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Let’s Discuss Social Security

Someone recently wondered why there had not been a PDD post regarding Social Security being “bankrupt.” Here goes:

Social Security currently has a 2.5 trillion dollar surplus. This is partly due to Ronald Reagan raising SS taxes on working people. Then he started to raid the fund to make it look like he could cut taxes on the rich and corporations, bloat the military, and still “balance” the budget. Well, he still wound up turning a surplus into a massive deficit, but I digress.

Other administrations followed Reagan’s lead and “borrowed” (stole) SS money for other purposes. However, the government is legally required to reimburse the fund. Social Security is an immensely popular program with a low administrative budget. It will be solvent, as is, for a couple of decades and can be made more sustainable with some minor tweaking such as raising the cap on SS tax which assures that Bill Gates pays as much SS tax as a family earning $120,000.

The current assault on Social Security is just another piece of the class-war being waged against working people by those who would have us go back to a world of serfs and masters. Corporate profits are at an all-time high, as is wealth disparity. An under-regulated and over-fed financial sector has crashed the world economy, but the banksters and speculators get bonuses while the rest of us face austerity measures to pay for their folly. They want Social Security privatized so they can redistribute the wealth upward, as usual. And as an aside: every other industrial democracy has figured out how to provide universal health care.

74 Comments

Carl Miller

about 9 years ago

Thanks Dave, listening to the sycophant tripe on the network channels is like swallowing glass. 

When the beltway lap dogs are told to push austerity to the people, we know we've reached the point of no return.  I hope everyone joins the anti-war rallies in New York City and San Francisco.  I'll be in the bay.  Cheers.

Les Nelson

about 9 years ago

Well, I'm quite satisfied with my social security as is my wife. We draw 2997 a month between the two of us in addition to my retirement and hers.

Our home is paid for as are both vehicles.

Life is good if you plan for it. It sucks if you didn't.

SlingFade

about 9 years ago

I'm going to go with the CBO, but it's great to know that your answer for everything is to take from some people to give to those you deem worthy.

Updated Long-term Projections for Social Security

Wes Scott

about 9 years ago

It was never meant to be your sole income for retirement; only a supplement of course. As stated above, life is good if you plan for it and sucks if you don't. They will raise the retirement age in the future and I'm sure FICA withholdings will rise someday on paychecks as more people get older. A lot of baby boomers are going to be drawing on it.

SlapShot

about 9 years ago

@Wes: Wouldn't it be nice if your 401k paid you five or ten times more than you ever contributed to it?  

SS is one big Ponzi scheme, and that is a fact no one can deny.

Dave Sorensen

about 9 years ago

Sling Fade- SS is a mandatory savings system; only those who contribute will receive $. It is not "taking from some to give to others deemed worthy". Slap Shot- The stock market, where some speculators are leveraged at 30 to 1 is a Ponzi scheme. Social Security collects real money and does not pretend to have more than it really has. It has a 2.5 Trillion-with-a-T surplus. How does that resemble a Ponzi scheme? 

zra

about 9 years ago

Slap Shot's sounds like he's making a sales pitch.

You could give someone your retirement and in exchange, you might be able to double, or maybe even triple it. Maybe. 

I'm sorry, but maybe is too big of an ambiguous notion for me to want to commit my financial future.

There's a risk when investing any sort of money in any sort of plan, but some are far riskier than others, and in those cases (the stock market) the cards are most definitely not in your favor.

Dave Sorensen

about 9 years ago

Yes, many people recently lost 1/2 or more of their retirement savings in the stock market crash. 1/2 of Americans have no connection to the stock market at all. The populist stock market is a myth, as is the "self-correcting" market.

Bruce

about 9 years ago

Having contributed to SS for 43 years, it is now my retirement and hopefully will be (unless some idiot tampers with it) until the day I die. Am I rich? No. Am I secure? Yes.

It is better than begging for food and shelter on the streets.

Just because it is a source of money, doesn't mean younger (non-recipients need to tamper with it). Looking back at paycheck stubs, I think my contribution with growing interest is just about the right amount of pay to exist on.

I am glad to have my social life time security, a.k.a. Social Security. Not everyone who has worked was able to put away 401 Ks or get big returns on saving accounts over the past 40 years, when striving to raise a family.

As for me, I need my Social Security, or else I've nothing.

hunter

about 9 years ago

Dave .... how about handicap people on group homes many of them have never worked a job and collect ss.

Lojasmo

about 9 years ago

Hunter:  social security survivors' benefits.  Paid for by their parents.

