Superbelt

We have all heard by now about Bush's plan of Social Security 'reform', right?
His plan is to take the system and instead of having younger americans pay into the system, allow them the option to use that money in private investment accounts.
If his plan goes through, Social Security as we know it is completely dead and it will eventually be 100% personal investment. The number of people who decide to go for the new plan will force everyone else to pull out of the Social Security network as well. Why? Because there will be no more solvency, the people who are left will be unsustainable (as the richest americans who pay around 88k for the system will definetley pull out) It will be foolish to try and stay there and just wait for it to permanently crash.

Anyway, that is only one small part of the problem. The real problem is Bush trying to turn SS into something it's not. SS is one leg of a 3 legged retirement stool for americans. The absolute stability and assurance of SS payments is supposed to be 1/3 of your retirement. Personal investment is another 1/3 and your company retiremet plan is the other 1/3.
Only SS's 1/3 is guaranteed. Bush's plan will make sure none of it is.
The whole reason behind SS is as a safety net to make sure something like the Depression wiping out everyones retirement security can't happen again.

Also, doesn't anyone else want to tear their hair out at Bush's proposal to borrow 2 trillion dollars to pay for the transition of this? BORROW, not raise the money. Just proposing it warrants us to lynch him and shove pvc pipe up his ass so we can cauterize his intestines with a red hot poker (a' la King Edward II). Why isn't the whole of america completely up in arms at the mere chance that he could raise our national debt that high with one fell swoop?
What is so anathema about raising taxes to pay for things you buy? The money is going to have to be paid eventually anyway, why put it off for decades, only to see it become an even more gargantuan hurdle for me and my children to pay for? Why does Bush appear to have no more financial responsibility than a college freshman who just signed up for six new credit cards?

Jadedfox

Sadly, I don't know much about this issue so I'll decline to comment but the above statement made me laugh so loud my colleagues at work are looking at me funny.

--jaded

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There is no fucking you, there is only me.

pan6467

When Social Security started it was meant as a SUPPLEMENT to people's pensions, unfortunately what happened is companies started getting rid of pensions or spent them into non existance (much like the government has done to SS), inflation hurt the pension and noone expected the life expectancy to shoot up as far as it has.

If SS is to survive, people have got to understand it is a supplement only. Government must find a way to make companies secure their pension plans better. SS is a great program but it can only work as a supplement not as a full income.

__________________
I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

Kadath

I have resigned myself to the fact that I will not see a dime in SS money and am planning my own retirement accordingly. Sadly, I won't ever see a pension either, unless I start working for the government again.

While I dislike some of Bush's policies, I don't think we should lynch him, or talk about lynching him for that matter.

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braisler

I too fully recognize that I will never see any money from SS and have adjusted my own retirement savings accordingly. I have always thought of SS as a sort of empty political promise that was never really meant to be carried through anyway. At the time that SS was introduced, the life expectancy of the average American worker was near or lower than the age for SS benefits to kick in. I always saw it as the government saying, "Hey, we know you are not going to make it to 65 anyway, but if you do, we'll kick in some money to help you until you do die at 65 and 1/2." The equivalent today would be, what, 80-85 years of age? The government has only now started to raise the age for SS benefits to kick in and they are doing it very slowly so as to not piss off the seniors (very large voting block).

This hurts me more than you can know, but I agree with Bush on the idea of making SS private. I don't agree, at all, with his idea of sending us into even more massive debt in order to do it. I would like to see the manditory contributions to retirement cut from the pay check just based on the idea of personal liberty. That is, it is my money and I should be allowed to do what I want with it. But I do believe that the majority of Americans need to have someone holding their hand when it comes to retirement savings. As a nation, we are far too involved in the here and now, instant gratification, gimme-gimme, commercialism and not capable of thinking any further down the road than a few months toward a new plasma screen TV or chrome fenders for the SUV. So, I reluctantly support the idea of having some minimum amount deducted from our paychecks to fund into our own retirement savings. I have never liked the idea of paying into a system that is paying my money out to other people right now instead of leaving it to mature for my own retirement.

So, that is my rant for now. I'll check back on this thread later as I am interested to hear the opinions of some of my fellow TFPers.

Superbelt

Right, so many americans do need their hands held. It's just an unfortunate fact of life. You give them the chance to fuck it up and they will. They will put it all in some hot stock, and boom a crash destroys any measure of security they once had. A large number of americans with no savings, at retirement age will wreak havoc on our economy.
The chain is only as strong as it's weakest link and Bush is replacing what was once a tungsten alloy link with a shoestring.

