Living & Working Longer

The biggest threat to American prosperity is the looming entitlement crisis. We can argue about hypothetically how to address the problem, but we will soon be able to learn from the real experience of others. Europe will face the entitlement crisis sooner & more severely than we will. What can we learn?

I am a member of the baby boom. Our time as the dominant generation is almost through, but we are not going quietly into that good night. We have tilted the playing field to favor ourselves as workers, investors and soon as retirees and cosseted ourselves with entitlements, hence the forthcoming entitlement crisis.

But American boomers are mere amateurs in comparison to our European brothers & sister. In 1975, a 30-year-old Frenchman earned 15 percent less than a 50-year-old; now he earns 40 percent less. Over the same period, the number of graduates unemployed two years after college has risen from 6% to 25%. Think about this. Boomers in 1975 living well and boomers in 2015 living well in comparison to other generations.

According to the linked article "the boomers are living it up; many have used their generous pensions to opt out of the labor market altogether. Only 30% of Belgians older than 55 still work, for example. A report by the London-based think tank Reform put the issue plainly. 'People over 50 are developing the lifestyles of teenagers.'"

We need to rethink the whole idea of retirement. If life expectancies keep on rising, it is very possible that average workers could spend as much or more time collecting pensions than actually earning them. We are living longer and living more healthy lives. The stereotypes of the feeble old man no longer apply or apply at a much older age. If seventy is the new fifty, maybe we should consider working at that age too.

I know I will be accused of being insensitive to the elderly, so be assured I am talking about myself and my generation. I am not saying we should take away pensions of anybody currently receiving them. But someone my age, with 15 years to adapt, might be expected to retire later rather than tax my kids to support my life of leisure, that - with any luck - may extend to a 30 year vacation.

But I do not really know. Never before in the history of the world have we had so many non-working but reasonably healthy old people. Fortunately for us Americans, the Europeans will get there first and we can learn from their successes and failure. For them the future is now. Let's watch and learn.

Posted by Jack at March 8, 2007 10:51 PM
Comments
Comment #211141

Jack, If you want the boomers to work longer your going to have to convince the corporatist to hire us old guys and not discriminate just because we make more than the younger people.Your also gonna have to convince them to leave a few jobs in this country so there is some work.

Posted by: j2t2 at March 8, 2007 11:07 PM
Comment #211143

j2t2

We will probably need some kind of hybrid program. Most people cannot do the work of a worker in his/her prime. We now have the system skewed to pay more for seniority. A 60 years old worker might make twice as much as a 30 year old and produce half as much. It is no wonder employers want to get rid of them.

We need to ease people into retirement. Actually that is what many older people want, but our rigid systems of labor rules often do not allow it.

It is much more complicated than I have written in 400 words. It is not merely that old people will continue to work as they did before.

If you think about it, a man doing physical work is most valuable in his 20s. In some professions, peak value comes as late as the 50s, but by the time you are 70, most people are on the down slope. We have to factor this in, but the idea that a person just stops working at 65 (or even 55 or 62) is no longer appropriate.

Posted by: Jack at March 8, 2007 11:24 PM
Comment #211148

Jack, Are you thinking about no payments at all until say 72 or smaller payments at 65 for those still working but at a reduced pay scale?
Why are we not contributing more now along with our employers and raisng the cap to beef this fund up?
Why would we not want the feds who have been taking money from this fund over the last 30 years to start paying it back now that it willbe needed. Either by selling off natural resources that they currently give away, such as the airwaves or say by charging corporations that benefit from the secure shipping lanes between here and China a fee to protect their cheap foreign imports that keep wages down and people underemployed in this country?
Perhaps a combination of these ideas would keep us from doing something really stupid like privatizing SS or burying or kids in enough taxes, to go along with the Iraq debt, to where they smother us with a pillow in our sleep.

Posted by: j2t2 at March 9, 2007 12:24 AM
Comment #211149

Once again, I am confused by the assertions that “entitlements”, priced in future inflated dollars (that are largely bought and paid for by the people who are entitled to them!), are somehow a monumental, looming problem and yet the huge public debt piled on by the republicans is somehow a manageable problem. This debt is in TODAY’S dollars. That means that 8,500,000,000,000 in current debt accrues and interest total of $382,500,000,000 at %4.5, THIS YEAR. What if, instead of renewing these stupid, largely ineffective tax cuts, we let them expire and then applied the proceeds to reducing the rate of increase in the national debt, slowing the rate of increase in debt service. Wouldn’t strengthening the general revenue stream go a long way to supporting a solution to whatever “entitlement” problem is coming down the line?
Also, Jack, why don’t you just say it the way it is. The term “entitlements” is just a creation used by people who want to cut them. The accurate words are: social security, medicare, veterans pensions, government worker pensions.
Also, how could it be that investments made by workers into their own social security is somehow a poor investment ( a point that is often argued on this board in favor of another ridiculous idea, private accounts) and yet at the end of the day the government is unable to pay the principal and “lousy” interest return owed to these retirees?
Our government is out of control. It is out of control because the republicans in charge of this massive bureaucracy are both ineffective and incompetent.