Lojasmo

about 9 years ago

As I said in the other thread.  Social security can be fixed forever by taxing income above 120k.

pH

about 9 years ago

I agree with most sentiments here, except the 'sanctity' of the surplus trillions.  The fund is entirely invested in US Treasury debt. Essentially: we loaned our surplus Social Security tax contributions to ourselves, which we're obliged to pay back with interest, by collecting future taxes, from ourselves.

Dave Sorensen

about 9 years ago

That's a good point pH, but with our corporate-captured representatives doing the looting and deciding what to do with the loot, it sure doesn't feel like it was "We" as in "We-the-People" doing all this. Point taken, though.

Sam

about 9 years ago

Lojasmo's last comment is right.

Jadiaz

about 9 years ago

Lojasmo: I work at group homes and find your social security survivor benefits statement to be false. Many young individuals who are disabled collect SS who never worked a day. They also have parents who are alive and in many cases collecting SS themselves. I am not saying these individuals don't need to be taken care of but your assesment of it being from money their parents paid in isn't correct. Nor do the parents pay extra SS tax in order to pay for their childs SS. Just thought someone who deals with this stuff at group homes should point out you are wrong.

Bruce

about 9 years ago

I'm not sure, where any is qualified to "second guess" the minimal financial benefits that someone receives from Social Security.  No one is getting rich off of Social Security benefits, especially those who are in care facilities.

B-man

about 9 years ago

People collecting benefits from Social Security can fall into one of three categories.

1. Social Security income due to retirement

2. Social Security Disability income due to being deemed not able to work -- there are many "levels" to this designation

3. Social Security Survivor benefits, which you  may receive if you lose a parent or spouse.

Some people will never pay into the system because they are unable to, some will never pay because they do not choose to, and some people will legislate laws that exempt them from paying.  In the end the working class ($40-$90K/year) will support the system because that is the largest group in America.

I myself have been paying into that system for 21 years now and if some jerk squanders it away before I am old enough to collect it I will be angry.  Privatization will be the end of it.

Bruce

about 9 years ago

When something "works," why does someone have to try to "fix it?"

Leave it alone.

SlapShot

about 9 years ago

It is a Ponzi scheme because it depends on the next person down the line to fund it.  There's no SS account sitting in DC with Dave Sorenson's name on it; Dave Sorenson will be collecting money paid into the system by the next generation of workers.  It is unsustainable in its current form regardless of pointing to "income above $120k" ... keep in mind that not all income is subject to SS taxes, nor is all wealth.  Bill Gates will only be paying on his Microsoft-paid salary, not his billions.  And I hardly think there are enough people earning over $120k via employment to make your pipe dream float.

Bruce

about 9 years ago

We all perpetuate for those who come after us - including Social Security. It's kind of like "birth" ... do it now and have a generation to follow us. Same concept with SS.

Everyone needs to pay, and pay proportionately to each dollar earned.

SlapShot

about 9 years ago

Yeah, Bruce, but the problem is there will be far more retirees than workers in the not-so-distant future.  So I guess your solution is to take more from the younger generation.  Problem is, unless each generation gets larger in numbers than the previous one, it is one big Ponzi scheme.  Coupled with the fact that life expectancy continues trending upward, and we've got one big problem.  As Bernie Madoff proved, the house of cards comes crashing down eventually.  But even more stunning than Madoff's racket is that Social Security pays far, FAR more to its recipients than what they paid in; inflation itself is a danger to SS system.  With our current debt trajectory, inflation is coming.  It's only a matter of time.

The system is broken, and it needs to be fixed.

Bruce

about 9 years ago

If you think with a "ponzi scheme" mentality - you might as well bend over and kiss your backside good bye. In the current time frame there are probably more retirees today than at any point previous and any point into the future (family size is decreasing) - therefore the probability that funds will diminish is slim to none as earning increase for many who contribute to the SS system. Your assumption is conjecture. Secondly, with private pension funds now available 401K's etc., (which were not previously available to potential retirees) the emphasis to move to privatization seems much more intelligent and viable into the future.

As far as the debt goes, perhaps as done in Biblical times - a time of debt forgiveness may have to come about. :)

TimK

about 9 years ago

The private sector has done a great job keeping this economy running so smoothly. What? You couldn't afford college? You worked your entire life doing low wage, menial work? Don't worry, you can invest in the stock market! If you have any free time, you could attend a rally full of angry white people who already retired and complain about taxes and health care.