SS is part of the social net. It is so successful because everyone puts into the pot. The rich put up to 88k, the poorer put in what they can. If we individualize everything (leaving out what will become huge administrative costs for each individual account) then those lower down will see their SS benefits shrink down to just what they put in.
Yes, that is social redistribution, but that was the point. It was a necessary mechanism to help ensure this country didn't become a hellhole after another depression. We apparently have such a short memory. Maybe we do need another depression to wake everyone up to reality.

http://story.news.yahoo.com/news?tmp...rity_challenge
You can be sure it will be plenty more than 2 trillion too. Politicians love to low ball things to roll up enough support for it.

KMA-628

This is a minor problem related to SS. Sure it sounds like something to be concerned about, but the real problem(s) are much worse. If there isn't SS anymore, why would you worry about this. Look at the ratios related to SS (payor to payee), compare them as the ratio gradually sinks to an almost 1:1 through the decades. We are getting close to single digit ratios, what then? Who's gonna bitch when SS ratios are sitting at 5:1?

Nope, wrong here.

SS has already become something it is not. The SS we have today is nothing like the SS drafted in 1935.

I realize the need to blame everything on Bush, but this ins't the case. In his situation, he loses either way. The system is going down, hard. How many more times are we going to try and saddle him with the responsibility of a problem he inherited. Why aren't we bitching about Clinton's "balancing" of the books that used up a good portion of SS funds. Why aren't we bitching about the fact that Congress thinks SS guarantees them a blank check as long as they "promise" to pay SS back.

No, sir, SS is in trouble. Not "straighten it out" trouble, but "we're gonna have to find a different way of doing this to fix it" kind of trouble.

First, maybe this sounds like the way it is supposed to be or should be, but this is strictly opinion. There is no "supposed to be" that can be atributed to this statement.

Plus, see above about ratios. The stability just isn't there.

Again, the "whole reason behind SS" is nothing like the real reason SS was created.

Was SS supposed to cover families? No.
Was SS supposed to cover wives when the husband died? No
Was SS supposed to cover death? No
etc., etc., etc.

SS was also not started as an entitlement program. SS was also started with a ratio much higher than what we have now. When SS was created, not only did they not think about it being an entitlement program, they didn't think it would be permanent and they didn't expect to have the kind of life expectancies we have today.

You can't assume that something that was created for the situation in 1935 could be relevant, applicable or doable in 2005.

This I don't like as well.

Because something has to be done and it is going to cost money. We are all going to pay for it one way or another.

KMA-628

actually, I was wrong, the ratio is already below 5.

Here is a link to show historical data related to the payout ratio of SS, it is very depressing to look at:

LINK

KMA-628

Also, one of the reasons using the stock market for SS funds was a bad idea decades ago was because the rate of return for SS was much higher than the stock market could achieve.

That has now completely flip-flopped and is true no longer.

We are talking single digit numbers here, like less than 2% - LINK

Another issue is the imbalance of proportions when comparing immigrants to natural citizens. You get a much higer rate of return if you move to this country compared to paying into the system most of your life. I'm not against immigration, but the person who paid into all of their life should benefit more than the person that has just moved here--that is hardly "fair".

Superbelt

Bush's tax cuts came, in large part from the SS surplus. Bush deliberately gutted the program (as many politicians have done before him, I admit), but he gets as much blame as anyone. Reagan restructured SS to continue working as it was for another hundred years. It can be done. Reagan did it by raising the tax limit on it and raising the retirement age a few years (which is reasonable as we are living longer)
You don't shoot your horse in the leg and then go complain about it.

KMA-628

BTW - the SS surplus isn't really what everybody likes to think. It is more a trick of accounting than anything else. If I have the time, I will put something together on it, but is not something one can "whip out".

When the horse breaks his leg, you shoot it.

This horse has been lame for some time now.....

Superbelt

When you run your numbers, run numbers on what a 2 trillion dollar influx of cash will do to it as well. Plus you might want to try doubling the maximum taxable (from 88k to 174k) on it if you think you can find the numbers.

Methinks the solution isn't so hard to find, it just takes a President who isn't afraid of making the right decisions, like raise taxes.

Bush : Raising Taxes
Vampire : _____

a) hotdogs
b) nubile teenage girls
c) sunlight
d) Listerine

KMA-628

the cash will just fix it for while, it is still based on workers paying into it - cash influx or not, the ratios are very troubling, especially when you look at the historical data related to the ratios.