Posted by: Charles Ross at March 9, 2007 12:34 AM
Comment #211154

The biggest threat to American prosperity is the looming entitlement crisis.

Nope. It’s stagnant wages for non-professionals. It’s not a looming crisis. It’s already here. You used to be able to graduate high school, work in a factory (likely a union job) and within a few years make enough money to buy a house, a car and to raise a family. You’d get health care and good vacations. Not anymore.

Posted by: bobo at March 9, 2007 8:08 AM
Comment #211160

J2t2

Re the Feds taking SS money, you are personifying something that an accounting entity. The Feds cannot pay anything back. All they can do is tax the current taxpayers at a higher rate and transfer those funds to others. The government has borrowed money from itself and left an IOU. It is the same if you did this. You decide to go out for a good dinner rather than save for the future, but you leave an IOU. Try to cash that.

Your idea about selling assets could be a good management strategy, but it does not fundamentally change the equation. Returning to our analogy, it is like you now charging your kids rent for their rooms, when what you probably need to do is stop using the money.

We need to restructure the whole system. Merely raising taxes will not work. It is an attractive proposition because you and I will reap the benefits in terms of higher pension and leisure in our “golden years”, while the additional taxes will be paid by future generations. That is how we got in this trouble in the first place.

We will need to go to a system where retirement is more gradual and people depend more on personal accounts for at least part of their retirement.

Charles

You hit the problem - government investing your money. That is precisely why you cannot get the same sorts of returns. The SS Administration is reasonably well run, but as a government bureaucracy it lacks the ability to many things you could do with your own money. There is no way the government can invest such a fantastic amount of money in anything except its own securities, which it does. Its sheer size would sink any firms it invested in and then investments would be politicized.

You criticize Republicans in government and rightly so. I would extend that to Democrats, but even if you do not accept this idea, you have to admit that for about half the time, the government will be in the hands of people you consider misguided or maybe even incompetent. How much power do you want them to have? Do you want George Bush to decide which firms get the sudden pump of government retirement cash and which are starved for capital?

Most Americans today have some form of personal account; only about a quarter of us actually will depend on SS for most of our post retirement income. This is good, since if you plan to depend on SS, you will be poor. I would like to come up with ways to extend this these personal accounts, with the choice that comes with it, to the remaining quarter of Americans.

Bobo

Those days are indeed gone. A HS education is not longer sufficient for success. You need other training or education. We do not need to apologize for that. When I started working, I loaded 94lb bags of cement 12 hours a day and made good money. There were dozens of us working there in nasty conditions, but we made good money. Today one man runs a machine that does what it took dozens of all day to do in a couple of hours. These jobs are just gone. They did not go to China, they are not outsourced and you cannot bring them back.

Our economy requires skilled workers. The government has a public interest in supporting education and it does. Community colleges are cheap and available all over the U.S. We can and should work to increase the skills of workers, but there is nothing we can or should do to increase the reward for unskilled labor.

Posted by: Jack at March 9, 2007 9:08 AM
Comment #211161

Jack,
I agree pretty much with what you write. However, some of the jobs did go overseas. But my main point is that I think the loss of those days has done more to harm American prosperity than “entitlements.” Improving Americans wages will benefit working Americans and retirees, who rely on the taxes workers pay.

Relying strictly on the ratio of retirees to workers to explain the demographic phenomenon is a weak comparison. The accurate measure is workers to non-workers. When was that at its highest? 1965! That is because we include all the baby boomers as children. They cost workers a lot too, in both personal income and government services (think of school construction, for one).

I do not deny that an aging population poses demographic and financial challenges. However, the challenges must be viewed within the context of the entire nation.

Posted by: bobo at March 9, 2007 9:19 AM
Comment #211166
We can and should work to increase the skills of workers, but there is nothing we can or should do to increase the reward for unskilled labor.

While people get skills in college, they don’t get any younger. They reach labor market later.
Still, the work timespan remains the same. Worst, it’s shrinking dangerously. Who hire over 50+ these days?

Why? Too expensive, not skilled anymore? Why not helping people going back to college all along their work life, instead of only *before* it? Keep skills up-to-date. Upgrade the outdated ones.

In an ever accelerating life, it would make more sense *and* solve at least partially our issue of unskilled/too expensive 50+ workers.

But corporates don’t want it. Free market don’t care. Both of them have a short term profit tunnel vision big issue.

A government should not. Well, at least *some* politicians should have vision beyond their own personal short term political profit.