Bruce

about 9 years ago

Interesting point Tim.

SlapShot

about 9 years ago

@TimK: You assume that the current economic situation is the fault of the private sector; it has never occurred to you that it might be the fault of the public sector, has it?

Problem is, government programs very, very seldom are a permanent solution.  They only provide a temporary fix ... one that usually comes in the form of benefits, subsidies, handouts, grants or loans.

SlapShot

about 9 years ago

And when the ultimate goal of the administrators of those programs is NOT to wean recipients off of the government dole, the program heads down the path of unsustainability.

Bruce

about 9 years ago

Slapshot - we are the "public sector".

Social Security was not intended to be "weaned off" ... 

Social Security is designed to protect citizens when they encounter social situations that make it difficult for them to provide for themselves. These protections include unemployment, old age and disability.

The baby boomer generation greatly outnumbers the two succeeding generations, and as more baby boomers retire, more money will be paid out to Social Security than is being paid into it...however; that will not last forever - as future generations after 1946 etc. have been increasingly getting smaller in number. There is a potential to bankrupt the Social Security program for future generations who are already paying into the program, but with continued funding and decreasing family sizes it may equalize itself out.

SlapShot

about 9 years ago

Decreasing family sizes equalizing?  That is precisely the trend that will bankrupt Social Security: Progressively fewer workers paying into a fund that will be supporting progressively more retirees; in fact, the only way Social Security would operate in perpetuity would be if each generation were larger than the previous--unsustainable in and of itself.  I'd also be interested to see what a 10% unemployment rate is doing to Social Security solvency projections; it can't be good.

And when I refer to "weaned," I'm mostly referring to other social welfare programs.  However, it would be beneficial to encourage people to plan for their own retirement so that they don't need to depend on the government--which should be the ultimate goal of any government program.

TimK

about 9 years ago

My dear mother worked her whole life from age 14 to 65. She worked as a waitress, a shop clerk, dish washer, etc. Her last job was working in the kitchen of a nursing home which afforded her a small pension -- she draws about $50 a month. Without social security she would be in pretty rough shape. So tell me, oh brilliant expert, how was she supposed to "plan" for her retirement? She has lived below the Federal Poverty Standard for most of her life. She worked hard. Harder than most of the people whining about taxes and Social Security going bust have ever worked. There comes a point in this "debate" where I literally can't listen to you any more. Your breathless Ayn Rand sermonizing is merely vapor.

SlapShot

about 9 years ago

Right.  Your cute lil' diatribe doesn't address the issue at hand: How to fix a broken system.  Social Security is a Ponzi scheme, no matter how much it has helped your poverty -- stricken mother.  Call it good, call it bad: The simple fact of the matter is that it is unsustainable in its current form, and throwing more money at the problem doesn't fix it.

Typical knee-jerk liberal reaction: Spout off with some anecdotal sob story about someone's sad situation and prop it up as the reason why we need to raise taxes on everyone else.  I'm sure your mother worked hard.  If she had the ability to pay into Social Security, she surely could have plunked 51 years' worth of that same money into an FDIC-insured IRA--that would be providing her a much more comfortable retirement than she currently enjoys.  Unfortunately, those of your ilk would rather force people to contribute to a broken system instead of calling for personal accountability.  

Pension funds are on the same road to disaster for the same reasons: More people drawing funds from the fund than there are contributing to it.  Of course, simple math is of little consequence to those of the ideological left--there's always more wealth to be confiscated, right?

TimK

about 9 years ago

SlapShot- really? Sorry you are such a heartless asshole.

Bad Cat!

about 9 years ago

Yea, I totally have to second that - SlapShot, you're being a total dick about this.

And I'd have to say that my hate is indeed substantiated.

SlapShot

about 9 years ago

@TimK: Heartless asshole?  Is that what you call someone telling it like it is?  Or how's about this: I'll bake you some chocolate chip cookies and pour you a nice glass of milk before I sit you down to give you bad news that Social Security is broken.  Frankly, I don't care about your mother's life story--that's your job.  What I am concerned about is the millions of retirees--my relatives amongst them--that will be left hanging when the proverbial shit hits the fan.  For some reason, the word "sustainable" only matters to liberals when referring to the environment.  Pointing this out makes me a "heartless asshole"?  