I would rather not band-aid it by chucking more "borrowed" money at it, I would rather it be fixed.

I am all for either removing the cap or pushing it much higher.

Superbelt

I don't want to borrow money either. Our government has gone absolutely insane over the past several years in the outrageous spending increases that go hand in hand with tax decreases. It's like watching someone slice their own throat.
Definetley the solution is to raise the cap and increase the age limit. What is so hard about doing that?
America can only be stronger by ensuring the stability of an ever increasing elderly population.

KMA-628

I have no clue what the last part means, but if there is a possible solution to "fix" SS, without raising taxes, than I think we would be remiss if we didn't at least look into it. Why must "raising taxes" always be the first solution people lean towards?

Remember, all of this is in the proposal/planning stages--it is not very likely that Bush will be able to get anything to happen while he is president.

Superbelt

It's a SAT thing. Analogies

: means "is/are to"

Bush "is to" raising taxes as Vampires are to ____

Raising taxes is the obvious solution to an increasing population of recipients. There is really nothing else you can do to it. I am all for options, but privatizing is not an option for what SS is meant to be.

flstf

There is no SS pension fund. Your SS taxes go into the general fund. Polititians do not have the dicipline to keep from using SS money for everything else.

The way it is now SS is just a means test welfare system. The means are based on how much SS wages you had over your working life. Most of us that have been working 30+ years or so would have a small fortune if we could have invested that SS tax money ourselves. Instead we will settle for something like $2000 per month or so.

The SS system will only go broke if the federal government goes broke. Your chances of getting your SS money are at least as good as any other outlay the government has to make. It all comes out of the same pot.

Bush's plan just looks like another tax cut to me. Just one more little bit not going into the general fund. Of course eventually the government will have to take in as much as it gives out but SS is just one of the outlays. With the baby-boomers just now reaching retirement age, woe be to the polititian who tries to cut SS benefits, LOL.

KMA-628

While I agree with almost all of this, I do get tired of trying to place the spending problem on Bush and his admin.

I am extremely conservative (no duh, eh?) and I have been very critical of the spending habits of the Bush admin, but I am also not naive enough to think it is isolated.

While this part of Bush and his people really bothers me, the blame goes a lot further.

In regards to privatization, why not? It's not like we are dealing with a percentage that will have much of an effect. If it works, great, than we can move towards privatizing more of SS. If it doesn't, it won't do any more harm than is already being done. At least we will know, for sure, beyond models and theories, whether it is worth pursuing further or not.

KMA-628

The problem here is not cutting SS, but how much of each of our paychecks goes to the fund. Right now, I believe we are sitting at 15% with a 50/50 split.

That amount isn't going to be able to stand for much longer.

Some economists have figured that, even with raising the cap, we would need INDIVIDUAL rates to be in the twenties in order for SS to be able to pay out.

No one is even going to dare talking about cutting payouts, but we do need to talk about legitimate ways of properly funding SS.

C'mon, SS is sitting at a rate of return of 1.3% right now. Even the stock market, over a period of time, can do much better than that, even if the market isn't doing well.

If you took the money I put in and will put into SS and invested it in the market, my final payout would be many times more than anything SS has to offer me, and that is an absolute fact. Look at averaged rates of return on the market, recession or boom, bull or bear, it always goes up over the long-run.

flstf

Agreed. But to most of us SS taxes are about the same as income taxes. They can reduce SS taxes and raise other taxes to make up the difference. I see no need for us to keep thinking of SS as a separate fund when it isn't. Just another government outlay. They should probably just eliminate the separate SS tax. At least that would reflect the way the system really is. It never was a separate fund. They could still base the benefits on wages earned over your lifetime.

KMA-628

I am not understanding this part at all--if the net effect is the same, why do it?

KMA-628

I know what an analogy is, I just have no clue what you were trying to impart.

guy44

I'm going to let two men, Josh Marshall and Michael Kinsley, who are much smarter than I, explain why A) There is no Social Security crisis, and B) Bush's plan is beyond awful:

First, Marshall on the SS "crisis:"

http://www.talkingpointsmemo.com/arc..._12.php#004236

Secondly, Kinsley explains why Bush's plan is stupid at best:

http://www.talkingpointsmemo.com/arc..._12.php#004237

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flstf

Well if for no other reason to dispell the myth that there is an actual SS fund. You would be surprised at the number of people who don't realize this and keep talking about how the fund is going to go under or there wont be any money in the fund when I retire. There is no fund.