Or did I miss something?

Posted by: Philippe Houdoin at March 9, 2007 9:38 AM
Comment #211167

Jack, Isnt SS an insurance plan not an investment program? If we are to have a multiple stream of income philosophy as our means in the “freemarket” economy why would we want to privatize the SS stream of income as the method to fix the problem? If only 25 % of the boomers will need the SS insurance do we really have a problem?

Posted by: j2t2 at March 9, 2007 9:48 AM
Comment #211169

Philippe Houdoin,

There is nothing in our society to stop anyone from furthering their own education.

It is much more important to me to work toward MY future education or MY CHILDREN’S future education than the population at large.

Posted by: tomd at March 9, 2007 9:50 AM
Comment #211173

There is nothing in our society to stop anyone from furthering their own education.

Sounds like an argument for free higher education (to get the skill you need for a better paying job) and more vacation time (to study while you work) if I ever heard one. But then, tomd, that would be a European idea, so I guess you don’t support that, right?

Posted by: Steve K at March 9, 2007 10:19 AM
Comment #211175

tomd,

There is nothing in our society to stop anyone from furthering their own education.

My point is there is nothing in our society promoting and helping someone to do it.
While it’s important at individual level, it’s even more important at nationwide level. Its competitivity (sorry?) at large rely heavily on its labor market skills. Only larger nations could rely for still some years on its labor market size more than its skills. We can’t.

When you can’t outnumber someone, you must outsmart him. Right?

It is much more important to me to work toward MY future education or MY CHILDREN’S future education than the population at large.

Good for you. I try to do the same.
But what about people who can’t afford it as much as you/me? Even if education is/was free, the time it requires is not. I dunno for you, but my spare time is quite small. It’s all relative, I know, as I’m a lazy always-in-vacation-or-in-strike frenchie (:-). But, anyway, time is still not free and not everybody are equal regarding free-time. In particular the one having 2 jobs to feed their family. AFAIK, this kind is more and more common in our society.

Or is it a “everyone for itself” situation, again?

Posted by: Philippe Houdoin at March 9, 2007 10:35 AM
Comment #211178

Philippe,

I think you’ve been on this board enough times to know that, when tomd says something, the bottom line is, indeed, survival of the fittest.

Posted by: Steve K at March 9, 2007 10:40 AM
Comment #211180

“I think you’ve been on this board enough times to know that, when tomd says something, the bottom line is, indeed, survival of the fittest.

Posted by: Steve K at March 9, 2007 10:40 AM”


More like PERSONAL RESPONSIBILITY

Posted by: tomd at March 9, 2007 10:57 AM
Comment #211182

Philippe

Actually you did miss something. Corporations are the leading trainers in society. They spend fortunes upgrading the skills of their employees. The problem comes when there is rapid change that catches both employer and employees off guard.

It is also difficult to retain some people, especially those w/o good educations to begin with. This is a problem, but not insurmountable.

Two of my cousins worked as unskilled foundry workers in the 1980s. Their plants shut down leaving them no place to go. Both went to tech school where they learned heating and air conditioning. Now they have a business where they not only do much more interesting things, they also earn decent livings as small business owners. We have to make such training cheap and easily available.

Steve K

Career education should be cheap, but not free. If it is free, you will get people who do not take it as seriously and the quality will drop.

Europeans, BTW, do a poor job of retraining workers and helping them find new employment. They overtrain in the wrong things and create long term dependency. That is one reason why their unemployment rates remain so stubbornly high. I do not know whether Philippe will agree. While we can always learn from each other, I think the U.S. has more to teach than to learn in this particular respect.

It is not a survival of the fittest, but a way to make everyone fitter when you use the free market. The fact is that the U.S. system is in some trouble, but the continental (Ireland, UK and Scandinavia do better, but overall EU is worse) Euro system is even worse off and more in need of reform. The “answer” lies in some new thinking, not some middle ground between not so good and worse.

Posted by: Jack at March 9, 2007 11:02 AM
Comment #211187

I don’t pretend to have all the answers, but how about starting with a better tax system ( the Fair Tax ) cutting welfare and any benifit to illegals, and cutting federal spending by 5% a year until it’s been reduced by 30 to 40 % . After that perhaps the people will understand their money is their responceability not the goverments Steven Boucher

Posted by: steve at March 9, 2007 12:15 PM
Comment #211191
The biggest threat to American prosperity is the looming entitlement crisis.

Really? I think it’s the growing gap between the richest 2% of Americans and the rest of us. And the rising cost of education that keeps our kids from competing in the workplace with the wealthy elite. Really, I think it’s the grinding down of the middle class that’s the biggest threat to American prosperity.