And what, pray tell, is wrong with suggesting that your mother could've achieved a better result simply by investing her Social Security withholdings in a more efficient manner?  Does that make me a heartless asshole?  Here's an idea for you, Timmy: Stop letting your heartstrings control your logic.  Doing good for your fellow man is one thing; doing it in a sustainable, responsible manner is quite another.  Heartless Asshole?  Good.  Great.  Grand.  Heartless Asshole it is.  Logic is on my side.

BadCat!

about 9 years ago

Let me guess asshole SlapShot, you don't have to worry about your parents in retirement because you grew up in a upper-middle-class home where money isn't an issue. Just because your parents are setup, doesn't mean that everyone's are. And what about your grandparents/great-grandparents during the great depression? Millions of parents would have starved to death in the street had they not had help to keep them housed and fed.

SlingFade

about 9 years ago

While the rhetoric used is bit edgy, I'm not seeing where SS is wrong.  Dick?  Maybe.  But not wrong......

SlapShot

about 9 years ago

@BadCat: Neither of my parents are college-educated.  My dad worked multiple jobs and eventually took out a loan to buy a business that would provide for he, my mom and my siblings.  He worked 60+ hours a week to run that business, and sold it several years ago.  And in case you're wondering, I worked three jobs through college because my parents couldn't afford to pay for it--even though the Dept. of Education said differently to the tune of $22k/year, but I digress.  That's another broken program for another thread.

So yes.  My parents planned for their retirement.  Thing is, my parents didn't do anything that anyone else couldn't do themselves.  And pointing out that people could do better for themselves than the government SS program shouldn't make me an asshole......it makes me truthful, and maybe it makes me too optimistic in Americans' fiscal responsibility.  Problem is, the government has created a nation of unaccountable citizens through these pyramid-scheme programs.

And I'm not even arguing against SS--I'm arguing that it shouldn't be the nation's retirement fund because it is UNSUSTAINABLE.  Your reference to the Great Depression has no bearing on this, since Social Security didn't affect the vast majority of citizens.  And if you're referring to FDR's New Deal, there's much debate as to how said Deal kept the United States mired in said Depression.

Timk

about 9 years ago

I'm sure that when my mom was making 15 cents an hour back in 1952 she could have made out like a bandit investing in an IRA. At least 20 percent of the US population has no way to put aside a portion of their earnings into some private sector scheme with merely a HOPE of seeing a return by the time they can no longer work. The solution IS progressive taxation. You free market fuckwads are incapable of seeing that. Capitalism is a failure without progressive regulation -- including higher taxes on those that can pay. If you're going to be a troll, please accept that I will refer to you as heartless assholes and fuckwads.

Bob Loblaw

about 9 years ago

TimK, grow up a little.  You're using that "inflammatory rhetoric" again.

If Social Security is such a great thing, why is it:

a) mandatory?
b) taken from your paycheck before you even see your wages?

I have read that Japan has voluntary social security.  Participation is dismal, even among the political class.  Why do you suppose that is?

Bad Cat!

about 9 years ago

You've got it wrong - pointing out that people could do better for themselves than the government SS program didn't make you an asshole, mocking TimK's mom for not having a big retirement fund is what makes you an asshole.

Bad Cat!

about 9 years ago

And I think it's perfectly valid to question Social Security, to consider if it has a good return on investment, if the government should be getting involved in retirement, and if people should be depending on it -- totally legit issues.

However, it's not a valid argument to say "Anyone who doesn't agree with me is an idiot," and "Anyone who wouldn't get by without Social Security is a lazy fuck who should work harder/invest better."

TimK

about 9 years ago

Japan has universal healthcare and price controls. They are achieving security for the elderly and disabled through different means, but still use taxes to do it. As for inflamatory rhetoric -- why is it that the league of craven acephalic nepocrats and fools (a.k.a. right wingers) can call for the outright assassination of liberal (and middle-of-the-road) politicians, but it's some how not okay for me to call an asshole an asshole?

Bob Loblaw

about 9 years ago

Because you are better than that.  

Switch to decaff

Bad Cat!

about 9 years ago

And goddamnit! I got baited into feeding the trolls once more - I'm outta here. Have fun frothing at the mouth while you angrily type on your keyboard to the silence of the internet where despite all of your impassioned arguments, you will make no difference whatsoever.

If you believe Social Security isn't the way to go, stop bitching about it, come up with a better idea, and push it forward. Anyone can be an armchair quarterback with a keyboard, only leaders actually change the world.

Bob Loblaw

about 9 years ago

Implied in my question was my plan to improve it:  Make social security voluntary.  Don't rob from Peter to pay Paul.

Bob Loblaw

about 9 years ago

Also, calling those who disagree with you assholes and trolls is rather assholish.

