has food, shelter, education, and healthcare, and a quality of life Americans can only dream of (mmmm… six week vacation… 35 hour work week) how much more do you really need? Even unemployment in Germany is way better than some “careers” here.

Amen! (But then, they don’t have religion either!)

Americans have this nasty habit of equating “success” with “money.” The two words have different meanings, and Europeans know that.

Also, Western Europe’s unemployment problem is largely due to the European Central Bank’s tight money policies.

SK
Unemployment has been high in many Euro countries for ten of fifteen years. Europe suffers significant structure problems re employment.

Happiness is hard to measure. Somebody on this blog cited some study that said people in the Phillipines were most happy. I have read other places that happiness does not go with money, at least after you have a basic amount. That said, I don’t percieve Euros being particularly happy, despite their frequent talk there of. Often, the more people talk about something, the less they think they have it.

Let me say for the 100th time, I like Europe and Europeans. I just don’t think they have much of a future unless they restructure their economies and their lives. They have examples of each scenario right in their own continent. They have to be more like Ireland and less like France or Germany.