KMA-628

Um , these guys aren't even debating the same thing we are (from your link)

Rhetoric aside, the numbers don't lie. Where this guy is pulling his info from, I don't know, but SS isn't really the point of his argument. He states it very clearly, in the beginning, when he is talking about the problems SS faces while saying there isn't a problem.

How about posting some info that isn't pandering and full of party politics?

This is actually a serious issue and desperately needs to be discussed. Your political affiliation must be able to be pushed to the side (unlike the links posted) in order to get anywhere with it.

Republicans and Democrats can butt heads and try to fight each other, but to what end? This issue affects everybody, regardless of what letter comes after your name.

If we look at it like your link suggests, we are merely discussing power, and completely ignoring the issue at hand.

Way, way, way too many people, with a whole lot more relevant education than these guys, thinks there is a problem with SS--and you can pull from either party to get these opinions.

KMA-628

your point is key to arguing the position that is attempted by guy44'2 links.

How can something that doesn't exist have a "huge surplus" while the place where the money is actually coming from has deficits?

The "huge surplus" is a myth, it is merely an assumption based on a line in a ledger.

The only "surplus" is in the fact that more money comes in from SS taxes than is given out in SS payments. The "extra" money gets spent right away by the President (note: any President, not just Bush) and Congress and then replaced with an IOU note.

A side issue that is extremely relevant in this debate is: spending. We also have to come up with a plan to control the blank check policy that has run rampant in our gov't for decades and decades.

My proposal: gov't spending equals revenue, no more, no less. Revenue goes up 4%, gov't spending goes up 4%. Revenue goes down 4%, then spending must go down as well. We have to live this way. Companies have to work this way to survive. Why don't we force our gov't to do the same?

Yakk

Actually, Bush's plan has the following problem:

SS has built up a large liability in the form of promises of future payments.

SS has always been a 'current workers pay for current retirees' system. The money current workers put in does not go to pay for their eventual retirement.

Instead, they recieve a promise that they will be cared for by the workers when they are old.

Bush's plan is to divert money going into social security into a privatized system of personal accounts.

Social securities problem is that it lacks the revenue/capital to pay for it's liabilities in the long term. Reducing it's income won't help solve this problem.

After the changes to the payroll tax in the 80s (for this very reason), Social Security should be liquid until 2038*. With Bush's change, it runs out around 2024**.

* those that believe social security taxes are just part of general revenue claim 2016. Those that believe Bush's circa 2001 economic predictions would believe that it wouldn't run out until 2075.

Finally, note that the social security shortfall shouldn't be any larger than the modest tax cuts Bush has pushed for.

Lastly, if you want to fix SS, set the SS payout start date at a certain percentile of the population (oldest 20%?), as predicted 5 years in advance, moving no more than 1/2 a year per year.

Huh, how is it a trick of accounting?

First question: is SS tax a part of general revenue or not?
Second question: has the SS tax not generated enough surplus to last well past 2038?

What you have to realize is, the US government is running massive deficits. This is your fault. It owes money to SS, it owes money to China, it owes money to American investors. And the American People voted the politicians in who did this.

Then, there is no SS shortfall. You can spend general revenue on SS.

If SS is part of general revenue, then
1> Over 40% of Bush's tax cuts have been aimed at the richest 1% of America
2> In many states, the tax burden on the working poor has increased since 1980 -- no tax cuts for them.

First of all, if you took your money, and invested it in the market, there would be a good chance you'd have next to no money, right now. Many people lost their shirts and went bankrupt.

Alternatively, you could have had the government making these investments. The government owning large chunks of the US private economy, politicians making decisions on whose stocks to buy, whose ventures to fund. This is a bad idea.

Why shouldn't it be a seperate fund? That is how it was run, and why they changed it in the 80s. The fact that Republican congresses, 2 Republican presidents and 1 Democratic president have run pretty horrible fiscal policy doesn't change things. It is general US government revenue and expendatures that is fucked up.

Accounting 'tricks' include the entire US economy. Money, credit, ownership, the US banking system -- all just accounting 'tricks'.

The US government needs to stop spending more money than it is entitled to.

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Last edited by JHVH : 10-29-4004 BC at 09:00 PM. Reason: Time for a rest.

KMA-628

First off......what??????