BTW, Jack, do you have any figures to back up your theory? When Social Security was last debated, it turned out that there really wasn’t much of a crisis at all. The looming baby boom “crisis” is just a temporary “pig in the snake”. Even if there is a shortfall — and many economists doubt it — beneficiaries will still receive more than they receive now and the problem will go away a few years later after the baby boomers all die.

Posted by: American Pundit at March 9, 2007 12:35 PM
Comment #211193

AP,

My previous response agrees with you. And as I add, the crisis isn’t looming; it’s already here.

Social Security is actually in decent actuarial shape. Changes are needed, but they are relatively minor over the long haul. Despite the complaints about the cost of Social Security, it turns out it’s not terribly different than what we’ve spent (or will spend in the next few years) on Iraq.

Health Care is a larger concern, but so much of our health spending goes to administrative costs that moving to a single payer system would solve a great deal right there.

Of course, there’s that big problem of people who see all these issues through ideological blinders.

Posted by: bobo at March 9, 2007 12:42 PM
Comment #211194

Corporations are the leading trainers in society. They spend fortunes upgrading the skills of their employees.

Jack,

I would like to think that our public education system is. You probably means re-training of already educated workers. It is true that corporations do a tremedous amount of training, but they are just as quick to drop those workers when they see an opportunity in another field.

Two other problems: small businesses have trouble keeping up with skills. I heard that something like 9 out of 10 new businesses fail within a few years. I don’t know if that is true, but I would suspect that the rapid pace of changes in skills plays a role in new business failures.

The other problem is that skills are not always transferable. It does you (and your company) no good to be trained on a proprietary software or mechanical system if you don’t intend to stay for the long haul. That’s just not the way the American labor force works anymore. But I don’t know how significant that is.

Posted by: Steve K at March 9, 2007 1:06 PM
Comment #211201

AP

As I understand it, sometime around 2018 the system will begin to pay out more than it takes in and will technically bankrupt (i.e. unable to pay out 100% of its obligations) in 2045.

But even if it can pay, we still have a fundamental societal problem if we have people collecting pensions for 30 years. When you consider the probable life trajectory, you can see the problem. A person is often in school etc (i.e. dependent) until he is 25. If we works until 65, he is productive for 40 years. If he lives to be 95 (not unreasonable given medical advances) we have 40 years of work – assuming he works the whole time – and 55 years of dependency.

When SS was created, life expectancy was 63. The retirement age was set ABOVE that at 65. Things have changed. Why would we WANT to continue with a system that tosses out people when they reach a certain age and pays them not to work? There are ample reasons why older workers cannot do some sorts of things and they may move into part time work, but living in gated communities in Arizona does nobody any good.

Re the pig in the snake, this situation will not right itself. In a societies up until recently, the age structure resembled a pyramid, with lots of young people and not many old ones. It is true we now have a bulge, but even w/o that the pyramid is shaped more like a square now. We did not envision workers carrying both their children and their parents for about 25 years on both ends.

J2t2

It was sold as an insurance plan and a pension plan. Franklin Roosevelt was more interested in marketing the plan than being correct. When 25% depend on SS, it does not mean the other 75% want to just give it up. President Bush proposed giving disproportionately to poorer recipients and was soundly turned down, BTW.

Steve K

I make a distinction between education and training. You are right that most training is fairly specific and has to be. You might know lots of interesting facts, but to function you have to have some specific skills.

It is the nature of many of the most useful skills NOT to be easily transferable. It is definitional when you are talking about specific skills. The most skilled surgeon is not much suited to most other kinds of work and I doubt you would hire Albert Einstein to build a deck in your back yard, despite his ostensible skills in physics.

In the case of a discontinuous change, we need to retrain radically. This is unpleasant and hard for the learner, but there is no alternative.

I was in Poland shortly after the fall of communism. Poland had lots of Russian teachers, since during the bad old days everybody had to learn Russian. Suffice to say, they wanted fewer of them after the collapse of the evil empire. What do you do with very skilled people whose skills are no longer needed? It is a problem and will be always.

Posted by: Jack at March 9, 2007 2:05 PM
Comment #211204

Jack,

Stop worrying. As retirement nears SSA will simply raise the retirement age as they have done before. You and I won’t live as long as our grandparents, due largely to pollution and more inactive lifestyles. Retire Shmire… worry about who and where you want you ashes scattered. (Burial is SO yesterday, there’s too many boomers to plant}

Posted by: gergle at March 9, 2007 2:24 PM
Comment #211205
As I understand it, sometime around 2018 the system will begin to pay out more than it takes in and will technically bankrupt (i.e. unable to pay out 100% of its obligations) in 2045.

Off the top of my head: back in Feb 2005, the SSA refigured it and said the system won’t pay out more than it receives until 2020. They push that number back every year because it’s based on absolutely worst-case scenarios. It’s probably up to 2024 by now.