Paul Lundgren

about 9 years ago

Just for future reference, whether it's OK or not to call an asshole an asshole in general is debatable, but it's not OK to call an asshole an asshole on PDD.

So everyone please behave or I'll pull this car over and you'll all have to walk.

I'll let the previous unsavory comments go, because it would be a tragedy to let them interfere with my dinner, and I won't kill the comments altogether on this thread yet because there's still a small chance someone might write something useful and maybe make it all worthwhile. (I know, it's a very small chance.)

Now play nice and kindly suffer fools.

Michael Latsch

about 9 years ago

At present SS seems to be an unworkable mish-mash of government-secured retirement investing and social welfare. To my mind, the crucial function of SS is to provide a minimum standard of living to people who cannot earn a living-due to old age, disability, or the stinginess of their employers. 

It would make more sense to me to detach this benefit from any concept of public retirement fund and charge progressive (broadly defined, perhaps to include capital gains at the same rate as earned income) income taxes to meet this cost, having taken a sober look at probable future demographics to estimate what sort of benefit can reasonably be expected to be sustainable. 

I am disturbed the concept of privatizing SS by setting up "FDIC-insured IRAs." Such vehicles would a) be restricted to federal bonds, and thus be functionally (in terms of ROI) indistinguishable from what we've got now or b) an invitation to moral hazard. 

Let's let the government do what the market cannot, take care of people whose work won't fetch a living wage. No more, no less. Of course, we'd all be better off if we took personal responsibility for our neighbors, but I'm not holding my breath. 

Can anyone characterize ROI for social security taxes, say for a worker who worked from 1940 till 1985 or 1960 till 2005 compared to a couple of private, uninsured strategies?

Dave Sorensen

about 9 years ago

Economist Dean Baker suggests longer lifespans will require some minor tweaking of SS taxes to get us past the Baby Boom hump. He says this:
 
"If Social Security benefits are left unchanged, in order to meet the fund's obligations it will be necessary to raise the Social Security tax by 0.1 percent a year (0.05 percent on the employer and 0.05 percent on the employee) for thirty-six years, beginning in 2010. This will be a total tax increase of 3.6 percent, approximately the same as the increase in Social Security taxes from 1977 to 1990." 

From the Atlantic:
Nine Misconceptions About Social Security

Timk

about 9 years ago

I stand by my use of "league of craven acephalic nepocrats and fools."

SlapShot

about 9 years ago

@TimK: The touching story of your poor Mommy is losing some luster.  She was only making than 15 cents an hour back in '52?  Odd, because the minimum wage was set at 25 cents in hour in '38 and was up to 75 cents an hour by 1952.

Regardless, you simply refuse to acknowledge that the system is broken and that the private sector has numerous options available (beyond government bonds) that far outclass the bloated Ponzi scheme that is Social Security.

@BadCat: No anger here.  Just pointing out the serious design flaws in the Social Security system.  And at no time did I "mock" anyone's mother regarding retirement fund balances,  nor did I reference "lazy fucks" needing to "invest better."  In order to stop you from further putting words in my mouth, let me say this very slowly:

People would get better financial returns from their Social Security funds if they were able to invest those same funds in insured, guaranteed investments like bank CDs, certain IRAs or government bonds.  

TimK speaks of "hoping" those funds will still be there; since the inception of the FDIC not a single bank customer has been stiffed on the insured balances of their accounts.  You want some regulation?  There it is: The FDIC.  In addition, there would be untold economic stimulation from these funds not being tied up in government bonds ... if you believe in the current banking system, which I'm sure many here do not.

Of course, our education system could be doing us all a huge solid by teaching this type of thing: Investing 101, the basics of credit, budgeting, etc., but apparently that isn't important.

SlapShot

about 9 years ago

@Dave: Your article is circa 1998.  There have been some serious developments since then, such as two recessions, the housing bubble and record-low interest rates.

Even the Social Security Administration has its doubts:

"The last 5 Trustees Reports have indicated that Social Security's Old-Age, Survivors, and Disability Insurance (OASDI) Trust Funds would become exhausted between 2037 and 2041 under the intermediate set of economic and demographic assumptions provided in each report. If no legislative change is enacted, scheduled tax revenues will be sufficient to pay only about three fourths of the scheduled benefits after trust fund exhaustion."

Michael Latsch

about 9 years ago

@SlapShot
I don't think there's really any argument between you and Dave-demographic reality implies that the rate of SS taxation will have to be increased to keep pace with payouts-the sooner the better if we want to keep things the way they are. 