Unless you define "working poor" differently than I do, #2 just doesn't work.

Also, what does SS revenue have to do with tax cuts and your claim?

The shortfall lies in the ratios as I have explained here several times. Do you see how the ratio is spiralling into oblivion? Forget about revenues. Forget about surplus, shortfalls, tax cuts, whatever.....look at the ratio. Almost the entire problem lies there. Shortly, a family with two working adults will have to cough up enough money in SS taxes to support one person receiving SS payments. The system just isn't set up to handle ratios this small, it is WAY TOO MUCH of a burden on the "working" people.

Because there is no surplus, except on the books. Just because my ledger says one thing, actual cash on hand is what matters.

Correction:
Bush's plan is to divert A VERY SMALL PERCENTAGE OF THE money going into social security into a privatized system of personal accounts.

What?!?!

Answer: nope, the so-called "surplus" is non-exitant, it exists on paper only in the form of an IOU,

And many more people made even more money during the last few years. The people that went broke did it because they invested poorly. Hell, you could play the market short and still make money on a stock going down.

Anyway, this plan has nothing to do with playing short. The idea is that the money is invested in the market long-term. A long-term investment into the market, made with common sense, will always yield better results than anything else.

SS used to have a very attractive rate of return. Now, it doesn't have shit for a return. My kids get a better return on their little savings accounts than I could with SS.

Combine the sinking return rates with spiralling ratios and you have a system ready to go kaboom. Even if the last round of tax-cuts were reversed, it wouldn't save SS.

flstf

I think you are right if we think of SS as a separately funded program. But it is not. The money goes into the general fund just like any other tax and out of the general fund just like any other outlay. Our polititians (and therefore us) decide what goes where and they can just up the outlays to SS reciprients. SS is simply in competition with military spending, national parks, education etc.. It is in no more danger of sinking than those other areas of spending and they all are funded out of the general budget.

KMA-628

Let's say this is true.

How does this explain a ratio of almost 3:1 and a rate of return of less than 2%.

How does the explain the past increases in the SS tax and the proposals to increase it again.

General fund or not, it is it's own line item. If the money coming into the program isn't enough to carry the program beyond another 10 or so years, we would have to draw the money from something else.

Check the link above showing the history of payout ratios and you will see what I mean.

If we were to graph this it wouldn't look very good. I can't think of anything that could withstand this sharp of a negative curve.

roderickpsu

I say we just completely phase out social security and thus phase out the damn FICA taxes!

flstf

KMA-628

Yes, and I imagine in the not too distant future it will be down to 2 workers for every retired one and so on. Our government (us) will have to make some hard decisions about what to cut to afford this (or raise taxes). It is one government outlay that looks to grow big time in the future. Much like military spending in time of war. If need be we will have to draw the money from somewhere else, or raise taxes.

We will elect those polititians that make the decisions that most of us want. And like a lot of European countries we will continue down a path toward socialism. If that's what the majority want, and I imagine they probably will. I thought I read where some European countries are concerned about their low birth rate and their ability to fund their social programs with so many retired. Maybe we will be in the same boat soon.

Eventually though in a democracy like ours we will vote for those who will take care of us. Therefore I think other things will go first before social security.

Yakk

What in the hell do you think money is?

Almost all money in the American economy is derived from IOUs. That is how modern monitary policy works.

Some buisiness, corperation or individual borrows money, and hands it to someone else.

The money supply is a complex and huge chain of IOUs. Social Security accounts are no more an accounting trick than your bank account, any government bonds you own, or a corperation's cash on hand.

If you want to tell me that the Federal government has been running massive operating debts and hiding it using SS, I'll believe you. The Bush administration is burning money like there is no tommorrow. Clinton did it to a lesser extent -- what saved his financial policy from being completely idiotic was the dot com bubble and the tax revenues thereof.

Accounting 'tricks' and numbers in ledgers are what the American monitary system runs on.

In the 80s, to delay the social security balance sheet problem, they increased the tax used to pay for social security.

States cut taxes in the 80s, then ratchetted them up in the early 90s. They cut progressive taxes, and then ratchetted up regressive or less progressive taxes.

The end result was an increase in the tax burdin for families at the lower end of the income scale. Note that most tax cuts are aimed at the wealthy.

Because of how words are defined. If SS isn't a tax, then for one thing the tax burdin on the working poor didn't go up as much.

Moving money to private investments doesn't solve this. The number of people working who have to support the number of people retired doesn't change.