Same goes for the “bankrupt” date. Last I saw a couple years ago it was pushed out to 2052.

And yes, the situation will right itself once the baby boomers pass away. In fact, our country is looking at a declining population over the next century. After this temporary spike, SS will be paying out less than it does now.

Posted by: American Pundit at March 9, 2007 2:33 PM
Comment #211209
Off the top of my head: back in Feb 2005, the SSA refigured it and said the system won’t pay out more than it receives until 2020.

One critical detail is that the SSA projections ALWAYS use very conservative estimates for economic growth, which is the key driving force behind how much money SS will have. That detail means the date keeps getting advanced into the future and means comparing SS with, say, the historic stock market trend, is a false comparison.

Posted by: Steve k at March 9, 2007 2:40 PM
Comment #211212

It is the nature of many of the most useful skills NOT to be easily transferable. It is definitional when you are talking about specific skills. The most skilled surgeon is not much suited to most other kinds of work …

Jack,
The surgeon as an example is, of course, not applicable to the problem we are discussing. He (or she) will never have a problem paying bills, saving for retirement, or affording health care. Of course, there are plenty of lesser skills that are transferable.

But my main argument is that specific transferable skills are becoming less and less available. People in service industries like retail (many more of them than there are surgeons) will be trained on specific POS or inventory systems and, if you want to switch jobs, well, you have to learn a new one. It even applies to more skilled blue collar work, such as auto mechanics. They have to know every increasingly complex autos and, whereas in the past you could fix a GM if you knew a Ford, today that is less and less true.

That counts as corporate training, but really you are doing the same work. So we should be wary of the economic value of training in large industries.

Posted by: Steve K at March 9, 2007 3:11 PM
Comment #211214

The biggest threat to America’s safety nets has been Republicans in the majority of one or more of the chambers of Congress and branches of government since 1994.

Since Newt Gingrich’s Contract On America, it has been the aim of Republicans to end safety nets for America’s working poor. Their many strategies toward this end have included: 1)Flooding the nation with illegal immigrants, supplanting good paying jobs for poorer paying ones, and supplanting legal FICA and IRS tax paying workers with underground economy illegal immigrant workers.

2) Jacking the national debt up so high as to make the nation’s economy unable to rise to the challenge of meeting its safety net obligations to workers who paid into them all of their working lives.

3) Expand entitlement spending to further weaken our nation’s future ability to sustain our safety nets, and further to make that Medicare Rx drug expansion program the highest cost program possible by outlawing competitive bidding amongst Pharmaceuticals for services to the Government’s Medicare program.

4) Elect an Iraq war so costly, unnecessary, endless, and without benefit to the U.S. economy as to preclude allocating tax dollars to the safety net programs for Americans at home.

This latter is the most egregious of all. For Republicans insist that our troops die and suffer catastrophic injuries, and our economic obligations suffer, NOT for the defense and protection of OUR Constitution and nation, BUT for the defense and protection of Iraq’s Constitution and nation.

We Americans Must remind Bush that it was OUR Constitution and Homeland he swore to uphold and defend, NOT IRAQ’s at our expense.

Posted by: David R. Remer at March 9, 2007 3:37 PM
Comment #211215

Here is a very interesting book, about Republican policies that favor the rich:
http://www.conservativenannystate.org/

You can read it online for free. It basically says that it’s not so much that Republicans want a free market with no government handouts, it’s just who exactly those handouts go to. While of course it’s critical of conservative policies, I think it might be of interest to open-minded conservatives (such as ones critical of the GOP) as well as liberals and anyone else interested in how our economy and tax system favors certain groups of people over others.

Posted by: mark at March 9, 2007 4:03 PM
Comment #211228

I don’t want to steer the discussion back to the topic of private accounts vs. social security but a few observations are in order.

The increased returns advertised by those who advocate personal accounts includes not only interest/capital gains but also the preservation of principal (that can be consumed or passed on as an inheritance). With social security, there is no principal.
Personal accounts do not offer any survivor’s insurance, to a spouse or minor dependents
Personal accounts do not offer a benefit to non-working spouses (%50 of the benefit achieved by the working spouse)
Personal accounts do not have a disability insurance benefit.
Personal accounts make NO guarantees as to what return can be achieved. In fact, personal accounts do not even guarantee preservation of capital!!! A worst-case example: an individual ops for a personal account in 1990, selects a bond fund, earns %6 on his money until, say, 1999, then switches to the four Q’s (a nasdaq index fund). By 2007 this individual would not only have had a rate of return of zero, he would have lost a substantial portion of principle!!! There are hundreds of thousands of personal account holders, perhaps millions who will make poor investment decisions. This is inevitable.