The SS Admin says in it's not so fast fast facts, "As reported in the 2008 Trustees Report, the shortfall over the next 75 years is 1.70% of taxable payroll." I read this to mean that increasing SS taxation by 1.7% total right now (or in 2008) would keep things solvent for another handful of generations. Elminating the income ceiling-as Dave suggests-would, as far as I can tell, reduce this increase. (you can see all the cool charts at http://www.ssa.gov/policy/docs/chartbooks/fast_facts/2008/fast_facts08.html)

You imply that DIY investments using insured vehicles would outperform SS witholding and repayment. This may or may not be true (http://www.angrybearblog.com/2009/03/social-security-return-on-investment.html suggests not http://politicalcalculations.blogspot.com/2007/01/approximating-social-securitys-rate-of.html suggests so-but it points me right back to the tension I tried to tease out earlier-SS as government run retirement plan vs. SS as insurance of basic livelihood. 

I think SS should be doing the latter and individual people should be doing the former. If by paying tax I can ensure that all people have their basic needs met in a reasonably efficient manner-I'm willing to do that. This doesn't mean that I'm going to treat my tax contribution as an investment or put one penny more than necessary in there, though. 

It's hard for me to imagine any kind of investment currently insured through FDIC that I'd like to park retirement money into at my age (29). Talk about a crappy rate of return. And as I said above, I rue the day that the feds would qualitatively expand the scope of that insurance-now that's a bailout!

Lojasmo

about 9 years ago

@slapshot:  the way to fix the broken system is to eliminate the $120k cap.  End. Of. Story.

Lojasmo

about 9 years ago

Given that the top 1% of earners control 50% of the wealth, and the top 10% of earners own 80% of the wealth, and contribute a meager fraction of SS dues, well...

Lojasmo

about 9 years ago

Japan has a mandatory pension which taxes citizens at 17.5% (without an income cap) compared to 15.5% that we pay in the US.  Supply eiders can stop bloviating about Japan's awesome system now.

Social Security in Japan

Oh, and the disabled kids and young adults are not receiving SSD benefits, they are receiving SSI benefits, which is a different program, and is not funded by SSD taxes, so, please, please stop it with that, too.

hunter

about 9 years ago

Usa money is backed by what not the gold standard ... basically Monopoly money. This thread has become a pissing contest to see who knows more facts.

Jadiaz

about 9 years ago

Yep Lojasmo, many get SSI many others get SSD.

SlapShot

about 9 years ago

Japan:

"The pension reform bill, approved by the lower House of Representatives with the backing of Prime Minister Keizo Obuchi's ruling political coalition, will pare core public pension benefits for new retirees by 5 percent and gradually raise retirement age to 65 from 60. 

The reductions, which will take effect next month, will slice deeply into the benefits of Japanese retirees. For example, the government said the lifetime retirement benefits claimed by a typical salaried worker age 40 today could be as much as 20 percent lower than what he or she would have received previously." 

and:

"According to the OECD's "Pension at a Glance 2009″ report , Japan's public pension system is expected to provide 33.9% of salary as pension to workers entering the workforce in 2009. This is the second lowest figure in the OECD, with only Britain trailing Japan. The OECD average for public pension payouts is 59% of salary." 

Numerous economists are seriously doubting the ability of Japan's national pension plan to weather their demographic shift.  Same with much of Europe, who we're apparently supposed to be more like according to folks 'round these parts.

@Lojasmo: Why increase SS withholdings when this same problem will occur again and again every time there is a variation in generational population?  Why not fix the system for the better?  From your cited article about Japan:

The government estimates that the premium will be 29.5% (of wages) in 2025 assuming that the elderly ratio becomes 25.8 %. If the ratio becomes 28%, the premium will be higher.

So 30% for SS/Medicare on top of 20-40% in federal income taxes and another 3-10% in state income taxes?  Yep, screw those rich people, they deserve to pay 90% of their income in taxes. It is unsustainable.

W.T.F

about 9 years ago

Got no solutions to any of your problems but I will say this: can you imagine the kind of mess we would have right now if President W. had succeeded at privatizing Social Security before the last big stock market crash?  There would be literally 10's of millions of ruined people. Calculate that and then decide whether Social Security is good or bad.

wageslave

about 9 years ago

SlapShot: you keep insisting the SS system is broken, but you yourself write that the trust fund won't be exhausted until 2037-2041. That's 3 decades away. Plenty of time for minor tweaks, like what Reagan and Tip O'Neal agreed to in the 1980s, to work.