If you want to solve this, up the SS payout age, or reduce benefits. I shot out the idea that you fix a certain percentile of the population as SS benefitiaries, with a max-rate-change to provide some security for future planning. It makes SS more practical and viable in the long term, come what may.

Second, the US government already owes the SS system a huge amount of debt. Use that debt to pay off SS expenses. With a small amount of courage and mild changes to the system, it will survive in its current form this way until 2050. With no changes, the debt doesn't run dry until 2038. Using Bush-style economic projections, it doesn't run out until 2075 or later!

Does this mean that Bush has been running massively unsustainable economic policy, and is burning money and/or handing it to the richest 1% of America willy-nilly? Why yes, yes it does.

Those trillions of dollars he needs to 'save social security'? That's actually trillions of dollars he needs to cut taxes, mainly on the rich.

A system that is tight on money. And he's planning on taking the money out of it. Sounds like the obvious solution.

Bush's tax cuts come to 170 billion/year, when they finally come online.

This is about the same as the expected social security deficit.

Bush's tax cuts where described as 'small' by Alan Greenspan. Doesn't this mean that the social security deficit is 'small'?

Of course, it could be that Bush's tax cuts where huge and will and have had devastating impacts on the fiscal health of the US government.

(please note, most of Bush's tax cuts are 'sleeper' tax cuts. The latest one I am aware of matures in 2010 -- the removal of the 1+ million dollar estate tax.)

You could. Do you understand risk?

Did you notice how many people lost alot of money? You could make alot of money. I know a poker player who has doubled their stake in a night! We should put social security money into poker.

You could make alot of money on the stock market. You could lose it all. If you use individual humans to decide, many of them will make poor decisions. And their social security funds will go poof.

The point of 'social security' is 'security'. Knowing you'll be able to feed yourself after a lifetime of labour, in case your plans go sour.

This (the returns on the stock market) is a long-term historical fact, not a law of nature. Understand why the stock market has had a better rate of return, don't worship it as a god of money-making.

Given the current valueations of the stock market and the underlying economics (which are unprecidented after the collapse of a bubble), your faith in the stock market may not be sustained into the future.

I've seen economists justify the current index values, for example. They managed to do it by assuming good long-term economic growth, and that every company in the index would grow faster than the economy, and that none would die. Over half of the 'value' of the stocks where based off post-2075 performance.

In the 1990s, there was a stock market bubble. It still isn't over.

Tossing another tonne of money willy-nilly into a stock market (say, by partially privatising social security) will have the wonderful effect of inflating prices. When the money comes out, it will have the wonderful effect of deflating prices. Now, what does this do to your return on investment?

SS isn't an investment. SS itself does invest money (nowadays), but it isn't an investment.

SS ran up huge debts via obligation by underfunding itself. This was stupid. In the 1980s, they upped SS payments in order to provide a large source of funding.

Do you know what debt is? Debt is promises to pay something to someone in the future. The SS system has a bunch of assets (US government bonds), and a bunch of liabilities (future SS payments). In the past, SS has had a great 'rate of return' because, like most things Americans vote themselves, it built up piles of liabilities without assets to balance them.

Since 1980, SS has been building up assets to balance out it's future liabilities. This is known as balancing the books.

The fact that the last round of tax cuts peak out at about the same level as the social security deficit does is rather interesting.

Or encourage immigration of young'uns. Or reduce the number of benefitiaries. Or reduce payouts.

Please note, a nation with quite simular demographics (Canada) has managed to balance their government retirement plan into the foreseeable future with a small bit of actual effort and political will. It has lower Birth rates, but higher Immigration rates.

As an aside, a solid social security system is apparently a strong predictor of birth rates. People apparently have kids in order to feel secure.

In 10 or more years, social security has to start drawing money from the massive debt the US government owes it. This isn't a crisis.

Either
a> Social security is seperate, in which case the US government owes it enough money for it to keep functioning, debt-free, until 2038, and possibly beyond
b> Social security is part of general revenue, in which case spending more on social security than comes in on social security taxes is not a crisis.

I'm aware Bushonomics likes glossing over details like that.

Companies actually run on debt. And the existance of federal government bonds is a very useful finantical tool (it represents the value of 'zero risk' investments).

I'm well aware there are far-right think-tanks which publish data that support and define Bush's finiantial and tax policies.

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Last edited by JHVH : 10-29-4004 BC at 09:00 PM. Reason: Time for a rest.

jorgelito

Wow, fantastic debate here.