The purpose of social security is two-fold. It provides a floor of income beneath working Americans and an insurance program for disability and survivors. It has, is and will be working just fine. Everything the republican philosophy has touched gets, just about instantly, screwed up. Don’t screw up something that is working well.

(there, i’ve done it, instead of talking about how to fix real problems we’re back to talking about how to prevent w and his gang of incompetents from creating them!)
Sorry.


Posted by: charles Ross at March 9, 2007 4:55 PM
Comment #211230
It basically says that it’s not so much that Republicans want a free market with no government handouts, it’s just who exactly those handouts go to.

I just saw an example of that in my paper today. The Bush administration wants the elite tax lawyers who are exploiting loopholes in the tax code to actually rewrite the tax code.

Why not just end the charade and make the wealthy and the corporations exempt from taxes altogether?

I.R.S. Letting Tax Lawyers Write Rules

The Internal Revenue Service is asking tax lawyers and accountants who create tax shelters and exploit loopholes to take the lead in writing some of its new tax rules.

The pilot project represents a further expansion of the increasingly common federal government practice of asking outsiders to do more of its work, prompting academics and other critics to complain that the government is going too far.

They worry that having private lawyers and accountants draft tax rules could allow them to subtly skew them in favor of their clients.

“It’s not the fox guarding the hen house; it’s the fox designing the hen house,”

Posted by: American Pundit at March 9, 2007 5:06 PM
Comment #211231

charles,
You are dead-on about the purpose of Social Security. It was never intended to be a person’s entire retirement income. It is an insurance program. Unfortunately, those on the right have the habit of completely ignoring that. They insist that SS compete with the private markets. That’s like saying don’t buy homeowners insurance — buy a fire door instead. Everyone should have the insurance FIRST.

Posted by: bobo at March 9, 2007 5:08 PM
Comment #211233

AP

What does a declining population mean? Fewer babies and fewer young people to support the existing cohorts of old guys.

Returning to my original point, which I guess I did not make too well, what sense does it make for young people to support me through 30 years of leisure in Sun City?

Gergle

I insist on being buried. I want some future anthropologist to have my skull on a museum shelf and have them all specualte about (and get wrong) the details of my life.

David

You cannot blame Newt or the contract. The contract promised to cut government. Three years later, we had a budget surplus. The problem is not all the contract stipluations were kept. Let’s bring back Newt.

Charles

We should all have a portfolio of retirement products, which ideally include personal accounts, SS, real estate and some form of pension. Most well off people have such things. The SS reform would merely extend the benefits of choice and personal accounts to that lower 25%.

Steve K

The world is becomming more specialized. The days of the polymath, all around good guys like me and you are almost past. They shall not soon see our like again, but there is not much we can do about that except be flexible and try to balance our life’s porfolio.

Posted by: Jack at March 9, 2007 5:14 PM
Comment #211243
Europeans, BTW, do a poor job of retraining workers and helping them find new employment. They overtrain in the wrong things and create long term dependency. That is one reason why their unemployment rates remain so stubbornly high. I do not know whether Philippe will agree.

I do agree. I’ve to fight until exaustion the system to be allowed going back to college to upgrade my disregarded initial computing degree to an engineer degree. The first day of course, I’ve updated my online resumee. In the next days, I was contacted by several companies. None during the months before.
But the job center guy didn’t want to believe me when I was claiming my initial diploma was the blocker in my resumee, not my actual skills. These guys, at least in france, are too much disconnected to companies needs usual requirements realities.

And, alas, french companies focus too much on diploma. Way too much.


Posted by: Philippe Houdoin at March 9, 2007 6:01 PM
Comment #211244

Jack, You seem to be saying, in essence, “well, the rich guys have it, I just want the poor guys to have it too.” I won’t address the illogic of this, except to say that there are a variety of private account vehicles available to all workers right now. What does it say considering the rather long history of 401-k’s, Traditional Roth IRA’s and SEP’s that a certain portion of the population has not bothered to take advantage of them? If an employee is not sophisticated enough to take advantage of a employer-matching 401-k, how are they going to be sophisticated enough to manage a stock/bond portfolio?

If you are dependent upon your social security for more than %50 of your retirement income, why in the world would you want to take a sixth of the benefit and invest it in entities that not only do not guarantee a rate of return but do not even guarantee your principal!!!!!?

When you say that you want to extend the benefits of investment choice to low income people that the wealthy have, do you understand that you are also extending the risk?

Posted by: Charles Ross at March 9, 2007 6:02 PM
Comment #211246

Charles

Some people are poor because they do not think clearly about money. We can do little for them by extending them choice; you are right about that. But some are smart and could just use a hand. I do not believe these are the kinds of people who will stay poor. If you come back in 20 years, you probably will be “helping the rich get richer” but for every poor guy you make rich, you have one less poor guy. It is worth doing.