Also: why are you worried about a 25% reduction in benefits in 30 years if we do nothing? Doesn't sound like a big deal to me. This sounds more like an extremely successful government program that is working well and needs minor changes to allow for a major generational shift. 

If I tell you my car is broken, you'd assume that it is not working now, not that it's scheduled to be slightly less effective in 30 years. So why do you say that SS is broken?

Dave Sorensen

about 9 years ago

I think some people ( not necessarily  people commenting here) are greatly exaggerating the problems with Social Security so as to open the door for privatization. There's a lot of money to be had and the greedheads want at it. When the banking system was recently collapsing and had to be rescued by a massive infusion of Socialism-for-the-rich, I don't remember conservatives saying that Capitalism was broken. As far as individual investing goes, many people don't have any money to invest- they are barely getting by during their working years. Educate them about investing all you want,but they don't have anything to invest. Maybe our economic system in general is broken, but that is a topic for another thread (groan).We can find the money for the wars of empire, or bailing out Wall St., but the New Deal safety net that takes the edge off the worst dog-eat-dog aspects of Capitalism is forever on the chopping block. In my opinion the "Greed-is-Good" types like Milton Friedman are/were sociopaths, and their way is the road to ruin.The problems with Social Security exist in the context of much broader, deeper problems. Regardless, it's important to talk about these things. Thanks for getting back on topic.

SlapShot

about 9 years ago

@WTF: You assume that the privatization would have shifted SS funds solely to the market.  There are numerous financial instruments that can withstand market volatility and are FDIC-insured.  

@wageslave: To continue on your analogy, your car is still running, but the check engine light is on and you're now getting 10 mpg as opposed to the 25 mpg it used to get -- not to mention it's burning oil.  Something is wrong with the system, and it needs to be fixed before your car breaks down and needs much more expensive repairs.

@Dave: You have a very pessimistic view of people in general, and wealthy people in particular.  When I refer to people being able to "invest," I'm talking about utilizing the same funds that would be going to Social Security -- not additional funds.  Secondly, investing as little as $25 per month over 45 years will yield nearly $100,000 for the retiree.  Since our government is already pumping the "surplus" in government bonds, why not allow the worker to do that instead?  It would eliminate another huge part of the government bureaucracy.  

And, as far as bailouts go: You're spot on.  Wall St. shouldn't have been bailed out.  By rewarding failure, a horrible precedent has been set regarding "too big to fail."  In my opinion, smaller, more responsible banks should've used any TARP-type funds to buy up the pieces of the failed behemoths.  Problem is, you insinuate that capitalism failed when in reality it was the government-sponsored entities Fannie Mae and Freddie Mac that loosened lending guidelines and issued the bundled investments that precipatated the economic recession.  Anyhow, going forward do me a huge solid and please be sure to include GM and Chrysler in future demonization of gov't bailouts -- because they made out like bandits as well in complete circumvention of bankruptcy law.  And the UAW?  Essentially stole from secured creditors during the "reorganization."

You're also absolutely correct in stating that our economic system is broken; that is, our public sector is becoming too large and bloated.  If you're looking for the #1 reason that (primarily) blue states are facing huge budget deficits and potential insolvency, look no further than public sector pensions/wages/employment.

Bruce

about 9 years ago

My last thoughts..Social Security is a program that works. Leave it alone. It's funded for a minimum of the next forty (40) years in this country. The dismantling of Social Security is lead by people who don't like government.  If it works, don't fix it.

SlapShot

about 9 years ago

@Bruce: So to h*ll with the rest of us who won't be utilizing the system within the next 40 years?  I'm trying REALLY hard to figure out why people like yourself don't want the system reformed, because it clearly needs it.

Bruce

about 9 years ago

SlapShot...those are your words not mine!

The system doesn't need reform, because it works. Tell me the time, don't build me a watch.

SlapShot - tell me why it needs to be "revamped or reformed?"

Will

about 9 years ago

Somewhere buried between ideological arguments and name calling, somebody asked a pertinent question: "can anyone characterize ROI for social security taxes...?" Sure, over the history of the program it's been about 1.5-3%. (Those on left and right can easily manipulate the data to suggest something outside that range for their own purposes, but objectively, that's basically it.) It varies depending on, of course, how much you paid, at what age you retired, at what age you died, and if you have a survivor who was also a beneficiary of your social security (and what age that survivor died).