My main problem: Who's right? Both sides make excellent cases, but unfortunately, it seems to come down to whom you believe.

I am not an economist nor statician. I have a reasonable amount of basic knowledge and common sense, but I am left scratching my head.

Why not do away with Social Security altogether? Let individuals decide how and if they want to save for their retirement. Maybe the system has run its course.

Borrowing in itself is not a bad idea. Like Yakk said, reasonable borrowing is how business and governements stay healthy and grow economies etc. However, excessive borrowing is disastrous.

Or, if SS is truly part of the General Fund, then that means the "payout" can fluctuate as necessary then. Is that true. Pay accordingly?

I guess it really all comes down to how you defien the problem and frame the issue. Otherwise it seems like we're comparing apples with oranges.

Does anyone really know how SS works and its strucutre of income->payout?

pan6467

Social Security CAN be there for the rest our lives and our children's lives. What it will take though is a raising of the age from 65 to 72, to have companies allow their workers to take their pensions to another company, and a sliding scale type payment based on income and assets to those who get it (the way it was suppose to be to begin with).

If I make $30,000 a year in retirement from my pension and investments I made in my youth, there is truly no need for me to make the $868/ month they pay out now (that's the max, I believe, it's what my grandmother gets, after Medicare takes out its premiums), especially when there are some who don't even recieve that.

As for spouses being able to collect their deceased spouses SS, it is a necessity in some cases, and if you disallow it, you really take away ANY incentive for a parent to not work yet raise kids (which is a F/T job in itself), because then you are telling the stay at home parent when they get old if their spouse dies they won't get ANY money to live on and that's BS. One of the greatest societal problems we have in this country now is the fact, in most cases, both parents have to work.

DEALING WITH MYTHS ON SS:

It hasn't just been Bush raping SS, other presidents and congresses have also.

They didn't just start raising the retirement benefits age. I believe it started at 55 or 60, then went to 62.

20 some years ago, they were talking about how they saw a huge problem coming with SS and wanted to raise the age from 62 to 72 but settled at 65.

Another massive problem and one the pro-business, pro-free trade, export manufacturing jobs, crush union sector people forget to mention is that the factories and unions had great pensions until the 80's, 90's and now when companies were allowed to rape the pensions. Even Ohio teachers pensions are heavily in debt and may not be there soon because of mis management allowed by the federal government.

Pensions were supposed to be a place where an employee would pay into and buy stock of the company, and into safe low return but high longterm yeild investments (like bonds), however, in the 80's Reagan (with a DEMOCRATIC House) passed laws allowing companies to borrow off pension funds, eventually to the point where you had Enrons, Adelphias, WorldComs, Eastern Airlines and so on totally rape their systems. You also had all these mergers where companies were allowed to take over other companies then rape their pensions. We need to stop allowing this.

We can have a continuance of a great retirement system, but it takes work and laws that hurt the pension plans repealed. Once we rebuild the company pension plans, then SS can return to what it was truly created for and we won't have any problems.

We need to do this real soon though or we will miss our window of oppurtunity.

__________________
I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

pan6467

Jorgelito, who's right and who's wrong is a matter of opinion, you just have to look at the facts and make your own decision.

My views are from my own research and what I learned in Gerontology this semester. But they are my views and any fact can be debated and used to support both sides of an issue (In most cases. It has been proven that facts can be used by both sides on this board many many times.) Just as KMA, Super, Fistf, and so on all have their opinions based hopefully on their own research and views of what society's responsibilities are.

SS works by taking so much from every person.... each person pays $72,500, in their working lifetime (I believe) and the company matches that amount dollar for dollar. Once you have reached that amount you never have to pay another penny. (Small business owners do not have to pay, white collar and self employed workers do not have to pay. In fact technically SS is a company optional plan, however if the company does not pay into it they have to have some form of guaranteed retirement system in place.)

From that $72,500, it is then determined what %age you paid into it. If you paid the full amount you are entitled to max benefits, if you paid 50% you'd get 50% benefits.

SS also is used for disability, in the form of SSI.

Hope that helps a little.

__________________
I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"

jorgelito

Thank you pan6467. It sounds a bit similar to what Yakk was saying about the "sliding" scale: "oldest 20%" of Americans. Kind of like a Bell curve isn't it? But that way we would ensure consistency right?

Now, can anyone verify/counter what he said?