Posted by: Jack at March 9, 2007 6:08 PM
Comment #211247

Phillipe

Thanks for the personal note.

Posted by: Jack at March 9, 2007 6:11 PM
Comment #211256

Jack said: “You cannot blame Newt or the contract. The contract promised to cut government. “

Obviously ONLY for the purpose of getting elected.

After getting elected it was jettisoned like a warp core breach. Republicans don’t know how to rule. They did demonstrate they knew how to get elected. And, comedically, how to get UNelected. But, Govern? Hah! They proved they don’t believe in their own campaign promises or rhetoric once they have power. Why should voters EVER believe them in a campaign EVER again?

Answer: They shouldn’t! Voters would be wise to adhere to my Mama’s wisdom: Know people by what they do, not what they say.

Now on to hold Democrats promises to the fire. So, far they are giving the voters a lot of hot air and no substance. The day of the Independent candidates is coming. They have no party to force them to jettison their principles.

Posted by: David R. Remer at March 9, 2007 6:52 PM
Comment #211268

David

They cut the budget though. Didn’t they? Actually, the contract accomplished much of what they promised.

You will have trouble holding the Dems to their promises because they avoided saying anything concrete besides that they hated Bush.

Posted by: Jack at March 9, 2007 8:36 PM
Comment #211344

The biggest threat is the billions of dollars spent on a civil war in Iraq, that of course will not affect bush or cheney as they are getting their royalites from the gas companies who make billions of dollars in profit, while the every day man is trying to keep his head above water.

Now if we could get congress and executive branch to put into SS like the rest of us, maybe they would think twice before making changes to the entitlements. Now Jack if you want to do away with them across the board, I would be for that, but give me the money I paided into SS so I can bank it off-shore so that the feds can’t touch it, or the interest I get.

Posted by: KT at March 10, 2007 2:58 PM
Comment #211350

Entitleitis creates dependency and dependency fosters political hacks who peddle more “goodies” in exchange for votes. Can the cycle be broken? I don’t know, but I doubt it. Democracy ends when “the People” discover they control the pocketbook. “The People” are now asking government to write large and larger checks each year to cover what “the People” don’t want to pay for themselves. Sad…we were a great country with great ideals and we have lost it.

Posted by: Jim at March 10, 2007 3:37 PM
Comment #211410

KT

I would be in favor of letting you keep some of the money and investing for yourself. Personal accounts are good things.

Posted by: Jack at March 10, 2007 10:08 PM
Comment #211414

Did I miss something? I contributed to an insurance program called Social Security, my several bosses contributed the same amount I did. How has my ‘Intitlement’ created a problem for our government? Did my insurance trust fund somehow become a part of the general budget? Gee, I’m shocked and appalled…Social Security can be ‘fixed’ by getting Republicans a few miles from it. Johnson had to be a Republican, ‘cause a Democrat would not have allowed that to happen.

Posted by: marysdude at March 10, 2007 10:58 PM
Comment #211437
what sense does it make for young people to support me through 30 years of leisure in Sun City?

LOL! If you can live a life of leisure in Sun City on Social Security… well, you’re either a magician or a counterfeiter. :)

Me, I’ll be lucky to make the property taxes and a weekly trip to the grocery store.

Seriously Jack, it sounds like you don’t know… uh, jack… about Social Security.

Posted by: American Pundit at March 11, 2007 12:58 AM
Comment #211442

I haven’t read this, but this book looks like it might have an interesting idea to replace the current entitlement system. In Our Hands: The Plan to Replace the Welfare State. I don’t know if it would work, though, it just looks interesting. The author claims his idea would eliminate poverty, help out everyone (21 and over at least) and thus avoid the problems current “entitlements” have, and still cost the same or less as the current system because it doesn’t involve any sort of beauracracy.

I think also a good way to greatly reduce health care costs would be to reform, or eliminate, the current patent system for prescription drugs. The government could maybe imburse pharmaceutical companies for their research and perhaps limit the amount they can charge for drugs. It’s a little outrageous people have to pay hundreds of dollars for prescription drugs, when it costs almost nothing to actually manufacture them. This idea is outlined in the “Conservative Nanny State” book, which is free for anybody to read online at www.conservativenannystate.com .

The part about this idea for reforming healthcare in the book should be in this chapter: Ch. 10 Don’t Make Big Business Compete with Government

Posted by: mark at March 11, 2007 1:12 AM
Comment #211468

AP

I know that most of the people in Sun City collect SS and many of them are probably near the top of the SS pay. Only around 25% of Americans are actually dependent on SS, and my bet is that many of them are near the bottom of the payout. That indicates a certain lack of planning or really bad luck, but it does show the nature of our problem.

Marys

Just wondering, why did you feel it appropriate to spelling entitlement incorrectly? Do you assume those receiving it are stupid?