It's an ideological argument for SlapShot and company to say something like "that doesn't even outpace inflation" or "you could put your money in a savings account and earn more." It's an ideological argument for TimK and company to say something like "but, there are no other reasonable options because banks and the stock market can't be trusted."

Save it. You're not going to convince anybody in a forum like this.

The best all of us can do in a forum like this is to maintain civility (sorely lacking from many here), present a new perspective, and honestly find the focus of an issue like this.

So, here's my best shot at that. It's not really relevant whether or not social security as a system is sustainable. It's not really relevant whether or not a push for "privatization" is an effort by a private sector eager to exploit somebody. What's relevant: what's the role of government? Do we want government (at some level: federal, state, local) to provide a minimum amount of cash to assist the elderly in retirement? If so, can we stop calling social security an investment or insurance program? It's not. If so, can we talk about fairness, i.e. taxing income above $120k and paying in proportion to the amount an individual contributed versus paying a set minimum/need-based amount? If not, can we talk about some mandate (or mandate-like) to contribute to an individual savings/investment account of some sort (FDIC insured or not)? If not, can we talk about what might fill the void now occupied by social security? Maybe some tax credits/breaks for private charities that would help provide for the elderly? How about some tax credits/breaks for families who care for elderly grandparents in their homes?

A lot to discuss. A lot of options. But, only one ideological question: what's the role of government? Not one angry entry addressed that question directly. Just take a poll on that question and move on graciously, civilly, and constructively to the others. That's how it works in our society (or that's how it's supposed to work).

Bruce

about 9 years ago

Good point Will, and it appears very clearly that the role of government was to provide Social Security, as signed into law by President Franklin D. Roosevelt in 1935 for the benefit of the citizens of theses great United States - else we would not have it.

The act was an attempt to limit what were seen as dangers in the modern American life, including old age, poverty, unemployment, and the burdens of widows and fatherless children. By signing this act on August 14, 1935, President Roosevelt became the first president to advocate federal assistance for the elderly.

My question is simply this, what is wrong with advocating federal assistance for the elderly?

Not everyone has a 401K or some similar private pension plan.

Bruce

about 9 years ago

I might add, these economics of the 1930s era, are not a lot different than the economics of the 2010 era.

We have old age, unemployment, burdens of widows and fatherless children - have times really changed?

Jim

about 9 years ago

We are paying out more than we are taking in. People use the term solvent. We aren't solvent. We are using reserves, not income. If it was a business, you'd be in a state of panic. Get real folks, it's time to smell the coffee. We are broke, it's getting worse, and you are all amazed at the beauty of the kings wardrobe. Keep you damn paws off of my hard earned dough.

Dave Sorensen

about 9 years ago

Slapshot, I agree our government is bloated, especially the military. If we shut down the empire we'd have a whole lot more money to work with.

I also think our financial sector is bloated. It produces little besides fictional wealth that can disappear in an instant. As the stock market is relevant to this discussion, I am curious as to where people think the profits made from investments come from, and why investors think they are entitled to "passive income" (love that phrase). Does the labor of people who work at said companies generate the wealth? If so, why do investors get any? Because they risked lending money to support the companies? Actually 99% of stocks traded are speculative -- the money goes to other speculators -- you're not "supporting" a company. Only with Initial Public Offerings does the investor's money go to supporting the company. So I don't really understand why speculators deserve a return. 

I think I'm about done with this thread. Thanks for the food for thought and diverse opinions expressed without censorship. And welcome brother Jim -- it was your comment on the snowmobiling thread that inspired this one. I think I'm done. See y'all downstream.

Bruce

about 9 years ago

Jim, our grand parents and parents paid so that we can afford and enjoy the comforts of attending school and graduating in the 12th grade. Subsequently, we and our children and grand children will pay for someone else's children to attend school and graduate from the 12th grade into the future...it's part of the concept of our American life.

Yes, perhaps we have a large debt - but it doesn't mean the end. People all over this nation are working hard to reinstate our economy and I think we will succeed.

This nation and it's people, need to learn to live within their financial means - and if it means spending less - than so be it. Credit cards, etc,. have been the down fall of many people - and those who would profess using SS funds - will only serve to destroy our nation further.

Think positively, and look forward in life  -- there are a lot of great years left in this nation, and this time won't make us falter or fall.

:)

Bruce

about 9 years ago

I agree ... I'm done with this thread.

Don't give up on America people, we are still a lot better off than a lot of people in other nations.

Take care everyone.

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