Regardless, KMA-628 is correct when he says that we need to drop the partisan bickering and focus on the issues and stuff.

Good discussion, I find it eye-opening and informative. Plus I'm too lazy to 'google' all the info myself so it's nice to have it consolidated in this thread (lol)!
Seriously, I haven't really given much thought to the SS issue until now.

I understand whay you say about "righ or wrong' being about opinion, but some things aren't necessarily just opinion. We have learned experts to help us make as best choices as we can. So at least a very informed opinion.

Also, maybe a degree of right or wrong (likelihood of success, probability etc.)

That's why I asked, to get a better sense.

flstf

There is no max set that you pay over your lifetime. You pay SS taxes on the first $88k (I think this is indexed to inflation, in 2002 it was $84,900.) or so each year until you stop working. I am not sure what the max payout is but I stopped working in 2002 and when I get to be 65 in 10 years I will get over double the amount that pan mentioned. Plus this amount will also go up because it is indexed to inflation. If your wife also worked, she gets separate benefits determined by her lifetime of wages as well. You can get a printout of the benefits you are eligible for from the SS website.

host

Compared to the more imminent, and much more immense fiscal crises
that the U.S. faces, SS fiscal stability and a disingenuous and diversionary
Bush "plan" to "solve" it, is pathetically laughable.

SS surplus last year......revenue taken in to the system vs. payments to
recipients, was nearly $138 billion. That surplus was borrowed and was spent
on other federal government budgetary items. The total surplus now borrowed
from SS, at the end of the last fiscal year was $1,355 billion ($1.35 trillion).
Source: <a href="http://www.ssa.gov/OACT/TR/TR04/IV_SRest.html#wp167619">http://www.ssa.gov/OACT/TR/TR04/IV_SRest.html#wp167619</a>

Not to worry, though. In addition to the incompetent and anti-middle class policy of the Bush tax cuts<br> <a href="http://enews.tufts.edu/stories/031804MetcalfsTwoCents.htm">http://enews.tufts.edu/stories/031804MetcalfsTwoCents.htm</a> , there are runious "incentives", such as the expired Bush tax credit for
businesses that purchased oversized, fuel inefficient SUV's before 2004.

The U.S. consumes 20 million+ barrels of oil per day, and imports at least
12.3 million of those barrels. A recent $25 rise in the cost per barrel has
increased our national energy bill by $300 million per day, or $9 billion per
month......no wonder we had a record, $55.5 billion trade deficit in just the
past month. Since there is nothing to indicate that this bankrupting trend
will ease, we are on a $660 billion annual trade deficit pace. An example of
the consequences of this trend:
Foreigners who hold U.S. debt are converting it into tangible assets, and the
dollar falls in value. Since summer 2001, gold has moved up from $250 per
ounce to $450, and the Euro that used to buy .83 of a dollar, now buys
1.30 dollars. China has purchased copper mines in South America and is
buying timber and oil properties in Canada. No one desires to be holding
dollar demoninated instruments that will keep falling in value.

Look around you......consumer items that can be manufactured by easterners
who are paid slave wages have never been cheaper. Walmart offers a
$27.00 DVD player. This lulls you into a false sense of confidence. The dollar
will buy less resource derived value.....plywood, oil, silver, if it must be
imported, or competes on the export market. Here is a link to the container
shipments in and out of LA and Long Beach ports:
<a href="http://www.portoflosangeles.org/statistics/detailmonth.htm">http://www.portoflosangeles.org/statistics/detailmonth.htm</a>
<a href="http://www.polb.com/html/1_about/ps_teusMonthly.html">http://www.polb.com/html/1_about/ps_teusMonthly.html</a>

U.S. currency valuation has been destroyed by mismanagement, greed, and
gluttony. Germans produce more than 1-1/2 times what we produce per
barrel of oil consumed nationally. I have made no points about the federal
deficit or the dramatic increases to the money supply by the fed, yet.

KMA-628

Someone is using Pan's username without his knowledge and I demand to know who it is!

Host: WTF????, it was actually moving along nicely. After the first paragraph, I didn't even bother.

Yakk - I plan on responding, but you left me A WHOLE LOT to respond to and I am busy (read: new game and I want to play it). Also, I fell for the "edit" thing.

jorgelito - even facts can be interpreted differently based on the angle you come from. Just understand your own slant, be upfront about it and attack each issue independently. Oh yeah, and for future reference: conservatives are always right and liberals want to take all of your money and give it to someone else.