Would you prefer to have SS privatized, as you imply. That way you could be free to invest your contributions. Maybe you could do better than the government. If you are a high income person, you probably are right. The open secret of SS is that it is a redistribution system that has been expanding its defintions of entitled.

Posted by: Jack at March 11, 2007 12:39 PM
Comment #211470
but it does show the nature of our problem

I forget. What’s the problem again? It sounds like you just have a problem with Social Security in general. Oh, that’s right. You’re a Republican.

Posted by: American Pundit at March 11, 2007 12:49 PM
Comment #211483

AP

SS was a nice system. It did a good job. But is was essentially a pyramid scheme. When population is growing, it works just fine because the population is shaped like a pyramid. We have passed that.

The Europeans are in even worse condition, as my article indicates. All developed democracies face this challenge.

It is fun to make promises, but harder to make them happen.

Posted by: Jack at March 11, 2007 4:14 PM
Comment #211508

Well Jack, I do have several IRA, and Money Market accounts that are for my retirement, along with SS, and my military retirement, I should do ok. Since I am self-employed, with my military retirement, what I mean is that I pay income taxes on the retirement I get. I therefore pay my own wages, just wish I could give myself a BIG pay raise.

Posted by: KT at March 11, 2007 10:18 PM
Comment #211528

No, Jack, SS is NOT a pyramid scheme. You don’t need a growing population to sustain it. You only need a growing economy.

Posted by: Steve K at March 12, 2007 8:15 AM
Comment #211533

Steve

We have a growing economy. But we also grow SS to fill that. If we were to hold benefits at today’s levels, we would have no trouble funding SS. But we all know that is politically impossible and many of the benefit gains are already cooked into the system.

Your growing economy theory depends on entitlements becomming a smaller share of a larger GDP. In fact, entitlements are projected to scoop up a bigger share of our growing economy.

Posted by: Jack at March 12, 2007 9:31 AM
Comment #211540

Jack,
When the economy (and per capita income along with it) grow, Social Security can take all, none, or some of that money. There’s no economic reason why SS has to take all.

It is economically feasible for Social Security to take an increasingly larger share of GDP and at the same time, people be wealthier than they were before. Putting the politics aside, seniors and others on SS (like the disabled) can get all they need out of today’s promises, and no one makes less than they currently do because the overall pie grows.

Of course, once you bring politics into the debate, no one wants to give up “their money.” But as the late, great, Robert Eisner wrote the money people will be earning in 20 years hasn’t even been printed yet and belongs to no one.

Posted by: Steve K at March 12, 2007 11:03 AM
Comment #211542

Jack,
Let me offer a simplied example (no inflation, everything else is equal).

Let’s suppose today’s per capita GDP is $50K. At some future date it will be $60K. That’s a 20% increase is Real per capital income. Nothing to complain about.

Now, at present we pay (per capital) $10K into Social Security. At some date in the future we pay $15K. That’s a 50% increase in SS outlays. Pretty Damn big. However, our real per capita income has still grown by 12.5% (50K - 10K now) v. (60K - 15K future). This is what I am talking about.

Posted by: Steve K at March 12, 2007 11:20 AM
Comment #211559

Steve K

I understand the concept, but entitlements are still consuming a growing share of the GDP.

Your example is hypothetical, but gets at the real problem. Entitlements are growing faster than GDP. The U.S. economy grows faster than any other developed economy, but we are still lucky to get 3% over the long run.

By 2050, the big three entitlements (SS, Medicare & Medicaid) are projected to take around 20% of the GDP. That is about what the WHOLE Federal government takes now. We CAN afford it, if the economy grows, but do we want to? Do you really want to see your taxes go up by 50% (as in your example).

The solution to entitlements is some innovative thinking, not just raising taxes because we can.

Posted by: Jack at March 12, 2007 1:30 PM
Comment #211572

Jack,

I don’t argue that we should raise taxes because we can. Rather, I point out that we can have it both ways — real growth in income and real growth in “entitlements” (a word I object to).

You ask if I want to see my taxes go up 50%. (Is that a made up figure?) Again, I can have a tax increase and still be wealthier than I am now, as I demonstrated. Do I want a tax increase? No. No one ever does. But next ask me if I want to ensure that every retiree lives a decent life and everyone has health care. Again, how much money we will be making in 2050 is hypothetical because that money does not exist yet. But health care are poverty are real today. I want to address them.

I don’t know where your 20% figure comes from. A lot of the long term numbers compare apples and oranges. Social Security “shortfall” figures (which assume an increase in SS taxes to close the gap) are frequently based on low-ball growth assumptions. Yet when we look at income growth as a percentage of today’s we use a different set of assumptions that are more within the recent historical range.

Posted by: Steve K at March 12, 2007 2:01 PM
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